debt

5 debt settlement do's and don'ts

Don't overlook the consequences
Next
3 of 7
Back
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."


 

 

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
CREDIT CARD WEEKLY NEWSLETTER

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.

Debt Adviser

When is debt off credit report?

Dear Debt Adviser, How do I find out the timeline on my debt? I know after six or seven years the debt is taken off. I would like to know if there is a way to see if it is gone. -- Mark Dear Mark, Now you see it, now... Read more

advertisement
Partner Center
advertisement

Connect with us