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Negot Lower Settlement on Credit Card Debt

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dancinfool

Junior Member
What is the name of your state? Georgia!!

I negotiated a lower settlement on a credit card debt to get out of it. I was then told that when you do this you would receive some paperwork that had to be filed with your taxes. I just needed to get out of the debt, and so did not care at the time whether it would have any adverse effect when I filed taxes. Is this going to affect the amount of money that I will get back when I file my tax return because I negotiated a lower settlement amount?? Thx if anyone can help.
 


tranquility

Senior Member
Yes, it does affect your taxes. The difference between what you owed and what you paid to settle is called forgiveness of debt. It is income. You spent it and gained benefit from it and never paid taxes on it--until today. You should receive a 1099-C for cancellation of indebtedness.
 

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