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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29558
Experience:  Taxes, Immigration, Labor Relations
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My credit card companys are charging off my debt , but say

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My credit card company's are charging off my debt , but say I have to pay taxes with a 1099 . I do not have a job , I do not own anything . My income is under $6,000 my total debt is $64,000. Im going to file bankruptcy but the creditor told me after it has been charged off and bankruptcy will not matter i still have to pay the taxes . Is this true? Also, Can I avoid paying the 1099's?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

If you negotiate with the creditor and all or part of the debt is forgiven or the debt would be canceled under bankruptcy protection procedure - you are sent the form 1099-C.


You are correct that the amount of debt forgiven is reportable on 1099-C - - generally is taxable, unless an insolvency exemption apply -- you should file a form 982 - to proof your insolvency - and might exclude all or part of canceled debt from taxable income.

Please see the IRS Publication 908 Bankruptcy Tax Guide - - with example of the form 982 on the last page.


Let me know if you need any help.


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