• Report: #269569

Complaint Review: MRC Receivables, Midland Credit

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  • Submitted: Wednesday, August 22, 2007
  • Last Posting: Wednesday, August 22, 2007
  • Reported By: — Somewhere Other
MRC Receivables, Midland Credit
8875 Aero Drive Suite 200 San Diego California 92123 U.S.A.

MRC Receivables, Midland Credit PAYOFF SETTLEMENT TURNS INTO IRS TAXES AND PENATIES RIPOFF San Diego California


1Author 2Consumer 0Employee/Owner

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Finally in 2004 after loosing my job and with high consumer debt, I settled with my creditors by refinancing my home.

One of the companies I owed was Midland Credit. My total debt was $8284.15. Through a local attorney, Midland Credit settled for $5900.00 payment in full.

Now after two years, I have received a notice from the IRS stating that MRC Receivables filed a "Cancellation of Debt" for the exact amount that Midland Credit chose to remove from my account and that I owe taxes and interest for this cancellation of debt.

How is this legal and furthermore how do I defend against the IRS since I must prove that MRC Receivables is in the wrong rather than them proving their right to file the cancelation of debt?

Pissed Off
Somewhere
U.S.A.

This report was posted on Ripoff Report on 8/22/2007 6:24:34 PM and is a permanent record located here: http://www.ripoffreport.com/internal-revenue-service/mrc-receivables-midl/mrc-receivables-midland-credi-3367m.htm.

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1Author 2Consumer 0Employee/Owner
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#1 Consumer Comment

Sorry.....but this is perfectly legal....

AUTHOR: John - Louisville (U.S.A.)

SUBMITTED: Wednesday, August 22, 2007

The IRS considers forgiven debt just as if someone gave you a cash gift for the same amount. Yes...this doesn't make sense and it's not fair...but it's the law.

I am surprised that the attorney who helped you with the settlement offer wasn't aware of this basic piece of information.
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#2 Consumer Comment

They are allowed to do that.

AUTHOR: Nikki - Coconut Creek (U.S.A.)

SUBMITTED: Wednesday, August 22, 2007

Anytime you settle a debt, you must pay taxes on the amount forgiven by the collector. The IRS treats this as income to you (or maybe interest income).

Personally, I don't think it's right. You can't deduct the interest you pay on most of your debts, so how can they make you pay for interest "refunded" to you? By the time it goes to collections, it is usually a portion of the interest that you're forgiven.
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