Form 1099-C - Estate

[Burke]

I thought I had posted this day before yesterday but in looking for replies, I can't find it. So here goes again....

Worthless ex-son-in-law signed promissory note years ago for $20K (when he wasn't an "ex,") then defaulted after paying back $12K. The mother who loaned him the money died in 2013, so now it is a debt of the estate. They are going to try to collect, but if it turns out worthless, I am going to assume the estate can issue a 1099-C to the guy? I just hope the ex-wife/daughter has his SSN around somewhere. But to do that, they would have to write the loan off I suppose, and make no further attempts to collect. They may be able to get a judgement, or attach it to his property, but it might be years before they get anything.

[mactoolsix]

The result of a 1099-C?

If they file a 1099-C, he could most likely avoid any tax by claiming insolvency. Thus, now the estate is forbidden from collecting and he pays zero!!

I would look at the small claims court judgment - at least they would have several years to possibly do a wage garnishment?

But then sometimes they might just want to put the whole thing behind them.

Mike

[Burke]

They are going the certified letter route to start, and then try to attach lien on property if that does not work. In VA, its a fairly simple task to file it at the courthouse. That house cannot ever be sold unless it is satisfied.