| Don’t be fooled by all those ads for credit counseling, debt consolidation, and debt settlement firms that promise to get you out of debt for pennies on the dollar. Most debtors who try to get out of debt by using one of these organizations never complete the program and end up losing all the money they have paid into the plan. They also don’t tell you that you have to pay their fees first before they will send any money to the credit companies, that every credit card company and creditor must agree to participate in the plan (which many will not), and that any reductions in your principal balances are subject to state and federal income taxation. Filing for bankruptcy is the most affordable way to get yourself out of debt and bankruptcy is not a taxable event. You will not have to pay any taxes on the debts that are discharged! |
