If a creditor writes off a bad debt and ceases collection and the amount of the debt is for more than $600.00, there is an IRS requirement that requires the creditor to report to the IRS the amount of the write-off on Form 1099-C which is the form that is used to report income.f a creditor writes off a bad debt and ceases collection and the amount of the debt is for more than $600.00, there is an IRS requirement that requires the creditor to report to the IRS the amount of the write-off on Form 1099-C which is the form that is used to report income.