What are the tax consequences of a Debt Settlement?
Your creditors will report any cancelled or settled debts exceeding $600 to the IRS, and you will be required to report this as income on your annual tax return. The IRS does permit you to write off any “income” from canceled debts up tothe amount which was discharged…The Money Mastered recommends that you consult with your tax advisor for advice in how this will apply to your situation.
