Is the debt discharged by a Chapter 7 considered income to the debtor for income tax purposes?

Get Legal Help Today

 Secured with SHA-256 Encryption

Is the debt discharged by a Chapter 7 considered income to the debtor for income tax purposes?

Asked on April 15, 2014 under Bankruptcy Law, Wisconsin

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Yes, it is. Any debt discharge or foregiveness is considered income for income tax purposes, since both mathematically and in the eyes of the law, not having to pay $1,000 is the same thing as being paid $1,000. You may wish to speak with a tax professional to discuss how best to deal with any tax liability.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

 Secured with SHA-256 Encryption