The video player could not be built.

do you have old debt you can't afford to pay? WE CAN HELP.

We'll contact you to discuss your situation.

Please check any that apply to you:
  I have debt I cannot afford to pay.
  I am being harassed by creditors.
  I am a senior citizen or disabled person.

Thank you for your information.

Need immediate help? Call 855-435-7787 to speak to a HELPS representative.

What Does It Mean When You Receive A 1099c Form?

Occasionally, creditors will write off your debt. (This is different from “charging off” a debt, which simply means they’ve sold it to a debt collector and taken it off their books.) When creditors write off a debt, often they will file a form with the IRS called a 1099c. The “c” stands for “cancellation of debt.” In certain situations, the uncollectable debt may become “income” to the person owing the debt, so he or she could be required to pay taxes on the income.

However, there are exceptions. Do not be alarmed if you get one of these forms. HELPS clients virtually never have to pay tax on 1099c income. If a person is insolvent, they have no tax liability. Insolvent means that your assets are worth less than the debt you owe. For example, if you have assets worth $12,000 but owe $20,000, you are insolvent. The value of assets is determined by what price they would get at auction – which usually means prices lower than you would get at a garage sale.


When you receive a 1099c form, if you aren’t required to file tax returns then you don’t have to do anything. Your income is so small that the IRS will generally do nothing. In the unlikely event that the IRS sends an inquiry regarding the 1099c, here’s what to do:

  • Send a simple letter to the IRS with a completed IRS form 982. You can call HELPS and we will get you this form. In the letter you will include a Statement of Assets and Liabilities, which can be handwritten on a piece of notebook paper if necessary.
  • Remember to list the value of your assets for what they would actually sell for – not what you would like to sell them for. You are looking for auction value, which is probably even less than garage sale value.
  • Be sure to reference your Social Security number.
  • Please note that it’s possible that the IRS will later ask you to file a return. However, that is very unlikely.


If you receive a 1099c form and you will be filing tax forms with the IRS, here’s what to do:

  • File IRS form 982 with your 1040 income tax form.
  • Simply list the dollar amount shown on the 1099c and indicate 1. (b) on the 982 form that you are insolvent.


 If your tax preparer says you will owe taxes for the “income’ on a 1099c form, show him this letter and contact HELPS immediately. There are many tax preparers who do not understand form 982 and the insolvency rule that allows for you not to owe taxes for a written-off debt.

Learn More About Other Issues and What HELPS Can Do For You.

Peace of Mind
These HELPS clients were dealing with harassing debt collectors and anxiety over old Debt. HELPS provided a solution to their financial worries.