TAX on NEGOTIATED BALANCES:
Veterans should be aware of the tax
>> ramifications of negotiating a credit card debt. If you or a member of
>> your family that you claim as a dependent on your tax form become
>> over-extended on their credit card balances it is possible to negotiate
>> with many credit card companies for a reduced balance to clear the
debt.
>> However, once payment is made the credit card company will issue you a
>> Form 1099-C reporting the amount not paid as a discharge of
indebtedness
>> income. This can later be taxed as income by the IRS. [Source:
The Tax
>> Barron Jun/Jul 08 ++]