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Total and Permanent Disability Discharge

Member

Total and Permanent Disability Discharge

I am a 100% disabled veteran and am thinking about using this program to have my student loans discharged if it does not hurt my credit or leave a negative tradeline. Does anyone have any experiences with this and know what the Tradeline says once discharged

Message 1 of 3
2 REPLIES
Senior Contributor

Re: Total and Permanent Disability Discharge

I recently read a news article that stated student loans that are discharged (for whatever reason, to include disability) are subject to be 1099'd.    Which means at years end, the lender will send a 1099-C to you and to the IRS.   The IRS considers anything on the 1099-C to be income and wants taxes on that amount.

 

My friend was surprised with a 1099-C and it hurt when it came to tax time.   To add insult to injury, the 1099-C was incorrect and claimed a higher amount had been "forgiven" that was actually "forgiven".   

 

Please research it on the net and this site.   Gather as much information as you can to make an informed decision.

 

Thank you for your service.

Message 2 of 3
Valued Contributor

Re: Total and Permanent Disability Discharge


IOBA wrote:

I recently read a news article that stated student loans that are discharged (for whatever reason, to include disability) are subject to be 1099'd.    Which means at years end, the lender will send a 1099-C to you and to the IRS.   The IRS considers anything on the 1099-C to be income and wants taxes on that amount.

 

My friend was surprised with a 1099-C and it hurt when it came to tax time.   To add insult to injury, the 1099-C was incorrect and claimed a higher amount had been "forgiven" that was actually "forgiven".   

 

Please research it on the net and this site.   Gather as much information as you can to make an informed decision.

 

Thank you for your service.


+1, I posted that article in the Credit in the News Forum and that's quite a shock. 


CH 7 Filed 7/27/15 Discharged 11/16/15
Starting Score: EQ 620 TU 568 EX 593
Current Score (07/13/16): EQ 674 TU 649 EX 674 (FICO's 08)
Cap1 QS ($5350) (Combined QS and QS1) Discover It ($4100) MilStar ($8,600) Fingerhut ($800)
Off to the garden 05/01/16
Message 3 of 3