19th Nov 2009 by Mark P. Cussen, CFP, CMFC
Loan forgiveness is practiced by creditors as a way to receive a lesser amount of money that what is owed. For example, a credit card company can make an offer to a customer that owes $20,000 saying that they will accept a $5,000 payment instead. They will forgive the other $15,000, which they can then write off on their tax return. The customer will usually receive a Form 1099-C showing the amount of debt forgiven, which the customer must report as income.
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