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One of the credit card companies has offered us a plan that would enable us to pay off the debt by reducing the payoff to 40% of the total actual debt. We were considering doing this, but then were told that on our credit report, it would show as being paid but would have some sort of notation indicating the rest would be considered taxable income with the IRS. I understand that whether we opt to pay the settlement amount or not, the unpaid debt is clearly reflected on the report and none looks better than the other. Which is the better way to go?
One of the credit card companies has offered us a plan that would enable us to pay off the debt by reducing the payoff to 40% of the total actual debt. We were considering doing this, but then were told that on our credit report, it would show as being paid but would have some sort of notation indicating the rest would be considered taxable income with the IRS. I understand that whether we opt to pay the settlement amount or not, the unpaid debt is clearly reflected on the report and none looks better than the other. Which is the better way to go?