Internet's first get-out-of-debt community - 134,000 members

Posted: Tue Nov 21, 2006 8:08 am Subject: My settlement company update.

I am so thrilled. My settlement company is
settling my first debt for me. It is a 4600.00 debt
with Sears and they settled for 1700.00. That is less than 40% and that is what they promised they could do is settle my accts for less than 50%.

I am so happy. I have another acct with Sears for about the same amount and I am sure they will settle it for the same amount. I am almost through with paying a portin of my monthly payment to my company and then the full payment will go into my reserves.

I hope the rest of the accts come to fold quickly.

Just wanted to share my good news!!!!

Mishele, how is your company coming along for you?

Posted: Tue Nov 21, 2006 9:25 am Subject: settlement

Congradulations. Just think one day you will have all of this behind you and can move on to brighter things. KYSIDE38 Very Happy

Posted: Tue Nov 21, 2006 9:30 am Subject:

That is great news! Isn't it a great feeling to finally be getting somewhere with all of this? And I'm sure you're right. Since both accounts are with Sears, they'll probably settle for the same with the second account. Best wishes to you. And have a Happy Thanksgiving!

Posted: Tue Nov 21, 2006 9:34 am Subject:

That is great news. Just be prepared. You will have to pay income tax on the $2900.00 that was forgiven.
Debts that are partially canceled or forgiven (other than in bankruptcy) must be reported as taxable income if the forgiven portion is greater than $600.
If you are insolvent, you owe more than the total amount of your assets, you may not have to report all or a portion of your forgiven debt, so you should contact your tax advisor before negotiating any settlement of your debts to understand the tax consequences.

Posted: Tue Nov 21, 2006 11:04 am Subject:

The creditor will send you the 1099 C form. You will have to fill it mentioning the forgiven debt and it will be submitted to the IRS for your income tax calculation.

Congrats! You have got a big chunk of your debt settled. Way to go!

Posted: Tue Nov 21, 2006 11:06 am Subject:

Thanks for that info. I wasn't aware you needed to pay tax on the forgiven debt. Good to know.

Posted: Tue Nov 21, 2006 12:51 pm Subject:

Yep. Anything over 600.00. I found that out the hard way a few years back when Providian settled a credit card and wrote off about 1700.00. I didn't report it (Never saw one of those 1099c thingies) and 2 years later got hit with interest and penalties from the IRS.

Linda Lou · Posted: Tue Nov 21, 2006 8:14 pm Subject: Already done that.

I already checked into the tax situation. If you are insolvent at time of debt settlement and have no assets, then you fill out a form and send in verificaiton in with your income taxes and you don't have to pay a penny on the forgiven amount.

We have nothing to our name, therefore we will not have to pay anything on the forgiven amount. The settlement will not be complete until 1/2007, therefore I don't have to claim insolvent until 2007 tax return anyway!

thanks everyone for the congrats.

Posted: Tue Nov 21, 2006 8:24 pm Subject:

I'm glad you shared the info about paying taxes on forgiven debts, b/c I wasn't aware of it Very Happy

Posted: Tue Nov 21, 2006 8:27 pm Subject:

Congratulations Linder!!!! Keep up the good work!

Posted: Tue Nov 21, 2006 9:33 pm Subject:

Your welcome brownsugar. That's the whole point of this forum. Sharing Strength hope and experience. Just didn't want anyone to get blind sided like I was. Hope 2007 is a prosperous and healthy year for you Linder Lou!

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My settlement company update.

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