If you negociate a settlement for an amount that i

If you negociate a settlement for an amount that is less than the full amount owed and receive a paid in full letter do you still owe taxes on the amount of the forgiven debt?

3 Answers

Certainly, youwill still owe taxes as any amount that is forgiven by the financial institutions are subject to tax by the IRS. Therefore, even though you recive a paid in full letter, you have to pay tax on that forgiven amount.


They can send you a 1099 for any settlement over $600.  Yes, you could end up owing taxes on it.

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They can send you a 1099 for any settlement over $600.  Yes, you could end up owing taxes on it.

How to Deal with Illegal Loans..OhioGal's Primer
http://www.debtconsolidationcare.com/paydayloan/dealingwith-illegallenders.html
PDL's are ILLEGAL in the following states...
AR, AZ, CT, GA, ME, MD, MA, NJ, NY, NC, PA, VT AND DC
OH AND NH have very restrictive low cost interest rate laws.

SOL for all states
http://www.debtconsolidationcare.com/statute-of-limitation.html

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