35. Paying Extra Taxes When You’re Broke
Typically, if you have to ask your credit card company to forgive a portion of your debt or you default on your mortgage, you’re already going broke or are insolvent. But a tax form 1099-C reports canceled, forgiven and discharged debt as income — and the taxes can be quite substantial, said Tarpey.
“Renegotiating your debt, then paying extra taxes is like taking one step forward and two steps backwards,” he said.
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