1099-C Cancellation of debt - still have to pay, why claim?

I received a 1099-C Form for Cancellation of Debt for a credit card. It was cancelled, but I%26#039;m paying for this debt in monthly installments. Why is it that it%26#039;s considered income when I%26#039;m paying the debt? Is there a way around this? It seems ridiculous that it%26#039;s considered income when I%26#039;m repaying it. Then again, I%26#039;m not a pro with these things. Any information will help!

1099-C Cancellation of debt - still have to pay, why claim?

A cancellation of debt is when you settle a debt for less than the full amount. For example, the account was 5k, and you paid 3k to settle the account. Technically the remaining 2k is considered %26quot;income%26quot; and that%26#039;s taxed (because you were actually liable for 5k).

1099-C Cancellation of debt - still have to pay, why claim?

Write the credit card company and tell them to void the 1099-C if you are paying them back.

What they MIGHT have done was cancel part of your debt if you agreed to pay off some of it. An example is if you owe $4,000 and can%26#039;t pay any longer. After they try to collect for several months, they will usually call you and try to %26quot;make a deal%26quot;. They%26#039;ll say %26quot;what about if we lower the amount you owe to $2,500 and give you 4 years to pay with monthly payments of $53.00?%26quot; And you agree to that.

Well, the difference of what you are going to pay back (in the example $$1,500) is reported as Cancellation of the Debt on 1099-C.

I would guess that is the kind of arrangement you made even if you weren%26#039;t aware of how it worked when you made it.