|
If I’m in financial trouble, can I renegotiate my debt with my creditors?
Renegotiating with your creditors can help you buy more time or settle your debts when you can’t keep up with your bills. Be honest and explain your situation to your creditors. They may allow you more time to pay, drop late fees, or even settle for less than the full amount owed. Creditors would rather settle than spend money trying to collect -- and possibly get nothing.
Be aware that negotiating your debts can show up on your credit report.One other issue: If you do get a lender to reduce a debt, the reduction is called income from cancellation of debt, and you will generally have to pay income tax on that amount. There are exceptions to this rule -- see "Questions and Answers on Home Foreclosure and Debt Cancellation" on the IRS Web site for details.Return to Questions
|
