Consumer complaint received 2024-06-03 00:00:00
Product: Debt collection — Credit card debt
Issue: Attempts to collect debt not owed — Debt is not yours
Company: NAVY FEDERAL CREDIT UNION
State: FL

Complaint narrative:
I am writing to express my concerns and seek guidance regarding an issue I am experiencing with a creditor who has charged off my debt. I have requested a 1099-C form, which is required for tax purposes, but the response I received from the creditor has left me uncertain about the next steps I should take. 

On XX/XX/year>, I formally requested a 1099-C form from Navy Federal Credit Union to properly report the cancellation of debt income on my tax return. Subsequently, I received an email from Navy Federal Credit Union stating that the charge-off is considered a loss for them. This response has caused confusion, as it does not clearly address my request for the 1099-C form. 

A charge-off occurs when a credit card issuer writes off a debt as uncollectible, and they no longer consider the debt as an asset. I have read if you settle your debt after a charge-off, the creditor is required to issue a 1099-C form if the amount paid to the creditor or collector includes a savings off the balance of {$600.00} or more. The 1099-C form filed by the creditor is usually the trigger for the Internal Revenue Service to notify you of taxes due on the forgiven debt. Additionally, the lender will likely issue a 1099-C tax form to the debtor and receive a corresponding tax deduction for the uncollectable amount. 

I understand that, under the Internal Revenue Code, creditors are generally required to issue a 1099-C form for cancelled debts of {$600.00} or more. However, the email I received from Navy Federal Credit Union did not provide the necessary documentation, leaving me unsure of my obligations and how to proceed. 

Additionally, I am aware that there are specific consumer protection laws related to charge-offs and the handling of cancelled debt. According to the Fair Debt Collection Practices Act ( FDCPA ) and other relevant consumer laws, creditors are obligated to provide accurate information and comply with reporting requirements. The lack of a 1099-C form and the ambiguous communication I received may potentially violate these provisions, and it has created undue stress and confusion for me.

Given these circumstances, I am seeking assistance from the Consumer Financial Protection Bureau ( CFPB ) to help resolve this matter. Specifically, I would like guidance on the following : How should I proceed if a creditor refuses or fails to provide a 1099-C form after a charge-off?

What are my rights under consumer protection laws regarding the issuance of a 1099-C form and the proper handling of charge-offs? 

What steps can I take to ensure compliance from the creditor and to protect myself from any potential legal or financial repercussions? 

I appreciate your time and attention to this matter and look forward to your guidance. 

Please let me know if there are any additional details or documentation required to facilitate your investigation and assistance. 

Thank you for your help. 

Sincerely, XXXX

Company public response: Company believes it acted appropriately as authorized by contract or law
Company response to consumer: Closed with explanation