Debt Forgiveness or Bankruptcy? Understand Your Options.
Many Americans in financial distress go to great lengths to work out resolutions with their creditors. For instance, if you are underwater on your mortgage, you may try to work out a short sale with your mortgage lender. If you owe other creditors, you may try to pay a reduced lump sum payment in exchange for forgiveness of part of the debt. Debt forgiveness can be advantageous in many instances. On the other hand, there can be tax consequences to debt forgiveness. If your debt has been forgiven, it may be considered to be income, and therefore taxable. These consequences may ultimately make debt forgiveness less attractive.
Bankruptcy may ultimately be a better way to resolve your debt problems. The best way to find out is to discuss your situation with a knowledgeable bankruptcy lawyer. The attorneys of Minnillo Law Group Co., LPA have helped people across Ohio and northern Kentucky who are overwhelmed by debt issues.
Before you act to obtain a solution to your debt problems, you deserve to understand your options. Call our full-service debt-relief lawyers at +1-513-723-1600 for straightforward answers and seasoned guidance.
Understanding the Tax Consequences of Nonbankruptcy Debt Forgiveness Programs
When your debt is forgiven by a creditor, the IRS may consider these amounts to be income, depending on the type of debt that was forgiven. If you have to pay taxes on the amounts, it will greatly reduce the potential savings of the debt forgiveness.
Alternatively, in bankruptcy your debts are not forgiven. Rather, they are discharged, meaning that your creditors are barred from trying to collect upon them. You will not be required to pay taxes on any of the savings. Rather, you can either get a fresh start in a Chapter 7 bankruptcy, or you can repay your creditors according to your ability to do so in a Chapter 13 bankruptcy. Our law firm is prepared to give you the advice you need to make decisions that are in your best interests.
Contact the Cincinnati-Area Debt Forgiveness Lawyers of Minnillo Law Group Co., LPA
We offer a free initial consultation. Call our Cincinnati office at +1-513-723-1600. You may also contact us online to request your confidential consultation. We have four offices in the Fairfield, Eastgate, Cincinnati and Covington region.
We are a law firm and a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.