So...........

[BDG]

Here looks like another nasty surprise I just found, maybe someone out here might have some input on this.........

Forgiveness of Debt for Tax Purposes.

From what I am reading. I go through my chap 13. Make my payments on time through my 3 year plan. After 3 years, yippee I am done, everything is discharged. Then wham I have to report the amount wrote off as taxable income!! Cripes, it would put me back to square 1! Is it possible to ever get out of this mess?????

[Flamingo]

That does not apply to you since you filed bankruptcy. That is only for forgiven debt when debt is "forgiven" by a creditor via debt negotiation and you receive a 1099 in the mail from the creditor for the amount forgiven in the tax year it is forgiven.

[magyar123]

Who told you that debts discharged in bankruptcy become taxable income???

[athomas]

Thanks for answering...I read that question and started freaking out! I have only 26.5 bi-weekly payments until we're done, and I got scared thinking about that possibility! Whew!

[BDG]

No one told me that. It was just something that I read. Perhaps I misunderstood it. I am kind of a worst case scenario planning type person..... I truly hope that you are correct!!!

[woeisme]

You have to pay taxes on it UNLESS YOU ARE INSOLVENT. By declaring BK, you've taken the step necessary to prove insolvency by IRS standards, so taxes on forgiven debt do not apply. Merry Christmas and stop worrying about it! :-)

[MOMof3]

I was worried about this too since we included back taxes in our plan--but our lawyer assured us we wouldn't have to report anything to IRS due to bankrupcty--whew--we already owe them enough!