Legal Question in Bankruptcy in Pennsylvania

Cancellation of Debt

Hi, How do you file for cancellation of debt?? I know the consequences. These amounts become taxable and a 1099C is issued. I understand that I can also pick and choose the cards I would like to cancel and it is not the same as bankruptcy therefore I will not loose my home. Who do I need to contact to file for cancellation of debt. Thank you in advance for your help.


Asked on 3/07/05, 5:48 pm

1 Answer from Attorneys
Mark Johns Mark Johns, Esquire

Re: Cancellation of Debt

You almost have things right but you have some wrong ideas. You cannot just apply somewhere to cancel debts. Bankruptcy can cancel debts but your home might be put at risk. Therefore if you can't pay your credit cards you may be able to negotiate with your creditors to reduce or eliminate interest or pay a portion of the debt. The canceled debt is not 1099 income, but reduces basis in any property sold that produces capital gain you may have and therefore is indirect income (If you have no capital gains you have no income from this). I would highly recomend speaking with an attorney to discuss your situation. I offer free consultations.

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Answered on 3/07/05, 5:59 pm


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