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5 debt settlement do's and don'ts

Don't overlook the consequences
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Don't overlook the consequences

"Any settlement for which the forgiveness of debt is greater than $600 becomes a taxable event," Graves says. "If somebody were to settle a $10,000 debt for $5,000, the $5,000 becomes taxable."

Graves adds that debt settlement also has a negative impact on your credit report and your future ability to borrow money at an affordable interest rate.

"The credit report lists the account as settled or paid for less than the amount owed," he says. "That is an indication to future creditors that you borrowed money but couldn't pay it back."


 

 

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Debt Adviser

Don't be seduced by this debt plan

Dear Debt Adviser, I have about $50,000 of debt on credit cards. My credit rating is still high. I am thinking about a debt consolidation loan. Will that adversely affect my credit rating? -- DT Dear DT, The cliche... Read more

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