Debt negotiation causes you tax problems

Dec 27

Bankruptcy GuideUncategorized 1 Comment

How about Discover? I have a client who is being sued for approximately $8000 ($5000 original balance + $3000 fees). They are refusing to budge and has offered $5000. We have offered $3000. Really… how is knocking off their RIDICULOUS compounded interest rate of almost 30% plus fees a “negotiation.” You really have to wait until the original creditor writes it off and sends it to collection to get a better deal than 20%, or better yet a debt buyer. The biggest problem I see with negotiations is when the debt is in the
5 digit range. Whatever is written off is taxable as income; tax which they can’t pay and cannot discharge for a long time.

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One Comment (+add yours?)

  1. winning formula
    Dec 28, 2009 @ 00:07:28

    I owe money to credit cards and collection agencies, if I start a mutual fund or ira could they take that m?

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