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Form 1099-C, Cancellation of Debt



Have you gotten a 1099-C form?

Tax time is here! Have you received your tax forms? One form some consumers may receive is the 1099-C Form, also known as a Cancellation of Debt Form.


Why did you get a 1099-C form?

If you've negotiated any debts in the past year? If so, that's probably why you got this form.

Form 1099-C is usually filed when you have made a negotiation agreement with a lender, and they have cancelled $600 or more of your owed debt. The lender will file a copy with the IRS and you will also receive a copy as it is required to be sent to the taxpayer as well. Many consumers will receive a 1099-C form due to one of the following reasons:

  • A home was in a short sale where the lender agreed to accept less than the full balance owed.
  • A home went into foreclosure and a deficiency balance remained that was either forgiven or unpaid.
  • No payments were made on a debt for at least three years and no significant collection activity was made for the past 12 months.
  • Negotiations were made on a debt where the lender/creditor agreed to accept less than the full balance owed.


If you're not sure why you received Form 1099-C, bring it to your tax professional!

If you got Form 1099-C and aren't sure why, don't ignore it! Present it to your tax professional. Ignoring the form or filing it incorrectly can lead to you paying more taxes. It may also be in your best interest to reach out to your creditor/lender for more information about why you may have received this form. There are some circumstances that may exclude this cancelled debt from your income, such as bankruptcy and insolvency. Due to different individual factors, we strongly urge that you seek professional advice of an attorney or tax professional to assist you with your options.


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MSI Credit Solutions provides superior credit restoration and comprehensive consulting services that are reliable and affordable. For more information regarding our credit repair services, real estate services & lending resources, or to schedule a free credit repair consultation, contact us today at 866-217-9841.


*The information in this article has been provided strictly for educational purposes. For more information about Form 1099-C visit the IRS website: