A Debt Charge-Off, like a Short Sale, is a common result of a negotiated debt (see Debt Negotiation). It is a way for you to eliminate some of your credit card debt. In fact, once the Debt Charge-Off has taken place, your credit card issuer will provide you and the IRS with a Form 1099-C. The Form will show the difference between the original debt amount and the negotiated payoff amount … and the amount unpaid will be reported as income.
There is a legal way to exclude this income from taxation and Davidoff & Associates can produce an assessment that will let you know if you qualify for the exclusion. Call us for details.