Started out with Hope Financial USA but soon found none of the creditors were going to work with them, filing chapter 7 next week instead.. When we were with Hope, my wife and I negotiated a lump sum payoff to kill off one of the debts (Hope Financial did nothing to help). Today, I received a 1099 for the amount that was canceled (19,000 out of a 28,000 debt, we paid them 9k) Since we are now going to file chapter 7, is there anything we can do to eliminate this tax burden? If we included the creditor and did not settle with them, we would not have this right now...
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sorry to see that. I think you may have no option other than paying tax on 19K. Talk to your layer and see what he suggests. Let us all know. -
I've read if you are insolvent at the time you reach a settlement with a creditor, then you can offset the 1099 income up to the total amount by which you were insolvent. I'd talk to your lawyer or a good tax accountant and see if that is the case.Comment
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