Is Forgiven Debt Taxable?

Debt forgiveness is taxable; the creditor should send a 1099 form for the unpaid amount.

QUESTION: Debbie asks if you accept a settlement offer from a collector, does the creditor send you a 1099 form for the difference between the balance and the settled amount.

ANSWER: Yes. Debt forgiveness is considered income and is taxable, but when you pay taxes on $1,000 of knocked-off debt, it’s still less than the full amount. There is a 1099 involved.

Jump-Start Your Goals!

Jump-Start Your Goals!

Get our 8-Day JUMP START series and weekly newsletter that are packed with articles and tools to help you win with money.

Learn to Beat Debt

Take Control of Your Money!

The best way to get out of debt and take control of your money is to make a plan! Financial Peace University is that plan!

Find a Class

Thank You!

Your 8-Day Jump Start is on its way to !