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Is there any sort of "statute of limitations" for collecting
debts or filing for bankruptcy? What I mean is, if I manage to
stay a step ahead of the bill collectors for a certain number
of years, will they eventually stop trying to collect?
The reason I ask it that I recently got a letter about a $600
debt saying they want to verify my name and SSN for tax reasons
because the debt had been discharged. Since I didn't pay it, I'm
thinking they just wrote it off. Correct?
Thanks in advance.
--
8
)~~~ Sue (remove the x to e-mail)
~~~~~~
"I reserve the absolute right to be smarter
today than I was yesterday." -Adlai Stevenson
http://www.suzanne-eckhardt.com/
***Revelation 22:12*** ICQ: 349878998
http://www.intergnat.com/malebashing/
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In article <g2fht0hdgeuhamp0s1d3b81olfnuannk58@4ax.com>,
Suzie-Q <sme617x@earthlink.net> wrote:
Is there any sort of "statute of limitations" for collecting
debts or filing for bankruptcy? What I mean is, if I manage to
stay a step ahead of the bill collectors for a certain number
of years, will they eventually stop trying to collect?
Some states do have a statute of limitations. If you manage
to avoid them for something like 7 years, the debt goes away.
You will have to check for your specific state.
Even without a statute of limitations, a creditor or collection
agency will eventually give up trying to contact you. They
may just drop the debt, or they sell it to someone else who
will start over, or they may sue you. If they sue and win,
they can seize assets and/or garnish wages (again, depending
on what state you are in).
The reason I ask it that I recently got a letter about a $600
debt saying they want to verify my name and SSN for tax reasons
because the debt had been discharged. Since I didn't pay it, I'm
thinking they just wrote it off. Correct?
If you are in a state like California that does have a statute
of limitations, they may be trying to trick you into contacting
them. If you do, for any reason, you reset the 7 year clock
back to zero. Or, they might be getting ready to file suit,
and want to verify your info so they properly serve you. Since
it is up to you to keep your address up to date with your
creditors, in some states, they can simply mail a letter to
your last known address, and that is proper service. In that
case, you might end up sued, and never even hear about it until
after you lose by default.
In general, $600 is not worth ruining your credit history,
reputation, or going to court over. Find a way to pay it.
Perhaps you can settle for $200 (but get it in writing before
you pay a penny to anyone).
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
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On Sun, 02 Jan 2005 22:39:50 -0500, Suzie-Q <sme617x@earthlink.net>
wrote:
Is there any sort of "statute of limitations" for collecting
debts or filing for bankruptcy? What I mean is, if I manage to
stay a step ahead of the bill collectors for a certain number
of years, will they eventually stop trying to collect?
The reason I ask it that I recently got a letter about a $600
debt saying they want to verify my name and SSN for tax reasons
because the debt had been discharged. Since I didn't pay it, I'm
thinking they just wrote it off. Correct?
Thanks in advance.
The "verify name and SSN for tax reasons" makes me think they might be
planning to send you a 1099 showing that they forgave your debt. In
that case, you might have forgiveness of debt income on which to pay
taxes, or you might have to show the IRS why you don't owe taxes on
this income.
Bill
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The "verify name and SSN for tax reasons" makes me think they might be
planning to send you a 1099 showing that they forgave your debt.
A *discharged* debt is not a *forgiven* debt, and a debt can't be forgiven
retroactively to before a bankruptcy petition, so I'd be suspicious. Sounds
to me like a possible attempt to reaffirm the debt.
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Scott Hedrick wrote:
"Bill Lentz" <blentz@negatorygoodbuddy.prodigy.net> wrote
A *discharged* debt is not a *forgiven* debt, and a debt can't
be forgiven retroactively to before a bankruptcy petition, so
I'd be suspicious. Sounds to me like a possible attempt to
reaffirm the debt.
A debt is forgiven when it's forgiven.
In this case, if a debt becomes unenforceable due to passage of the
statute of limitations, it becomes taxable income to the debtor in the
year the statute lapses.
Stu
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On 1/11/05 2:05 PM, in article eo88u0ho7rde6ibttnlmss7pil9fb1rf1u@4ax.com,
"Scott Hedrick" <dinehnm@yahoo.com> wrote:
A *discharged* debt is not a *forgiven* debt, and a debt can't be forgiven
retroactively to before a bankruptcy petition
Even if it were, forgiveness of debt income isn't taxable if (and to the
extent that) the debtor is insolvent.
Financial institutions often issue unjustified 1099s. Individuals and firms
sometimes do it out of spite. The effective solution isn't to argue, but to
list the amount on the tax return and then back it out on the next line (or
the nearest suitable place) with an explanation.
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Biwah wrote:
forgiveness of debt income isn't taxable if (and to the
extent that) the debtor is insolvent.
Determining if the debtor is insolvent is done at the debtor level, not
the financial institution level, though. I agree that if a debt is
discharged in bankruptcy, no 1099 is required (because DOI income isn't
taxable if discharged in bankruptcy, regardless of the debtor's solvency).
The effective solution isn't to argue, but to
list the amount on the tax return and then back it out on the next line (or
the nearest suitable place) with an explanation.
For a 1099-C (reporting discharge of indebtedness income), the nearest
(and only) suitable place would be a Form 982.
Phoebe :)
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Phoebe Roberts, EA wrote:
Biwah wrote:
Determining if the debtor is insolvent is done at the debtor
level, not the financial institution level, though.
Just remember that there are different definitions of insolvency,
sometimes having very different results. For example, from a balance
sheet standpoint most people who have purchased a home in the last few
years are insolvent. But from the standpoint of whether they can meet
their ongoing financial commitments, they are not insolvent.
Stu
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Stuart Bronstein wrote:
Phoebe Roberts, EA wrote:
Just remember that there are different definitions of insolvency,
sometimes having very different results.
The IRS has provided a definition for your convenience. ;) "You are
'insolvent' to the extent your liabilities exceed the fair market value
(FMV) of your assets immediately before the discharge."
Phoebe :)
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Phoebe Roberts, EA wrote:
Just remember that there are different definitions of insolvency,
sometimes having very different results. For example, from a balance
sheet standpoint most people who have purchased a home in the last few
years are insolvent. But from the standpoint of whether they can meet
their ongoing financial commitments, they are not insolvent.
Stu
Be careful that you are not confusing insolvency with negative cash flow -
two different things.
Insolvency is defined as owing more than you own and is entirely a balance
sheet issue.
Gene E. Utterback, EA
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Gene E. Utterback, EA wrote:
Be careful that you are not confusing insolvency with negative
cash flow - two different things.
Exactly.
Insolvency is defined as owing more than you own and is
entirely a balance sheet issue.
There are (at least) two different definitions of insolvency, and they
can give conflicting results. One is as you mention, the balance
sheet approach is one. Under this approach, many people buying a
first home are insolvent on the date escrow closes.
The other definition is that one cannot meet his obligations as they
come due. Someone heavily invested in real estate and who has equity
in his properties, can be "insolvent" for bankruptcy or other legal
purposes if his negative cash flow exceeds his cash available and he
can't keep current with his ongoing financial obligations.
Stu
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Stuart Bronstein wrote:
There are (at least) two different definitions of insolvency, and they
can give conflicting results. One is as you mention, the balance
sheet approach is one. Under this approach, many people buying a
first home are insolvent on the date escrow closes.
The other definition is that one cannot meet his obligations as they
come due. Someone heavily invested in real estate and who has equity
in his properties, can be "insolvent" for bankruptcy or other legal
purposes if his negative cash flow exceeds his cash available and he
can't keep current with his ongoing financial obligations.
Which brings to mind a related question, concerning transfers of assets.
It has been noted that a transfer which has the effect of making you
insolvent will generally be "undone" by the bankruptcy court, if things
get that far. But what measure is used for "insolvent"?
In particular, say you have a lawsuit pending against you, and you
transfer significant assets into a retirement fund or other
"untouchable" form (e.g., an irrevocable trust). Is that a voidable
transfer? For how long?
What if the lawsuit is not pending at the time of the transfer, but you
have a pretty good idea one will be filed (e.g., you have just been
involved in a horrendous auto accident)?
What other factors affect the timing of transfers?
--
I pledge allegiance to the Constitution of the United States of America,
and to the republic which it established, one nation from many peoples,
promising liberty and justice for all.
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Barry Gold wrote:
It has been noted that a transfer which has the effect of
making you insolvent will generally be "undone" by the
bankruptcy court, if things get that far. But what measure
is used for "insolvent"?
I would guess the balance sheet type of insolvency. But I don't know
for certain.
In particular, say you have a lawsuit pending against you, and
you transfer significant assets into a retirement fund or other
"untouchable" form (e.g., an irrevocable trust). Is that a
voidable transfer? For how long?
That's probably not a voidable transfer. To be voidable it has to be
for an antecedent debt (in other words paid when payment is past due).
Or it has to be for insufficient consideration. If you can
legitimately put assets into a pension plan or pre-pay on your
mortgage to take advantage of a homestead exemption, I don't think
that would qualify as a voidable transfer.
What if the lawsuit is not pending at the time of the transfer, but
you have a pretty good idea one will be filed (e.g., you have just
been involved in a horrendous auto accident)?
In the normal case it can be voidable either if it is shown to be a
fraud on creditors or that it is for insufficient consideration and
renders the debtor insolvent. But that's not bankruptcy law, that's
the general law of fraudulent transfers.
Stu
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Stuart Bronstein wrote:
Barry Gold wrote:
That's probably not a voidable transfer. To be voidable it has to be
for an antecedent debt (in other words paid when payment is past
due).
Or it has to be for insufficient consideration. If you can
legitimately put assets into a pension plan or pre-pay on your
mortgage to take advantage of a homestead exemption, I don't think
that would qualify as a voidable transfer.
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