Is this wise?

[Mklangelo]

I have debt in Federal and State taxes, two Perkins Loans which the debt has been purchased by collection agencies and some msc unsecured debt.


Would it be wise to file a 13 on the taxes and for the rest, hire one of those non-profit debt consolidation agencies to negotiate the rest of the amount owed to it's lowest and pay that seperately? I'm thinking things will go much faster that way.


Thanks in advance

[JusticeForAll]

I don't think you can do that.

When you file BK, you don't get to pick and chose which debts are included, by law you have to include them all.

You may be able to pay some of them outside the plan (but that is usually for secured debt).

Further, if a creditor 'forgives' debt, it becomes taxable income to you (you'll get a 1099 from them if it's more than $600), but if you file a Chapter 13, make your payments and at the end the balance is discharged, it will not be considered taxable income.

If you were going to do it that way, it would be best to do the debt negotiation first and wait like a year before filing.

Consult an attorney before you do anything!

I have debt in Federal and State taxes, two Perkins Loans which the debt has been purchased by collection agencies and some msc unsecured debt.


Would it be wise to file a 13 on the taxes and for the rest, hire one of those non-profit debt consolidation agencies to negotiate the rest of the amount owed to it's lowest and pay that seperately? I'm thinking things will go much faster that way.


Thanks in advance

[miss puff]

Further, if a creditor 'forgives' debt, it becomes taxable income to you (you'll get a 1099 from them if it's more than $600),

Hey JFA. I was just curious, does this mean "discharged" debt? So when we do our taxes this year we will get 1099's from all our creditors that we discharged in bankruptcy? We are a ch 7, no asset.
Thanks, Miss P

[JusticeForAll]

Hi Miss Puff!

No discharged debt is not forgiven debt. There will be no tax consequences to you in your Chapter 7.

That is only if you negotiate with the creditor yourself and settle the debt for less than what's owed.

Hey JFA. I was just curious, does this mean "discharged" debt? So when we do our taxes this year we will get 1099's from all our creditors that we discharged in bankruptcy? We are a ch 7, no asset.
Thanks, Miss P

[miss puff]

Hi Miss Puff!

No discharged debt is not forgiven debt. There will be no tax consequences to you in your Chapter 7.

That is only if you negotiate with the creditor yourself and settle the debt for less than what's owed.

AAAHHHA! Thank you for clarifying that, I was thinking we were going to owe taxes big time. I can breathe a bit easier now, lol.