I want to settle a credit card debt but am afraid of the tax hit. What should i do?
I am mulling an offer from a debt collector for Citibank visa on my wifes account. The account was already charged off by citibank and now in the hands of the collector. The offer to settle is very good but its almost 3000 dollars off and i am afraid the reduced debt will be taxed like crazy by IRS. I really dont have to settle because my wife is on Social Security disability and cannot be garnised as per law. Does anyone know what the tax hit would be? Its about 3k off the original debt.