Debt forgiveness is really a gift of money to the debtor. If you owe a large debt to a lender but have an extremely difficult financial situation, then the lender can cancel the remaining debt as an act of forgiveness. It is often administered to foreclosure situations under which the house has lost significant value.
But debt forgiveness is taxable. If you want to avert this forgiveness tax, then you can either file for bankruptcy or prove your insolvency.
If you would like to learn more about debt forgiveness, then contact Tacoma, Seattle, Kirkland, Bellevue, Bremerton, Everett bankruptcy lawyer Ryan Nykamp today at 425-289-9873.