1099-C received years later - what are my options for a debt written off in 2008?

I hit a serious rough patch back in 2007-2008 and couldn't keep up with my car loan from Chrysler Financial. I tried working something out with them, but after a couple conversations, they basically told me "don't bother" because they had already written off the debt. At that point, I was completely broke - no assets, underwater on everything. Fast forward to this January - I just received a 1099-C from them for tax year 2025, even though this all went down around 2008. From what I've researched, they were supposed to send the 1099-C when they actually wrote off the debt or stopped trying to collect, which was definitely back in 2008! I'm in a better financial situation now than I was back then, but I absolutely cannot afford this tax hit. The amount on the 1099-C is $14,300 which would create a huge tax liability for me. What options do I have at this point? Who can I talk to about this issue? Is there a specific type of tax professional who handles these delayed 1099-C situations? I'm totally lost and worried about owing taxes on a debt that was written off 17 years ago!

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18 comments

Landon Flounder

•8M

This is actually a fairly common issue, and you do have some options! When a lender cancels a debt, they're supposed to send a 1099-C for that tax year - not years later. First, contact Chrysler Financial (or whoever holds their old accounts now) and ask for documentation showing when they actually wrote off the debt. If they confirm it was back in 2008 like you believe, request that they issue a corrected 1099-C for the appropriate tax year. Next, if they won't cooperate, you can file IRS Form 8082 (Notice of Inconsistent Treatment) with your tax return explaining why you're not including this income. Include any documentation you have showing the debt was actually discharged in 2008. Also, even if you weren't insolvent now, what matters is your insolvency at the time the debt was canceled. If you were insolvent back in 2008 (which it sounds like you were), you can exclude some or all of this forgiven debt from your income using Form 982.

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Landon Flounder

•8M

You wouldn't necessarily need to amend your 2008 return. The statute of limitations for the IRS to assess additional tax is generally 3 years after filing, so they couldn't come after you now for a 2008 issue. The key is documenting why you shouldn't have to include this income in 2025. As for documentation, even if Chrysler Financial no longer exists as the same entity, their accounts and records would have been transferred to another company. You can start by contacting whoever sent you the 1099-C and asking for their records on when collection activity actually stopped. Bank statements from that period showing when payments stopped being attempted might also help your case.

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Ally Tailer

•8M

I went through something really similar with an old Capital One debt. After trying to fix it myself for weeks and getting nowhere, I found this AI tool called taxr.ai (https://taxr.ai) that helped me figure out exactly what forms to file and what documentation I needed. It analyzed my situation and showed me that I qualified for the insolvency exclusion even though the 1099-C came years late. The tool basically walked me through documenting my financial situation from when the debt was actually forgiven vs when they sent the form. Saved me from having to pay taxes on about $8,000 of forgiven debt!

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Ally Tailer

•8M

The tool doesn't require you to upload your actual financial documents - it asks you series of questions about your financial situation at the time the debt was forgiven (assets, liabilities, etc.) and then calculates whether you were insolvent. You can estimate if you don't have exact numbers, as long as you're reasonable. I was skeptical too at first, but it actually references the specific IRS code sections and publications while walking you through everything. It's basically using the same rules and calculations a tax pro would use, just making it way easier to understand. There is a cost, but it was way less than what I would have paid a tax attorney for the same advice.

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Aliyah Debovski

•8M

Just wanted to update about my experience with taxr.ai after seeing it mentioned here. I was dealing with TWO old 1099-Cs that showed up this year (one from 2011 and one from 2013) and was freaking out about the tax bill. The tool actually found documentation requirements I wouldn't have known about - like how to prove when collection activity stopped. It helped me draft a letter to the IRS explaining why the 1099-Cs were issued in the wrong year. It also calculated my insolvency at the time and showed I was underwater by about $22k when these debts were actually forgiven, which meant I qualified for full exclusion. Just finished my taxes and didn't have to pay a dime on the "income" from those 1099-Cs. Worth every penny for the peace of mind alone!

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Cass Green

•8M

If you're getting nowhere with Chrysler or whoever sent the 1099-C, you should try contacting the IRS directly. But good luck with that... I've been trying to get through to a human at the IRS for weeks about my own 1099-C issue. After spending hours on hold and getting disconnected 4 times, I finally used Claimyr (https://claimyr.com) to get me through to an actual IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The service basically navigates the phone tree and waits on hold for you, then calls you when an actual human picks up. The IRS agent confirmed that the creditor should have issued the 1099-C in the year they actually wrote off the debt, not years later. They recommended I file Form 8082 along with my explanation and any evidence I had about when the debt was actually canceled.

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Cass Green

•8M

It's actually pretty simple - you enter your phone number and what IRS department you need to reach, and their system calls the IRS and navigates through all the prompts automatically. It basically waits on hold for you (sometimes for hours), and when a human finally answers, it calls your phone and connects you directly. Nothing magical about it - they're just using technology to handle the most frustrating part (waiting on hold forever). I was skeptical too until I tried it. It took about 2.5 hours total, but I was able to do other things instead of sitting with a phone to my ear the whole time. And yes, this time of year is brutal for getting through, which is exactly why I needed help.

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Madison Tipne

•8M

I have to eat my words about Claimyr. After my skeptical comment, I was desperate enough to try it for my own tax issue (not a 1099-C, but needed to verify some information before filing). I've been trying to reach the IRS for THREE WEEKS with no luck. Used the Claimyr service yesterday, and while it still took almost 2 hours of wait time, I got connected to an actual IRS representative who helped solve my problem in about 10 minutes. For the original poster - definitely worth using this to ask the IRS directly about your 1099-C situation. The agent I spoke with was surprisingly knowledgeable and explained that creditors frequently mess up the timing of these forms. She said they see this issue all the time and gave me specific guidance on what documentation they look for when reviewing these cases.

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Holly Lascelles

•8M

Former bank employee here. In my experience, what often happens is that banks "write off" debts internally but keep them on secondary collection systems or sell them to debt buyers. Then years later when they finally give up completely or hit some internal deadline, they issue the 1099-C. Document everything! Request your credit reports from 2008-2009 which might show when the account was charged off. Also, pull your IRS wage and income transcripts for those years to make sure they didn't already issue a 1099-C back then that maybe you missed. If you were truly insolvent in 2008 (which means your total debts exceeded your total assets), you probably wouldn't have owed tax even if they had properly issued the 1099-C then. Form 982 is your friend!

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Holly Lascelles

•8M

Those bank statements from 2008 showing when they stopped attempting withdrawals would be EXCELLENT evidence! Keep those safe. And you don't need to file Form 982 for 2008 now - that's long past the statute of limitations. What you want to do is file Form 8082 with your current return explaining the inconsistency - that this debt was actually discharged in 2008 based on your documentation, not 2025. Then if you were insolvent at the time (in 2008), you can include Form 982 with your CURRENT return to show that even if the income was recognizable now (which it isn't), you would have qualified for the insolvency exclusion anyway. It's like a double layer of protection.

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Malia Ponder

•8M

Chrysler Financial doesn't even exist anymore! They went bankrupt in 2009 and their assets were acquired by TD Auto Finance. So whoever sent you that 1099-C is probably some debt buyer who got your old account in a portfolio purchase. I'd definitely dispute this. I work in collections (yeah I know, everyone's favorite person) and we are required to issue 1099-Cs for the year in which we make the decision to stop collection activity, not years later when some database gets updated.

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