Canceled debt usually must be reported to IRS as income | The Columbus Dispatch
#1 Mar 27, 2011
Don't let this article scare you!
If you, as a consumer, find yourself unable to pay your credit card debts I strongly urge you to consider debt settlement.
I am NOT talking about those fly-by-nigh hucksters and scam artists that pollute the airways with their ridiculous ads.
Most consumers can, at the proper time, negotiate very favorable settlements by negotiating directly with their unsecured creditors (credit cards, store cards).(HINT: you will not be able to settle your debts until you are at least 90 days behind.)
What this article fails to mention is, people get into debt according to their means. That is, if you make 50k a year, it is likely that your level of debt reflects that. So, even if you take a hit on taxes, it's not going to be a huge hit.
Finally, the tax hit can be worth the pain if you would otherwise have been faced with bankruptcy.
PLEASE do not let an attorney talk you into bankruptcy if your debt is mostly unsecured debt! I cannot overemphasize this!
No matter what any attorney tells you, bankruptcy follows you for life. You will ALWYAS pay higher interest rates, be considered a high-risk borrower AND it can knock you out of contention for jobs.
Plus, most consumers will be placed in a "reorganization" program that does not discharge their debts. Translation: you still have to pay back the money, only now you also have a bankruptcy on your record.
My qualifications to make these comments: I am a writer, who was faced with a debt burden that got out of hand, after just a couple late payments. I'm talking interest rates of 30% and higher.(The circumstances that led to this are a long story, but were NOT the results of living beyond my means. My wife and I got screwed by an incompetent homebuilder.)
After the minimum payments increased by four, six or eight-fold, I/we could not pay. Period. After doing a lot of research, I negotiated settlements directly with the unsecured creditors, and saved nearly $30,000. I have since written a book about my experiences, in the hopes of saving people from bankruptcy -- which I have done -- and also keeping people from wasting their money with expensive, ineffective third-party debt settlement crooks.
I hope someone finds this information useful. Again, don't let this superficial, short article that is lacking in detail fool you.
#2 Mar 27, 2011
I misspelled "always." Sorry!
#3 Mar 26, 2014
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