Ando, this is a numbers issue.
If you sell the house for $170k and take the proceeds and negotiate with each creditor for 30% of outstanding debt (or less) you will have 1099 income to deal with for the forgiven debt. However, your tax bracket is not going to be 70%...so you will have left over funds. Work out what your expenses will be assuming you have to pay the tax on X% saved. It still is better then giving it all to the Trustee!
If you sell the house for $170k and take the proceeds and negotiate with each creditor for 30% of outstanding debt (or less) you will have 1099 income to deal with for the forgiven debt. However, your tax bracket is not going to be 70%...so you will have left over funds. Work out what your expenses will be assuming you have to pay the tax on X% saved. It still is better then giving it all to the Trustee!
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