Hi, I am new here. I am in a pretty bad place financially, and have never been good with money (was never taught) so I am trying as best I can to educate myself now so I can somehow pull myself above water. I have $48,000 in private student loans that are currently in collection. I spoke with a collection representative today who offered me a settlement of $22,000 or possibly lower if I make an offer. I would like to do my research before making any decisions. I am currently working as a 1099 freelancer, and make roughly $30-40k. My credit score is already extremely low (500) so I am not sure if I should be concerned with a settlement lowering it further. I am mostly concerned with the associated income tax that I have been reading might be applied to the amount that is forgiven. If I am doing my math right, and I could be paying income tax on the $26,000 amount forgiven. My main question is whether I could be considered "insolvent". I do not own any assets - I rent an apartment, lease my car, and have no other retirement or investment funds. My liabilities are this loan, a federal student loan (approx $10k) and $1k in credit card debt. I am literally at the bottom of my financial barrel and having $26k + in student loans forgiven without being taxed would be life changing for me. Any advice or information is greatly appreciated. Thank you!
