{"id":765,"date":"2010-02-08T18:29:24","date_gmt":"2010-02-08T18:29:24","guid":{"rendered":"https:\/\/nybankruptcy.net\/main\/?p=765"},"modified":"2018-11-28T08:49:21","modified_gmt":"2018-11-28T08:49:21","slug":"1099-c-and-forgiveness-of-debt-another-reason-to-be-wary-of-debt-settlement-companies","status":"publish","type":"post","link":"https:\/\/nybankruptcy.net\/main\/1099-c-and-forgiveness-of-debt-another-reason-to-be-wary-of-debt-settlement-companies\/","title":{"rendered":"1099-C and Forgiveness of Debt: Another reason to be wary of debt settlement companies"},"content":{"rendered":"

\"\"<\/a>I’ve previously warned against working with debt settlement companies<\/a> on the basis that many of them are scams and just take advantage of people.<\/p>\n

However, here’s one more reason to be wary of debt settlement companies:\u00a0 1099-C<\/strong>…. the tax document you receive signifying income when a debt is forgiven.<\/p>\n

If you negotiate a settlement so that part or all of a debt is forgiven, the loan you originally received is no longer a loan in the eyes of the IRS.\u00a0 It’s income!\u00a0 And you have to pay taxes on it.<\/p>\n

A 1099-C is the form that a creditor issues to you that indicates the amount of debt that was forgiven for any debts greater than $600 that are forgiven.\u00a0 When you do your taxes, any 1099-C amounts are counted towards your gross income which means that you may incur significant tax liability, especially if you negotiated away a lot of debt.\u00a0 This includes reduced credit card debt as well as mortgage debt canceled in connection with a short sale.<\/p>\n

As a result, it’s extremely important to plan ahead<\/span> if you intend to negotiate any debts away.\u00a0 Because there are a few ways to avoid 1099-C income.<\/p>\n

    \n
  1. File for bankruptcy before the debts are canceled or reduced.<\/strong> Any debts forgiven during the course of a bankruptcy case are not considered income and you will not receive a 1099-C.<\/li>\n
  2. Be and remain insolvent for the period while the debts are forgiven.<\/strong> If you have fewer assets than liabilities at the time, then the IRS\u00a0 does not consider your canceled debts to be income.<\/li>\n
  3. Mortgage Debt Relief Act of 2007<\/strong><\/a>.\u00a0 Congress was nice enough to pass a law declaring that any mortgage debt forgiven to homeowners of residential real estate between 2007 and 2012 is not considered income and does not require a 1099c.<\/li>\n<\/ol>\n

    If you’re a New York resident dealing with financial problems and contemplating bankruptcy, don’t despair.\u00a0 There are many options and tools to help you deal with your debt.<\/p>\n

    However, the issues involved can be a little tricky.\u00a0 And it’s important to have a good New York bankruptcy lawyer helping you.<\/p>\n

    For more information, please contact me<\/a> for a free initial consultation<\/strong> and I\u2019ll share the benefit of my 30 years of New York bankruptcy experience to help you navigate the process and get the full benefit of the bankruptcy laws.<\/p>\n

    Contact Bruce Weiner, Esq.<\/a><\/h2>\n

    EMAIL Bruce Weiner<\/a><\/strong>
    \nPhone<\/strong>
    \n(718) 855-6840 (Local)
    \n(866) 402-8476 (Toll Free)
    \nFax<\/strong> (718) 625-1966<\/p>\n

    Go to fair debt collection practices act<\/a>\u00a0<\/strong><\/em>t<\/em>o learn more about Rosenberg Musso & Weiner LLP<\/strong><\/a> and\/or to set up a free consultation.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    I’ve previously warned against working with debt settlement companies on the basis that many of them are scams and just take advantage of people. However, here’s one more reason to be wary of debt settlement companies:\u00a0 1099-C…. the tax document you receive signifying income when a debt is forgiven. If you negotiate a settlement so …<\/p>\n

    1099-C and Forgiveness of Debt: Another reason to be wary of debt settlement companies<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-global-header-display":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":""},"categories":[16,7,14,27],"tags":[133,2,21,30,3,134,60,48,32,135,15,9,51,52,62,28,35,55],"acf":[],"yoast_head":"\nAnother reason to be wary of debt settlement companies<\/title>\n<meta name=\"description\" content=\"I've previously warned against working with debt settlement companies on the basis that many of them are scams and just take advantage of people. 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