Consumer complaint received 2025-04-14 00:00:00
Product: Debt collection — Credit card debt
Issue: False statements or representation — Attempted to collect wrong amount
Company: ALLY FINANCIAL INC.
State: PA

Complaint narrative:
Subject : Urgent Complaint Regarding Improper Collection of Charged-Off Account Without Issuance of 1099-C Complaint : I am filing an urgent complaint regarding an attempt to collect or continue reporting a charged-off credit card debt that originated with Ally, but is now listed under XXXX Card Services. Since XXXX is the entity currently associated with this debt, I am directing this complaint to them. 

The account was charged off as bad debt/uncollectible on XX/XX/year>. Although my credit report currently shows a {$0.00} balance on the charged-off account, it also lists a highest balance of {$1500.00}, which I believe reflects the amount charged off and/or sold to a third party. I have never received a 1099-C from Ally, and based on IRS guidelines , such a form should have been issued if the debt was forgiven or canceled. It appears Ally may have sold the debt to XXXX, which raises questions about whether the original creditor already financially benefited through the sale, and whether any further collection or reporting is legally valid. 

According to IRS regulations, a 1099-C is generally required when debt exceeding {$600.00} is forgiven or canceled. As this debt was charged off and no 1099-C was issued, it raises serious concerns about whether the debt was legally canceled or transferred, and what reporting obligations were met or neglected. 

In this case, it appears Ally may have sold the debt to a third party XXXX and if so, it is likely they already benefited financially through the sale. Therefore, even if a 1099-C were to be issued at this point, I question whether Ally could substantiate that no tax benefit was received, and that there was no improper double-dipping meaning, profiting from the sale of the debt while still treating it as a collectible balance without proper disclosure to the IRS or the borrower . 

This issue raises both tax and consumer protection concerns and further supports my request for the immediate removal of this account. 

The continued reporting of this debt as active is false, misleading, and unlawful under federal credit reporting standards. Furthermore, this improper reporting is damaging my credit score and directly interfering with my ability to secure essential business financing. 

Given the urgent financial nature of this situation, I request that the charge-off account be removed immediately from all of my credit reports. The creditor has failed to provide the legal documentation ( such as a 1099-C or valid assignment of debt ) required to support the continuation of this debt on my record. 

I urge the CFPB to investigate this matter promptly and facilitate the immediate removal of this account from my credit report. If the creditor can not provide proper documentation, the debt must be removed without delay. 

I expect the creditor to take immediate corrective action, as the continued reporting of this account is harming my ability to access essential financial resources for my business. 

Thank you for your immediate attention to this critical issue.

Company response to consumer: Closed with explanation