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Dear Terry,
I leased a 2007 auto about 20 months ago. I lost my job about six months into the lease, and between my house, car and
credit cards, I got three months behind on everything before going back to work.
I got caught up on the house, but once I was 90 days behind on the car, they wanted the vehicle back. Well,
my credit was so bad I couldn't get another car, so I asked them to accept a three-month catch-up payment once I had the
money. They said I missed being able to do that by two days. They told me someone would come get the car.
That was about a year ago. The other day, I got a 1099 tax form in the mail from the finance company for
the full value of the car to claim on my taxes. What in the world is that?
I got a couple calls in recent months, but they never really tried to come get the car. It is on my credit
as a charge back about a year ago for the full value. What are they trying to do here?
Do I have to claim this $30,000 as income for the car? I've been waiting for them to come get it but they
never did and I had no other car so I wasn't going to hand it over until I had to.
I was very upset they wouldn't take my money to catch up. Have you heard of anything like this?
-- Tom
Dear Tom,
The finance company, for whatever reason, decided to wash its hands of the car and leave it with you -- or, the company may
contend, it made an effort to get it and was unsuccessful.
That means you received "income" in the form of a $30,000 car for which you didn't pay. The finance company
writes off the car as a bad debt on its taxes and you have to claim it on your income taxes.
You need to contact an accountant to see what your options are. One area worth exploring is whether the
finance company released its lien on the vehicle. If it didn't, then it's not really your property to dispose of as you see fit.
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