If you are considering bankruptcy, the Bankruptcy Defender may be able to assist you negotiate with your creditors to reduce the debt you owe them. Generally, most creditors receive little to nothing when you file bankruptcy. Because the creditors know this, the creditors will often negotiate down the amount you owe them in exchange for a one-time lump sum down payment and small monthly payments until the negotiated debt is paid off.
Be forewarned; if the creditor accepts a lower amount for the debt and discharges the remaining balance owed, the creditor may issue you a 1099-C for the difference between what was owed to the creditor and what was paid. This discharged amount may or may not be considered taxable income depending on your situation. It depends on your situation at the time of debt settlement – i.e. if you were ‘insolvent’ and what type of debt is being settled.
This assessed income tax may not be dischargeable in Bankruptcy possibly for over three years. If this is the case, and you will be unable to pay the IRS for the income tax on the discharged debt, then debt negotiation may not be a good solution for you. Chapter 7 bankruptcy can discharge the full amount owed the creditor without the need to pay the IRS income tax on the amount of debt that was discharged.
Either way – debt negotiation or bankruptcy – the Bankruptcy Defender can help you resolve your debt problems.
The Bankruptcy Defender helps individuals file for bankruptcy in Southern Nevada, including Las Vegas, North Las Vegas, Henderson, and Boulder City.
