Cancellation of Debt

Start New Financial negotiates with every one of your creditors directly to achieve the forgiveness of a substantial chunk of your total debt, so that you end up paying merely a reduced percentage of what you thought you had to pay. The interest rates and fees may also be reduced or/and completely eliminated, leaving the debtor more inspired and happy to pay off the new, more appealing reduced amount. Just call us and you won?t believe how low an amount we can turn your debts into because we tooth-and-nail for you.

Your debt won?t seem so robust when Start New Financial is through with it


When a creditor relieves a debtor from a debt, it is called cancellation of debt (COD). Some debtors negotiate directly with their creditor to obtain debt forgiveness. Bankruptcy & some programs help debtors get debt forgiveness.

Taxable Income

All cancelled debt $600 and more is taxable income by the IRS, so be sure to declare it in your taxes if this applies to you, or you?ll be owing taxes and penalties and we?d have to represent you there too, because we also handle tax debt.

Owe Less

Start New Financial loves to see creditor?s debtors? joyous reaction when they?re told their new reduced amount of debt. It is a prelude to what?s to come: their reaction to finally being debt-free. It?s priceless and we always take it there! Always!

1 Nice Monthly

During our negotiations with your creditors, Start New Financial is able to reduce your debts and interest to the right amount you can handle and work with, for just one comfortable monthly payment for you no matter what you owe.

The Meaning of Cancellation of Debt

What Is Cancellation of Debt (COD)?

When a creditor relieves a debtor from debt obligations this is called cancellation of debt (COD). Debtors may negotiate with creditors directly for a debt forgiveness plan. Some debt relief programs or simply filing for bankruptcy can also help debtors obtain debt cancellation. When taxes are filed, most debts that are forgiven by creditors may be taxable as income. On a 1099-C Form, creditors typically record as income any cancelled debt to the debtor.

Through bankruptcy or debt relief programs, debtors can achieve direct negotiations for debt relief. As mentioned, the forgiveness of debt obligations from a creditor is called cancellation of debt (COD). They must be filed through Form 1099-C, reported as taxable income, all debts that are cancelled by a creditor. The person is required to file with the IRS once the cancelled amount exceeds $600. The IRS defines all requirements, exceptions and exclusions that need to be followed when filing.

Understanding Cancellation of Debt (COD)

There are many times where, in order to lower their total debt, a distressed borrower may choose to file for bankruptcy or to work with a debt relief program. In order to negotiate debt relief, working directly with creditors is another action debtors may also take.

The legal requirement to pay taxes on the amount that has been forgiven is the main impact of a debt cancellation program, as this canceled amount is counted as income by the Internal Revenue Service (IRS). The expected taxes on potential savings from the cancellation of debt is what borrowers should plan ahead for when obtaining debt relief.

If the canceled debt amount is $600 or more, individuals will have to file Form 1099-C. The amount of 1099-Cs that the IRS is expected to receive for 2021 exceeds 4.5 million.

?A distressed borrower can find great relief from the cancellation of debt. For economic support, debt forgiveness may also be offered between countries in some cases.

Exceptions to Cancellation of Debt (COD)

When it comes to the cancellation of debt income, there are quite a few exceptions. The following are not considered cancellation of debt income as defined by the IRS:

  1. When a student becomes disabled or dies and amounts of the student loan are discharged.
  2. When a seller provides a qualified purchase price reduction on a property?
  3. Reductions in the principal balance of a mortgage by Pay-For-Performance Success payments under the Home Affordable Modification Program.
  4. Canceled debt that would be deductible if an individual paid it as a cash basis taxpayer
  5. Some qualified student loans that meet specific criteria
  6. Other education relief programs or loans that help provide health services?
  7. Debts canceled as an inheritance or gifts

The IRS excludes the following exclusions from being reported as income even though they are considered cancellation of debt income:

  1. Cancellation of qualified principal residence indebtedness
  2. Cancellation of qualified farm indebtedness
  3. Canceled debt to the extent insolvent?
  4. Cancellation of qualified real property business indebtedness
  5. Canceled debt from a Title 11 bankruptcy case

Cancellation of Debt Methods


The best option in many situations for a distressed debtor may be bankruptcy. In bankruptcy, the debtor has the support of an attorney and the courts. It can help save tax liabilities the fact that debt forgiveness is also not considered income in bankruptcy. The complicated process of a bankruptcy can have a long-standing impact. That is why, before heading down this path, it is worth speaking to lawyers and accountants about it.

Debt Relief Programs

All across the nation there are debt relief and settlement companies are available to help with debt forgiveness. Debtors can find help in identifying an appropriate program for their situation if they work with a credit counseling resource such as the National Foundation for Credit Counselors.?

To negotiate a debt settlement with creditors on behalf of a debtor, there are many for-profit entities that are debt settlement companies. The process for settlement can take years, but there are also numerous caveats to working with these companies. Even so, for debtors who have been steadily delinquent in payments, debt settlement can be an option.

On a debtor?s behalf, creditors are contacted directly by the debt settlement companies for debt forgiveness after they have assessed a debtor?s entire credit profile. In order to increase the likelihood that a creditor will settle, debt relief programs usually request that debtors stop all payments on their monthly credit bills. In order to accumulate all the funds needed for a lump sum settlement of your debt, to be settled at some point in the future once you have all the funds for it, most of these companies generally will also require you to make monthly escrow payments.

Negotiations With Your Creditors

It can be very challenging to negotiate the cancellation of your debt with a creditor. The main source of income for creditors are the fees and interest on approved credit that influence their bottom line and makes most of them unwilling to cancel individual debts. Nevertheless, for canceled debt there are some creditors that do include provisions in their credit agreements. For a small additional fee, credit relief services can also be obtained from many creditors to be used in specific hardship situations such as a medical occurrence or a job loss. On their own, a debtor can more feasibly identify any creditors they believe may easily qualify them for debt cancellation by the debtor simply reviewing the credit card terms of every creditor.

There are certain loans that may have a higher chance of debt forgiveness because they were issued under government programs. These loans eligible for debt forgiveness under government-sponsored relief programs may include mortgage loans or student loans. Since it could save the creditors some of the costs of a foreclosure, some of them may also be willing to negotiate principal reductions on mortgage loans for distressed debtors.?

Start New Financial can help you with this and more, with the goal of helping to make you debt free for less money and as soon as possible, as your peace and happiness is so important to us for your complete satisfaction.


You?re in the best hands now and can stop stressing and worrying about your crippling debt because you are not alone. Start New Financial will not leave you till you are completely debt-free from your unsecured debt. You?ll only regret not having called us any sooner to avoid all you went through.

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