Announcement

Collapse
No announcement yet.

Help! Being Sued by Portfolio Recovery In WV

Collapse
This topic is closed.
X
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Help! Being Sued by Portfolio Recovery In WV

    I had an account with First North American National Bank and when I
    was having trouble making the minimum payments and had a few late
    charges, they lowered my credit amount which then made me be
    overlimit. So I was charged late fees and overlimit fees. I attempted
    to negoiate with them and was told that the amount I could pay per
    month wasn't enough and they would not let me pay what I could. They
    then started collection proceedings and harassed me at home and at
    work. I wrote them a cease and desist letter and they finally quit
    calling me. I received a letter from them saying that they were
    charging off my account. Then I received a letter from Portfolio
    Recovery Associates saying they had purchased my account from FNANB
    and started harrassing me by phone again. I ignored all correspondence
    from Portfolio and their attorneys, Martin and Seibert. Then I was
    served with a summoms by the circuit court and with the court papers
    is an affidavit of lost and /or destroyed documents that the note I
    signed was without fault or neglect, lost inadvertently destroyed or
    stolen. Attached to that is a photo copy of an invoice dated 2/09/02.
    I don't have the money for an attorney so I sent a response that I do
    not owe them any money and requested proof of the debt to be submitted
    to the court. What do I do now? Can I be forced to pay them on a debt
    that was already charged off by the creditor? Is the affadavit enough
    for them to prove I owe them?


  • #2
    Help! Being Sued by Portfolio Recovery In WV

    kimmy5390 wrote:
    I had an account with First North American National Bank
    <snip>
    I received a letter from them saying that they were charging off my account. Then I received a letter from Portfolio Recovery Associates saying they had purchased my account from FNANB
    <snip>
    Can I be forced to pay them on a debt that was already charged off by the creditor?
    IANAL, but "charged off" doesn't mean "you don't owe us." It means "you
    don't owe us enough for us to keep calling you."

    Phoebe

    Comment


    • #3
      Help! Being Sued by Portfolio Recovery In WV

      "Phoebe Roberts, EA" <[email protected]> wrote in message
      news:<[email protected]>. ..
      kimmy5390 wrote:
      I had an account with First North American National Bank
      <snip>
      I received a letter from them saying that they were charging off my account. Then I received a letter from Portfolio Recovery Associates saying they had purchased my account from FNANB
      <snip>
      Can I be forced to pay them on a debt that was already charged off by the creditor?
      IANAL, but "charged off" doesn't mean "you don't owe us." It means "you don't owe us enough for us to keep calling you."
      IANAL either - But IIRC...
      From the borrower's point of view, that is what a charge off looks
      like - like Paula said. The bigger meaning is that the lender has
      given up and charged off the amount you owe on their books as a loss.
      The net loss of your bad debt is then a tax write-off for them.

      They can still sell it to a collection agency to reduce the net loss.
      They can still continue to try to recover the money from you directly.
      If they end up recovering anything after the charge-off, they just
      rebook the recovery as revenue.

      I have never been in the situation to personally see a lender do it on
      a charge-off, but I thought that this can be taxable on the borrower.
      I suppose it has to be reported to the IRS... But if you borrow
      money, never pay it back, and the lender writes it off, it could be
      considered "income" to the borrower and be taxable. I seem to remeber
      seeing something about this kind of situation being considered
      "taxable debt relief" (or something like that). But I have never had
      to experience it. Any input from someone in this group that knows
      about this???

      Oh... yeah, Kimmy. They probably can sue you. If it is a valid debt
      and just refuse to deal with them, then court may be the recourse they
      take.

      Comment


      • #4
        Help! Being Sued by Portfolio Recovery In WV

        > I have never been in the situation to personally see a lender do it on
        a charge-off, but I thought that this can be taxable on the borrower. I suppose it has to be reported to the IRS... But if you borrow money, never pay it back, and the lender writes it off, it could be considered "income" to the borrower and be taxable. I seem to remeber seeing something about this kind of situation being considered "taxable debt relief" (or something like that). But I have never had to experience it. Any input from someone in this group that knows about this???
        I believe you are correct, that debts that are written off are income. For
        example, if a corporate executive borrowed a million dollars from the
        company, and then the company decided not to seek repayment, it would be
        income to the borrower. This stymies money laundering schemes and off books
        compensation schemes. I have never heard of it being applied in a consumer
        debt situation.

        Comment


        • #5
          Help! Being Sued by Portfolio Recovery In WV

          J. Arlen Pruitt <[email protected]> wrote:
          I believe you are correct, that debts that are written off are income. Forexample, if a corporate executive borrowed a million dollars from thecompany, and then the company decided not to seek repayment, it would beincome to the borrower. This stymies money laundering schemes and off bookscompensation schemes. I have never heard of it being applied in a consumerdebt situation.
          Then you've missed some interesting news articles. The most common
          case I've heard of involves somebody who borrows money against their
          residence (either "purchase money" or a refinance). The debtor has
          a financial reversal, the real-estate market suffers a downturn, and
          the debtor "walks away", leaving the lender holding the bag.
          Sometimes there is a "short sale" (for less than the outstanding
          loan, and the lender accepts the sale proceeds in lieu of full
          payment). Sometimes the borrower tends a "deed in lieu of
          foreclosure". Sometimes the loan is foreclosed. One way or another,
          the lender gets less than the outstanding balance of the loan.

          The IRS treats the difference as "debt forgiveness" income. Or did
          during the 90s. The most recent tax law revisions may have done away
          with this, or at least modified it so people who are already in
          financial trouble and losing their homes don't get hit with a big tax
          bill on top of everything else.

          One obvious exception is bankruptcy. Debts discharged in bankruptcy
          do not count as taxable income, AFAIK.
          --
          I pledge allegiance to the Constitution of the United States of America, and
          to the republic which it established, one nation from many peoples, promising
          liberty and justice for all.
          Feel free to use the above variant pledge in your own postings.

          Comment


          • #6
            Help! Being Sued by Portfolio Recovery In WV

            "J. Arlen Pruitt" <[email protected]> wrote in message
            news:<[email protected]>. ..
            I have never been in the situation to personally see a lender do it on a charge-off, but I thought that this can be taxable on the borrower. I suppose it has to be reported to the IRS... But if you borrow money, never pay it back, and the lender writes it off, it could be considered "income" to the borrower and be taxable. I seem to remeber seeing something about this kind of situation being considered "taxable debt relief" (or something like that). But I have never had to experience it. Any input from someone in this group that knows about this??? I believe you are correct, that debts that are written off are income. For example, if a corporate executive borrowed a million dollars from the company, and then the company decided not to seek repayment, it would be income to the borrower. This stymies money laundering schemes and off books compensation schemes. I have never heard of it being applied in a consumer debt situation.
            The first time I ever heard it brought up was in a discussion about
            people short selling their homes (getting a bailout on an upside down
            mortagage). Don't know if it really happens.

            Comment


            • #7
              Help! Being Sued by Portfolio Recovery In WV

              Barry Gold wrote:
              The IRS treats the difference as "debt forgiveness" income. Or did during the 90s. The most recent tax law revisions may have done away with this, or at least modified it so people who are already in financial trouble and losing their homes don't get hit with a big tax bill on top of everything else. One obvious exception is bankruptcy. Debts discharged in bankruptcy do not count as taxable income, AFAIK.
              Another one is insolvency -- in other words, if the debtor is still
              under water, even if banckruptcy isn't declared, then the debt
              discharged is not taxable.

              --
              This account is subject to a persistent MS Blaster and SWEN attack.
              I think I've got the problem resolved, but, if you E-mail me
              and it bounces, a second try might work.
              However, please reply in newsgroup.

              Comment


              • #8
                Help! Being Sued by Portfolio Recovery In WV

                Barry Gold wrote:
                Then you've missed some interesting news articles. The most common case I've heard of involves somebody who borrows money against their residence (either "purchase money" or a refinance). The debtor has a financial reversal, the real-estate market suffers a downturn, and the debtor "walks away", leaving the lender holding the bag. Sometimes there is a "short sale" (for less than the outstanding loan, and the lender accepts the sale proceeds in lieu of full payment). Sometimes the borrower tends a "deed in lieu of foreclosure". Sometimes the loan is foreclosed. One way or another, the lender gets less than the outstanding balance of the loan. The IRS treats the difference as "debt forgiveness" income. Or did during the 90s. The most recent tax law revisions may have done away with this, or at least modified it so people who are already in financial trouble and losing their homes don't get hit with a big tax bill on top of everything else.
                Not quite. People who were insolvent were always excluded from having
                to recognize income from discharge of a debt.
                One obvious exception is bankruptcy. Debts discharged in bankruptcy do not count as taxable income, AFAIK.
                Not quite. Under IRS section 61(12), cancellation of debt results in
                taxable income unless there is a specific exclusion.

                Under section 108, cancellation of debt does not result in taxable
                income if -

                • The discharge of debt occurs in bankruptcy;

                • The discharge occurs while the taxpayer is insolvent

                • The discharged debt is qualified farm indebtedness or

                • Except for a C corporation, if the debt is qualified real property
                business indebtedness.

                The term "qualified real property business indebtedness" means
                indebtedness which -

                (A) was incurred or assumed by the taxpayer in connection with real
                property used in a trade or business and is secured by such real
                property, and

                (B) was incurred or assumed before January 1, 1993, or if incurred or
                assumed on or after such date, is qualified acquisition indebtedness.

                The term "qualified acquisition indebtedness" means, with respect to
                any business real property, indebtedness incurred or assumed to
                acquire, construct, reconstruct, or substantially improve such property.

                Stu

                Comment


                • #9
                  Help! Being Sued by Portfolio Recovery In WV

                  Stuart Bronstein <[email protected]> wrote:
                  Not quite. People who were insolvent were always excluded from havingto recognize income from discharge of a debt.
                  Good point.
                  Not quite. Under IRS section 61(12), cancellation of debt results intaxable income unless there is a specific exclusion.Under section 108, cancellation of debt does not result in taxableincome if -• The discharge of debt occurs in bankruptcy;• The discharge occurs while the taxpayer is insolvent• The discharged debt is qualified farm indebtedness or• Except for a C corporation, if the debt is qualified real propertybusiness indebtedness.
                  [details snipped]

                  Ack! Excellent example of how the law is way too complicated.

                  In any case, it doesn't apply to OP. For most people most of the
                  time, the answer is that if you walk away from a debt and the creditor
                  writes it off (all or part), the "debt forgiveness" is taxable income
                  unless you are insolvent or the discharge occurs in bankruptcy.
                  --
                  I pledge allegiance to the Constitution of the United States of America, and
                  to the republic which it established, one nation from many peoples, promising
                  liberty and justice for all.
                  Feel free to use the above variant pledge in your own postings.

                  Comment


                  • #10
                    Help! Being Sued by Portfolio Recovery In WV

                    Barry Gold wrote:
                    In any case, it doesn't apply to OP. For most people most of the time, the answer is that if you walk away from a debt and the creditor writes it off (all or part), the "debt forgiveness" is taxable income unless you are insolvent or the discharge occurs in bankruptcy.
                    Writing off a debt does not necessarily mean the debt is forgiven.
                    Sometimes a company will write a debt off and then turn it over to a
                    collection agency to see if they have any more luck. In this case
                    there would not be income to the debtor until the statute of
                    limitations runs or the debt is actually abandoned.

                    I have a recollection of seein a case in which the IRS blew the
                    statute of limitations on collecting a huge tax bill against a tax
                    payer. But then they turned around and went after him, saying he
                    received income in the amount of the unpaid tax in the year the
                    statute ran. The IRS won.

                    One other thing I ran across is that, with respect to non-recourse
                    notes, forgiving of debt will not be considered income. However I
                    don't know if that is still the rule.

                    Stu

                    Comment


                    • #11
                      Help! Being Sued by Portfolio Recovery In WV

                      In article <[email protected]>,
                      Barry Gold <[email protected]> wrote:
                      In any case, it doesn't apply to OP. For most people most of thetime, the answer is that if you walk away from a debt and the creditorwrites it off (all or part), the "debt forgiveness" is taxable incomeunless you are insolvent or the discharge occurs in bankruptcy.
                      However, in this case the debt was _not_ forgiven, it was sold to a
                      debt collector. The lender "writing off" the debt (for its own tax
                      and accounting purposes) and "forgiving" the debt (for the benefit of
                      the debtor) are two different things.

                      Seth

                      Comment


                      • #12
                        Help! Being Sued by Portfolio Recovery In WV

                        Stuart Bronstein <[email protected]> wrote:
                        One other thing I ran across is that, with respect to non-recoursenotes, forgiving of debt will not be considered income. However Idon't know if that is still the rule.
                        Now _that_ is interesting. Because trust deeds written for buying a
                        primary residence are non-recourse. (But a refinance will have
                        recourse.)
                        --
                        I pledge allegiance to the Constitution of the United States of America, and
                        to the republic which it established, one nation from many peoples, promising
                        liberty and justice for all.
                        Feel free to use the above variant pledge in your own postings.

                        Comment


                        • #13
                          Help! Being Sued by Portfolio Recovery In WV

                          Barry Gold <[email protected]> wrote:
                          In any case, it doesn't apply to OP. For most people most of thetime, the answer is that if you walk away from a debt and the creditorwrites it off (all or part), the "debt forgiveness" is taxable incomeunless you are insolvent or the discharge occurs in bankruptcy.
                          Seth Breidbart <[email protected]> wrote:
                          However, in this case the debt was _not_ forgiven, it was sold to adebt collector. The lender "writing off" the debt (for its own taxand accounting purposes) and "forgiving" the debt (for the benefit ofthe debtor) are two different things.
                          Good point! It sounds as if the lender has filed a FALSE form 1099.
                          I don't know if the IRS will actually penalize them for this, but it
                          couldn't hurt OP to notify the IRS. In fact, it's probably necessary
                          if he's not going to be hit for taxes on the "forgiven" debt that
                          wasn't really forgiven.
                          --
                          I pledge allegiance to the Constitution of the United States of America, and
                          to the republic which it established, one nation from many peoples, promising
                          liberty and justice for all.
                          Feel free to use the above variant pledge in your own postings.

                          Comment


                          • #14
                            Help! Being Sued by Portfolio Recovery In WV

                            In article <[email protected]>,
                            Stuart Bronstein <[email protected]> wrote:
                            One other thing I ran across is that, with respect to non-recoursenotes, forgiving of debt will not be considered income. However Idon't know if that is still the rule.
                            I believe that applies in cases where the debt itself didn't provide a
                            deduction.

                            There used to be an abusive tax shelter that worked as follows:

                            1. Buy the US rights to a movie made in India for $1,010,000; $10,000
                            paid in cash, the rest a non-recourse note payable only from
                            revenues earned from showing the film.

                            2. Deduct the entire $1,010,000 as an expense. (This is the reason
                            for the "at-risk" rules currently in effect.)

                            3. No revenue is made from showing the film, so nothing is paid on the
                            debt.

                            4. Shortly before the $1,000,000 debt becomes due and gets cancelled
                            (which would product taxable "phantom income"), change accountants
                            :-)

                            The rules were changed, so money that wasn't at risk (the $1,000,000
                            non-recourse note) wasn't deductible. Therefore, it wouldn't be right
                            to have the cancellation of that debt be taxable.

                            Seth

                            Comment

                            Working...
                            X