Taxation of Forgiven Financial debt - The 1099C & You
In addition I would like to go over another option a lot of people do not know about. This is debt resolution, a process very similar to debt settlement with the end results of saving money and time; however the negative aspects of debt settlement will be greatly diminished with debt resolution.<br /><br />The first option is the most common and this is to do absolutely nothing. Which surprisingly is the exact thing most people do and may be what you have been doing up until now, before realizing you must take action to resolve the situation. Most people in debt and this could be including yourself are running on what is called the "credit treadmill". The credit treadmill is a ruthless and endless cycle of monthly minimum payments and high interest.<br /><br />This is perhaps one of the worst places to be financially. If you just pay your monthly minimum even if your interest rate is moderately low, you will be stuck in debt for over 38 years! During the course of the decades it takes to pay off this debt you will pay back over five times the original balance in interest alone! If your APR (interest rate) happens to be where millions of other people find theirs, up in the high twenties if not thirties, it will take much, much longer to get out of debt. And naturally you will be losing A LOT more money.<br /><br />I don't really feel I need to address the first option anymore. There are no positive aspects to being stuck in debt and doing nothing about it but paying minimum payments.<br /><br />Once people are made fully aware of the situation they are in, and have come out of denial to the fact that they do indeed have a problem with credit card debt the first option many people look into is debt consolidation.<br /><br />There are two ways about which debt consolidation can be achieved. There are debt consolidation loans, and then there is consumer credit counseling.<br /><br />Let me first explain the option of getting a debt consolidation loan. A debt consolidation loan is a loan taken out to pay off the balances on your credit cards. The benefit from doing this is that there will be only one monthly payment made on the loan. Thus taking away the headache of juggling multiple payments to the various creditors. The second benefit is that the loan may come at a lower interest rate.<br /><br />This is however in my opinion the riskiest of all the credit card debt relief options. Why? Because in the vast majority of cases the only possible way to obtain a debt consolidation loan is by using your home for security; essentially taking out a second mortgage to pay off your credit card debts! What you will be doing is transforming your low risk unsecured credit card debt into a high risk loan secured by your HOME!<br /><br />The sad fact is that over 80% of people who end up in this situation and use the equity in their home to pay off their credit card debts find themselves within the same situation in less than five years.<br /><br />The old clich?? "no pain no gain" applies greatly to this method of debt relief. <a href="http://www.debtcounsellinghelp.co.za">debt counsellors</a>
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