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Settling can be really bad for you

May 18, 2013
By Mary Hunt , Times-Republican

Dear Mary: What do you think about settling a debt with a creditor? I recently agreed to one for a credit card, and the bank did notify me that the forgiven debt will be considered income by the IRS. I will have to file taxes on this amount using form 1099C. The bank will report the zero balance to the credit agencies, my credit report will read "settled, zero balance" and the account closed. Was this a bad move on my part? -- Cindy, California

 
 

 

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