Saturday, April 21, 2007


Apparently, if you renegotiate terms with your creditor the IRS considers it to be taxable income.

Still, many banks are not willing to set up payment plans. Instead, they will force sellers to tap into other assets, such as retirement savings or cars. And if the lenders do forgive the debt, the Internal Revenue Service will consider it taxable income. On Wednesday, Reps. Robert E. Andrews (D-N.J.) and Ron Lewis (R-Ky.) introduced a bill that would make such a forgiven debt non-taxable.

That's absurd.