It is commonly believed that any settlement arising from a credit card debt negotiation must be reported on your taxes. This is not true. Normally, this advice is given by people who advocate credit counseling, which is woefully ineffective compared to debt negotiation.

When people advise you to report a debt negotiation settlement on your taxes, they are thinking of the rule that requires you to report any income over $600 to the IRS. (They think any savings on a debt can be considered an advance in income.) However, debt works differently than income, so you can actually write off the debt on a tax return. Keep in mind that this is only possible if you are in the red financially.

This is one of the scare tactics used by credit counseling advocates, or even bankruptcy advocates. Our purpose is to help you avoid these two solutions--which aren't very effective solutions at all. They cause as many problems as they solve.

Bankruptcy stays on your record for over a decade. Counseling companies reduce debt at around eight years--an improvement, to be sure, but not nearly as effective as the three years maximum that DTS offers. Credit counseling companies are also limited by the number of creditors that will even work with them. We work with all types of creditors, including medical billing, department store debts, financing agreements, and other billing issues.