Old Credit Card Nightmare

[daveleonard]

I received a notice that I have a cancel debt for $24,000 on my IRS account.
I have been in the Philippines since 2003. Before I left the States I paid all my balances and came to the Philippines. I had one credit card but paid that off.
In 2015 I was doing research on places to rent because I planned to return to the States to get a divorce from my Philippine wife. I took advantage of a free credit search just to see what it said. I found that there was a credit report of an unpaid balance on my account which had been reported to the credit bureau. I called the credit card company and the lady said that my account had been closed in 2006 for none payment and the balance was written off. I did not know of any charges other than what I paid off. I immediately sent a letter to the card company and told them it was an honest error and that I would pay the balance just send me the paper work. I never heard back from them. I was never sent a notice of the cancel debt from any source.

They apparently re-opened that suspended and written off account, charged me interest for the last ten years and wrote it off on their 2014 income tax which of course showed up on my IRS account as a cancel debt which I must figure as income on my 2014 tax return.
This is a big crisis for me because I live on my social security benefit and a small $320 pension. The card company charged interest on that $800 balance and it turned into $24,041 that they took off their tax and advised IRS and I got the cancel debt.
When I wrote the letter to them in 2014 they had my address yet I never received a notice of this action and did not find out about it until my 1040 was sent back by the IRS and the cancel debt revealed.
I earn approx $15,000 on social security, and $320 in a small pension. I have no job here in the Philippines, investments, business or any other income.
This means my income goes from about $18,000 paying no taxes to $49,000 and owing the IRS about $12,000. It will take me likely the rest of my natural life to pay this off, that is if they let me make payments on it. I am 70 years old now.

Is this right for a credit card company to do? It seems to me if they absorbed the $800 in 2005 that they would have had to take the $800 off their taxes as a loss in that year and not re-open the case ten years later or so adding interest to their advantage and taking off $24,000 in 2014 on their taxes.
Any advice? Thanks, Dave





daveleonard

[Trinity71]

Old Credit Card Nightmare

I received a notice that I have a cancel debt for $24,000 on my IRS account.
I have been in the Philippines since 2003. Before I left the States I paid all my balances and came to the Philippines. I had one credit card but paid that off.
In 2015 I was doing research on places to rent because I planned to return to the States to get a divorce from my Philippine wife. I took advantage of a free credit search just to see what it said. I found that there was a credit report of an unpaid balance on my account which had been reported to the credit bureau. I called the credit card company and the lady said that my account had been closed in 2006 for none payment and the balance was written off. I did not know of any charges other than what I paid off. I immediately sent a letter to the card company and told them it was an honest error and that I would pay the balance just send me the paper work. I never heard back from them. I was never sent a notice of the cancel debt from any source.

They apparently re-opened that suspended and written off account, charged me interest for the last ten years and wrote it off on their 2014 income tax which of course showed up on my IRS account as a cancel debt which I must figure as income on my 2014 tax return.
This is a big crisis for me because I live on my social security benefit and a small $320 pension. The card company charged interest on that $800 balance and it turned into $24,041 that they took off their tax and advised IRS and I got the cancel debt.
When I wrote the letter to them in 2014 they had my address yet I never received a notice of this action and did not find out about it until my 1040 was sent back by the IRS and the cancel debt revealed.
I earn approx $15,000 on social security, and $320 in a small pension. I have no job here in the Philippines, investments, business or any other income.
This means my income goes from about $18,000 paying no taxes to $49,000 and owing the IRS about $12,000. It will take me likely the rest of my natural life to pay this off, that is if they let me make payments on it. I am 70 years old now.

Is this right for a credit card company to do? It seems to me if they absorbed the $800 in 2005 that they would have had to take the $800 off their taxes as a loss in that year and not re-open the case ten years later or so adding interest to their advantage and taking off $24,000 in 2014 on their taxes.
Any advice? Thanks, Dave





daveleonard

I can let you know somethings that may assist you in resolving some of these issues.


1. Written off unsecured debt (like credit cards) do not end up as IRS tax debt.

2. If you owed a few hundred dollars on a credit card and the company wrote it off, it may have some interest, but that stops accruing when they write off the debt which is normally done within 12 to 18 months of the last payment made or original due date of the bill. A few hundred dollars is not going to accumulate thousands of dollars in interest over 18 or so months.

3. When you contacted the company about the debt, they had already written it off. You did not receive a response because once written off, you can't pay it to them and they cannot collect it. They wrote it off, meaning they took it as a loss on their taxes.

4. You are not responsible for their tax loss.

5. If the credit card company sold the written off debt to a collection agency and that's an if since it was just a few hundred dollars, to try and recoup any part of the debt and you contacted them (the collection agency) with intent to pay, they could try and collect the amount from you for another 7 years (time limit of liability) but again it would not be for much more than the original debt.

I would advise against this. If you have an outstanding debt older than 7 years old, you can contact the 3 U.S. credit bureaus (Experian, Equifax, and Transunion) and have it removed. That's it. If you try to contact the collection agency again if it was sent to one and even state you may start to pay the debt it goes back on your credit report for another 7 years even if you pay it in full as derogatory information.

Whatever that IRS debt is, it's not the credit card. You would need to contact the IRS directly to clarify if you owe anything and if so, what you owe it for.

Trinity71

This is my opinion and not legal advice. Use of this information is strictly at your own risk.