This question pertains to credit card debt settlement negotiations. On web sites similar to this one I have seen various claims that you can get a creditor to agree to not claim the remainder of a settled debt as a loss to the IRS. I have settled a few debts and I always lose this part of the debate. I start off debating this as part of the negotiation with the debt collector. I get nowhere with them and then get transferred to a ‘supervisor’. I get nowhere with the supervisor and eventually end up talking to a lawyer. The lawyers always tell me that they are legally obligated to file the remainder of the debt as a loss. Is this true? Or are they just telling me this because they receive a significant tax write off for the forgiven portion of the debt?
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Hi jabroni5329
As far as lawyer is concerned,he tries to get maximum benefit by making sure that other party is really worried about the verdict and thus can come forward for out of court settlement.
This is their methodology so I won't say thtat they may not come after you for the forgiven amount just for the sake of saving a tax because it is not the case that they receive 100% tax rebate in this case.
But in my opinion most of the credit card companies do make provision for the non performing assets before disbursing any loan for the fiscal year.
keep in touch........ :arrow: :arrow: :arrow:
The lawyer is telling you the truth. they must report the loss. the weird part is that they often forget to. I have never received a 1099, even from discover that threatened me with one saying if I forced the negotiation any lower I would have tax problems.
So stop bringing it up! See how many you receive at tax time. you are still saving a lot of money, even if you have to pay taxes on it
The lawyers always tell me that they are legally obligated to file the remainder of the debt as a loss. Is this true
lawyers are making their duty to file the charge sheet but it won't help us because they are bound to do their business.
?
ok, just try not talking about it