25% fee of EACH account, are you kidding me!?!?

I settled several accounts in 2010 and I received 1099s for all of them. You could try a debt management plan (DMP) where you pay one lump sum and they pay your creditors. The one I was previously in (before settlement) only charged me $35 a month. They negotiated the lower interest rates with my creditors, set up the payments, and all I did was make sure I made the monthly payment. They did the rest. Unfortunately, I lost my job, got sick and could no longer stay in the DMP, then I turned to settling my credit cards myself.

thanks for the info aubrey, that is what I suspected and I have way too much debt to turn it into a tax liability that HAS to be paid aside from me dying!

How much were your taxes if you don't mind me asking?


I can't imagine what I would be paying considering I have no deductions and am in about a 30% tax bracket.

I'm strongly considering a DMP, just trying to decide who to go with. Which program were you in?

This consolidated credit counseling I mentioned in my other post, is 40/month with a $40 set up fee. Consumer credit was 30/month. I think that's pretty reasonable.

I didn't have to pay any taxes on the forgiven amounts because I was insolvent at the time I did the settlements. There's a special form you have to attach to your tax return. If your liabilities outweigh your assets, then you're insolvent. I kept a spreadsheet and also attached it to my tax return. Also, it's reported in the year you did the settlement, so if you settle next year, you wouldn't report it until you file your 2012 return.

When I did my DMP I went through Take Charge America. I liked them because they are a non-profit and their customer service is outstanding. You can follow everything on your website account. They were easy to work with and very understanding. If you are considering DMP, I would go with a non-profit.