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Debt Reducton Programs

posted Jan 2, 2010, 9:50 PM by Regina Thurston Hall   [ updated Jan 2, 2010, 9:52 PM ]
Question:  I joined a program that cut my debt in half or saved me a lot of money.  Now my payments are less and the amount I owe to the creditors are substantially less.  Will I have to pay any taxes.
 
Answer:  Probably.  In general these "savings" are considered debt forgiveness or cancellation of debt and you will receive a 1099-C.  That form will indicate how much of your "savings" are taxable.