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View Diary: Rolling Jubilee Hits $8,000,000 in Medical Debt to be Retired Uncollected. MORE UPDATES! (279 comments)

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  •  I know you are a tax guy, so.... (2+ / 0-)
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    johnny wurster, VClib

    In my state, when the SOL is reached, it only means that the creditor can no longer sue the debtor for the amount owed.  The debt is not abrogated, it can be paid (voluntarily) by the debtor, and remains on the creditors books.  For practical purposed the debt is written down (taken off the books) by the creditor as uncollectible and the write off is an IRS deduction.  You are saying that there is a separate Federal SOL on debt, which abrogates the loan and "gifts" the amount owed to the debtor, which must be reported as "income" on the debtor's Federal return?  Even if the creditor chooses to carry the loan and not write it off?

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