Just Wanted To Ask: Is It Bad To Settle A Debt ?
Posted on October 29, 2009 at 10:48 pm
hi everyone, just wanted to ask: Is it bad to settle a debt ? i am up to my eyeballs in debt and i am wondering if this can be done instead of filing for bankruptcy
Posted on October 30, 2009 at 1:20 am
Is it bad to settle a debt? I don't think so. Settling your debt allows you to pay for an amount that is less that what you actually owe, and the remainder of the amount will be forgiven. You're also given an opportunity to complete the settlement amount for a 12-35 month period.
Posted on October 30, 2009 at 2:09 am
Is it bad to settle a debt?
Well, not as bad as filing for bankruptcy, that's for sure.
The downside of settling debt is that you have to report the forgiven amount to the IRS as taxable income.
Posted on October 30, 2009 at 2:27 am
Just to add to what Karess said--if you are to settle a debt and the forgiven amount is $600 or over, the creditor must send you and the IRS copes of Form 1099-C at the end of the tax year. On that form it is necessary for the debtor to report it as taxable income.
Posted on October 30, 2009 at 2:28 am
Is it bad to settle a debt if you have very low income?
Posted on October 30, 2009 at 3:02 am
Is it bad to settle a debt? I think so, in terms of its effects on your credit report.