Scam -O- Rama Update

A couple of posts back I wrote about the debt collection sharks and their 1099C scam, also reported on at http://www.budhibbs.com/.

This is one of the newer shell games played by the collectors of time barred debts. They buy, (or say they do) old debt that's past the statute of limitations, paying pennies on the dollar. Because the debt is past the statute of limitations the collection sharks can't legally collect on it, and they know this. To view your state's statute of limitations, go here http://www.bcsalliance.com/.

That doesn't stop them from trying to wring some money out of these zombie debts, with ever more creative accounting scams. They file a 1099c with the IRS listing your ten, fifteen, twenty year old debt as a "canceled debt, " as if they'd ever loaned you money or extended you credit for anything, ever... As if.

Clutter being what it is, the zombie debt collection sharks count on you throwing out your ten, twenty year old financial records. (I don't throw anything away, sharks!) They count on you not remembering that you had a credit card or whatever that was charged off twenty years ago, and more importantly they count on you not having any records on that old time barred debt.

But neither do they. If they provided you with an address, ask them (via certified mail) to validate the debt, show you proof of a contract you signed, or proof of the original debt, and they can't do it. Maybe they have a partial account number. Maybe they creatively added on a few hundred or a few thousand in "interest" or late fees to your original debt--if it was even yours to begin with...

If you know you're being stalked by the vultures of low finance, call the IRS and ask them how to handle your 1099c for a zombie debt. State your case, ask questions. Be honest. Have your supporting papers nearby. File complaints with your state's Attorney General and the Federal Trade Commission. http://www.ftc.gov/. Write down the reference numbers for your complaints.

This is what I learned. There's a form 3949A at http://www.irs.gov/. You can download and print it and file it with your income tax return, to dispute 1099Cs that are just wrong.

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