Settlement Offers

When you fall behind on your credit card payments your creditors may offer you settlements to pay them a lower amount.  This may sound like a great idea at the time but what they may not tell you is that they can report this to the IRS as income, you could then be required to pay income taxes on this amount.  If you file bankrupcty on these debts you will not have to report them as income.  In the long run bankruptcy is much better for most people than settling with their creditors.