QPRI EXCLUSION

Normally, debt forgiven is income to the debtor. The Further Consolidated Appropriations Act, 2020, signed on December 20, 2019, extends the Qualified Principal Residence Indebtedness (QPRI) exclusion. This allows homeowners after a foreclosure, loan modification, short sale, or deed in lieu of foreclosure to exclude the forgiven amount from their income for tax purposes. 

In such circumstances, the homeowner will receive a 1099-C (Cancellation of Debt) form from their bank. If the QPRI exclusion applies, the forgiven amount is not considered income. This will apply to debts forgiven in tax years 2018 through 2020.

TAX BREAK ON MORTGAGE FORGIVENESS EXTENDED AND REVIVED

Generally, the tax law treats the forgiveness of debt as taxable income to the debtor. But as a wave of foreclosures followed the housing bust that began in 2006, Congress decided to cut some slack for homeowners who lost their homes. A new rule allowed up to $2 million of debt discharged by lenders in foreclosures or short sales, for example, to be excluded from income. That provision expired at the end of 2014, but it has now been revived retroactively to cover 2015 and extended for 2016, too. This break does not apply to the discharge of debt on second homes or rental property.

See  https://www.congress.gov/bill/114th-congress/house-bill/2029/text

SETTLEMENT OFFER OF CREDIT CARD DEBT

This is what one looks like and at first it seems to look good - a 45% reduction of the debt is offered but note:

1. There is no agreement or representation regarding reporting the debt to Experion, etc. to help credit score.

2. If the amount of debt reduction exceeds $600, you will get a 1099 and it will be reportable income (technically, even if under $600, that would still be income as forgiveness of debt).