Are there any tax implications associated with enrolling in a credit card debt settlement program?
Yes, it is possible that you may be taxed on the savings related to our settling of your credit card debt. However, for clients who are technically insolvent, then filing IRS form 982 may exempt you from paying taxes on the savings from settling. The IRS defines insolvency as financial state in which someone owes more (liabilities) than the value of their assets. Many of our clients fall under this category, but you should consult a tax attorney for advice regarding your situation. Secondly, even if you are taxed on the savings from debt settlement, you may still save a lot of money. Remember, you are only taxed on a percentage of the savings. That is, if our debt settlement program saved you $2000 off one of your credit cards and you had to pay 25 percent of that amount to the IRS ($500), then you still saved approximately $1500. Assuming the debt was $4,000 and our fee was $600, the total savings is still $900. Unfortunately, since we are not tax specialists, however, we cannot offer
