Question

We turned over $40,000 in debts to a debt-relief group that helped us in two ways:

They got the debt reduced to $30,000 because of the outrageous interest rates charged by the credit card companies.

They got us on a pay plan that works great.

However, we just learned that we are going to receive a 1099-C for cancellation-of-indebtedness income of $10,000. How do we get out of paying taxes on this $10,000? (T.C., Kissimmee, Fla.)

Answer

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