Most people don't know this, but if you settle a debt for less than the amount you owed, you are potentially responsible for taxes on the forgiven debt. Look at it this way: You received goods and services for the full amount of debt, but you're only paying for a portion of it - sometimes less than 50%. Anything more than $600 is generally considered taxable, but the IRS will sometimes waive the tax if you can prove that your assets were less than your liabilities when the debt was settled.
Jean ChatzkyIf you default on an unsecured debt, you won't lose anything (except points on your credit score).
Jean ChatzkyIn fact, the bigger the bill, the less likely you are to spend it. If you want to really save money, spend only cash and carry only fifty-dollar bills.
Jean ChatzkyBy definition, saving - for anything - requires us to not get things now so that we can get bigger ones later.
Jean Chatzky