[lawnfixer52]

Is settling a debt good for your credit. Our credit is bad credit card debt high. We got a settlement for a card with a very high balance the settlement is for 70%. We pay 30% of balance. My husband is on disability now & unable to pay our debts in full. He had 3 back surgeries. He is unable to work. If we pay the settle amount. Will we bothered by any other collection agencies. I guess what I am asking will the bill be paid in full. Please help desperate.

[joypulv]

It's legal, but there are plenty of unscrupulous credit settlement companies out there. They take their profit from your payments first, often the first 1, 2, or 2 payments you make, then pay off the card companies. You need to know that they won't take your money and run.

I take it you aren't dealing directly with the card companies? Tell us the name if you want and we can research their reputation. (You can too, just by entering the name into your browser, and looking for links about any scams.)

[AtlantaTaxExpert]

Also note this tax fact: the 70% portion of the debt that is being forgiven is considered TAXABLE INCOME by the IRS, so you will a Form 1099-C from the credit card company. The income will be reported on Line #21 of the Form 1040, and you will pay federal (and probably state) income tax on that income.

[Indian CPA]

Once the debt is settled, follow up with the credit card company to update the credit bureaus on the settlement. This will improve your credit.

Cancelled debt will be considered as Income and you owe taxes. If this amount is substantial you should consider making estimated tax payment.

Indian CPA
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[AtlantaTaxExpert]

Indian CPA:

Good points about the estimated payments AND proper updating of the credit record.