I have a Citi card with a balance of about $5000. I will be getting some money next week and was wanting to settle with them. Any advice on a good approach??
I don’t have an answer about settling, but I have a question for anyone who has settled. Did you get anything that said you owed taxes on the balance of what the debt was settled for?
You are subject to a 1099-C for any amount forgiven over $600 that you have to claim on your taxes.
However, it is up to the creditor to send them out. I have had some send them for $601 forgiven and some not send them for over $2500 forgiven. And you do have a tax liability for the difference in settlements – it’s considered “income” since you’re not paying for something you’ve received.