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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I co-signed a car loan son, he didn't pay, they re-poed

Customer Question

I co-signed a car loan for my son, he didn't pay, they re-poed his car about 8 years ago and now they are disallowing they charge to me and I am required to file on my income tax. Why didn't they charge this to him?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help you. The company issued 1099C - the cancellation of debt to both of you since you are both legally obligated to pay for it. When you co-signed the loan, you basically gave the bank legal right go after you if the primary holder stopped making payments. Unfortunately canceled debt is consider taxable income. You will have to talk to your son and figure out how you are going to claim it or if one of you may qualify for insolvency. In that case only one of you will have to claim it.
Customer: replied 1 year ago.
According to y son they did not issue a 1099-c to him. He filed and received his refund no problem. why didn't they split it since they were discharging to both of us.
Expert:  emc011075 replied 1 year ago.
Most likely the bank did mailed one to him as well, but if the bank didn't have a current address he may not have received it. Getting a refund is not a guarantee that the return is fine and will not be audited 6 month later. Bank will not split the cancelled debt because they have not rights to do so. The bank is required to report the entire amounts to both of you.