Consumer complaint received 2025-01-13 00:00:00
Product: Debt collection — I do not know
Issue: False statements or representation — Attempted to collect wrong amount
Company: ALLY FINANCIAL INC.
State: CA

Complaint narrative:
Dear Consumer, Financial Protection Bureau, I am writing to formally file a complaint against Ally Financial for inaccurately reporting a charged-off account on my credit report and for their failure to issue a Form 1099-C, Cancellation of Debt, which I believe they are legally obligated to provide. I have tried 3 different occasions to reach out to Ally Financial with zero success. 
Details of the Complaint : Creditor Name : Ally Financial XXXX XXXX XXXX XXXX Charged-Off Amount : {$20000.00} Ally Financial has reported this account as charged-off on my credit report, but it is my understanding that when a debt is canceled or discharged ( such as through charge-off ), the creditor must issue a 1099-C to report the discharge of debt to the IRS, as outlined by the Internal Revenue Service ( IRS ). However, I have not received a 1099-C from Ally Financial for this charged-off debt. 
Legal Violations : 1. Failure to Issue a 1099-C ( IRS Code Section 6050P ) : According to IRS Code Section 6050P, a creditor is required to issue a 1099-C if a debt of {$600.00} or more is canceled or discharged, including charge-offs. The creditor must file the 1099-C with the IRS and provide the borrower with a copy of the form by XX/XX/XXXX of the following year. By failing to provide me with a 1099-C for the canceled debt, Ally Financial is in violation of these regulations. 
2. Failure to Report Accurate Information to Credit Bureaus ( Fair Credit Reporting Act - FCRA, 15 U.S.C. 1681 ) : Under the Fair Credit Reporting Act ( FCRA ), creditors are required to report accurate and complete information to credit reporting agencies. By reporting this account as charged off without issuing a 1099-C, they have provided inaccurate information about the status of the account. Furthermore, the failure to correctly report the discharged status of the account is a violation of the FCRA. 
3. Reporting of Discharged Debt ( Internal Revenue Code Section 108 ( e ) ( 1 ) ) : When a debt is discharged, the amount of the discharge may be considered taxable income under Internal Revenue Code Section 108 ( e ) ( 1 ). However, failure to issue a 1099-C means that the IRS and I have no formal documentation of this discharge, potentially creating significant confusion regarding my tax liabilities and financial status.

4. Violation of Regulation Z ( Truth in Lending Act - TILA ) : Under the Truth in Lending Act ( TILA ) and Regulation Z, creditors must disclose clear information regarding the account status, including if it has been charged off or discharged. Ally Financials failure to provide a 1099-C is a violation of these disclosure obligations.

Request for Resolution : Request for 1099-C : I request that Ally Financial immediately issue a 1099-C form for the canceled debt, showing the amount discharged and providing me with a copy of the form for my records.

Request for Credit Report Correction : I also request that Ally Financial correct the reporting of this account to the credit bureaus. This account is inaccurately reported as charged off, and as the debt has been discharged, it should be marked accordingly. I ask that they remove any incorrect entries related to this account and ensure that it is reported in compliance with the law.

Notification of Action Taken : Once the corrections are made, I request that Ally Financial provide me with written confirmation of the updates to my credit report and the issuance of the 1099-C. 
Conclusion : I strongly urge you to investigate this matter and take appropriate action against Ally Financial for failing to comply with the IRS reporting requirements and for inaccurate reporting of this account to the credit bureaus. I would appreciate it if this matter could be addressed promptly so that I can resolve the discrepancies on my credit report and ensure compliance with applicable tax and financial regulations. 
Thank you for your attention to this important matter. I look forward to your prompt response and resolution of this issue. 
Sincerely, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX

Company response to consumer: Closed with explanation