What’s the difference between going through Debt Settlement and going through Debt Consolidation?
A Debt Consolidation or consumer credit counseling agency will suggest a plan in which you pay off your debt through their service usually at the full amount. Many act as collection agencies for the creditors and a plan through a creditor-funded agency can take five to seven years. Generally, the monthly debt consolidation payments add up to the total of the amounts you are currently paying. Debt Settlement will negotiate and settle your debt faster and more directly. It’s important to be clear that Debt Settlement is NOT the same as Debt Consolidation, Credit Counseling or Bankruptcy. With regards to having to pay income tax on monies saved, some creditors will issue IRS Form 1099 showing your monies saved as income, which may possibly be subject to income tax. However, the consumer can fill out IRS Form 982 which indicates proof of insolvency. Based on insolvency, the income reported by the creditor on Form 1099 would not necessarily be taxed as income. It’s always best to consult a
