Forgiven debt may be taxable by the IRS!
The Second Circuit has ruled that debt collectors don’t need to warn clients of the potential tax liabilities associated when making a settlement offer for less than the full amount owed.
In Isaac Altman v. J.C. Christensen & Associates Inc., docket number 14-2240, the U.S. Court of Appeals for the Second Circuit stated in it’s opinion that the “fact that a debtor may then have to pay tax on the amount saved is simply not deceptive…”
Isaac Altman received a letter from J.C. Christensen & Associates stating that he could save up to 50 percent on his $6,000 debt if he made a payment upfront. Altman alleged the letter was deceptive violated the FDCPA’s prohibition against false, deceptive, or misleading representations. As stated above, the Court was not convinced.
So, you may want to consult your accountant/tax preparer before accepting a debt settlement offer. Additionally, you generally won’t have this tax issue if you file for chapter 7 bankruptcy. Therefore, it may be in your best interest to also consult a bankruptcy attorney.
The Law Firm of Vaughn & Weber, PLLC
393 Jericho Tpke. #208
Mineola, NY 11501
Are Debt Collectors Getting More Aggressive?
This article seems to suggest that they are. Although this is bad news for borrowers, the law, fortunately, protects borrowers from overly aggressive and abusive debt collectors. Debt collectors that harass borrowers, contact borrowers at odd hours, or contact borrowers’ employers may be violating the Fair Debt Collection Act. If so, those debt collectors may be forced to pay borrowers $1,000 in damages. Additionally, without proper documentation, the debt may be discharged.
If you believe that you have been harassed by aggressive debt collectors, The Law Firm of Vaughn and Weber is here to help! Call (516) 858-2620 for a free consultation. We are located at 393 Jericho Turnpike, Suite 208, Mineola, NY 11501.
You May Be Able To Settle Your Student Loan Debt
First, it really helps if the student loan you want to settle is a private student loan (not a government issued loan).
Second, as with debt settlement in general, it usually helps if you have a lump sum you can use to pay the agreed upon settlement amount. However, a lump sum is not always required. Some lenders will allow a payment plan.
Lastly, you want a no-interest payment plan with a repayment term and a monthly payment that works for you.
Important Note: You may be able to settle your student loan debt even if you are already being sued for repayment!
The Law Firm of Vaughn & Weber, PLLC can assist you with Student Loan Settlement and other Student Loan issues. Call (516) 858-2620 to arrange a FREE consultation with an attorney!
Don’t file a Chapter 7 bankruptcy unless you have 500k in debt!
That’s pretty much what a radio show host recently said. We can’t see how this is good advice. There is no minimum amount of debt that one must have in order to file bankruptcy! Even more disturbing was the fact that the host appeared to be offering some sort of debt settlement guide or program they created.
First, Debt settlement can work, but you need money to settle! You have to be able to make a lump sum or monthly payments.
Secondly, we have had clients with very little debt file bankruptcy. Many individuals file bankruptcy to prevent home foreclosure, head off an impending lawsuit, discharge a judgment obtained against them etc.
Finally, Bankruptcy is not for everyone. We suggest that you speak with an attorney about bankruptcy and debt settlement before making a final decision.
As always, the Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 393 Jericho Tpke., #208, in Mineola, NY. Contact us at (516) 858-2620 to arrange a FREE consultation with a bankruptcy and debt settlement attorney.