Worried about taxes on your settled debt? You may not need to.
In this article from Creditcards.com – a little known tax exemption is discussed. This exemption is for people that have had debt cancelled, or settled. The IRS considers this cancelled debt “income” for the consumer, and requires you to pay taxes on it. What most consumers don’t know is that insolvency qualifies you for exemption. Insolvency is when your debts exceed your assets, the case for many debt settlement clients. Surprisingly, less than half of consumers who qualify for this exemption take it.