Originally posted by Beeheery
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hi everyone,
i have had someone offer to give me money (no need to pay them back) to settle my debts vs filing bk. i know that filing bk is considered a last resort and stays on our credit for 10 years, but does settling make it any better at all? if there is going to be just as much of a stain on my report as there would be with bk, i am going to decline. i know if i dont file, i wont ever have to mark on a job or rent application "yes" to filing before but if i settle and my score is so crappy, does it even matter? im at the point right now where unless there is a significant difference between settling or filing, im just going to file. any help would be appreciated.
i have had someone offer to give me money (no need to pay them back) to settle my debts vs filing bk. i know that filing bk is considered a last resort and stays on our credit for 10 years, but does settling make it any better at all? if there is going to be just as much of a stain on my report as there would be with bk, i am going to decline. i know if i dont file, i wont ever have to mark on a job or rent application "yes" to filing before but if i settle and my score is so crappy, does it even matter? im at the point right now where unless there is a significant difference between settling or filing, im just going to file. any help would be appreciated.
The difference between settlement and a BK is a 1099-C. You will get a 1099-C for any debt that you have settled and you will owe taxes on the forgiven part of the debt. If you are talking about a small amount of debt, then certainly consider a 1099-C. But if your debt is considerable (I believe HHM posted a 'guideline' in another thread of somthing like 40% or more of gross income for your unsecured debt) then do a BK. You do not owe taxes on debt that has been discharged in BK.
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