Tax Implications of Debt Settlement

If a debt is settled, would the amount of savings be considered taxable income?

I am not a tax professional however, my understanding is that the entire amount you save as a result of the settlement would be considered taxable. Be sure to consult with your tax preparer before entering into a program so you fully understand the tax implications of debt settlement.

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Q & A

i have very good credit. my creditors are chase, first national, and discover. i haven’t missed any payments. i just received a settlement from an injury and i don’t know how im going to make a living in the future so i need to be as frugal with this money as i can. im gravitating towards debt settlement savings because i would like to pay all the debt at once saving as much or more then half the money i owe. plus eliminating the 500.00 a month i pay my creditors would help in making my injury money last as long as possible. giving me time to go to school. im just very concerned about the affect it will have on my credit score.

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I just signed up with Campos Chartered Law firm for debt settlement. Are they reputable? because I wanted consolidation and they told me it was consolidation of debt only to find out now it’s settlement.

The use of the word “consolidation” of debt can be very confusing…

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Please help me, do debt relief programs really work? That is only paying back less than what you actually owe.

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