1099-c… Bankruptcy can help!

Did you know that is your debt is written-off, or canceled, you can owe taxes on the amount that is canceled?  See the IRS explanation here:  https://www.irs.gov/taxtopics/tc431.html

Bankruptcy can help.

Even though you get a 1099-c, if you have a bankruptcy discharge or an ongoing Chapter 13 bankruptcy plan that has been approved by the Court, you may qualify for an insolvency exception.

This means that bankruptcy can protect you from the income  taxes you would normally have to pay from this canceled debt.

The IRS form and instructions for the insolvency exception- Form 982 and a short explanation are available here:  https://www.irs.gov/uac/what-if-i-am-insolvent

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