I think everone knows by now that if you settle a debt and the forgiven amount is $600 or more, the creditor will run a 1099 and you have to include that amount on your tax return under miscellaneous income, and pay taxes on it.
BUT - assume you have 5 credit cards, and each of them has a balance of $1000. You negotiate a settlement/forgivness with each credit card outfit for 50% or $500.
Altogether $2500 would be settled/forgiven - but none of the creditors will issue a 1099 because none of the settlements was $600 or over.
BUT - assume you have 5 credit cards, and each of them has a balance of $1000. You negotiate a settlement/forgivness with each credit card outfit for 50% or $500.
Altogether $2500 would be settled/forgiven - but none of the creditors will issue a 1099 because none of the settlements was $600 or over.