 TITLE: What Happens with Canceled Debt? CONTENT: The Difference Between Canceled Debt and Debt Settlement\n--------------------------------------------------------\nHaving a debt canceled or forgiven is a little different than settling a debt for less than what you owe. While debt forgiveness typically happens as part of a specific program, debt settlement often occurs when you're struggling to pay what you owe and are behind on payments.\nAlso, debt settlement is typically only available for unsecured debts, including credit cards and personal loans. In a debt settlement situation, your credit might already be in bad shape, and settling can damage your credit even more.\nOn the flip side, debt cancellation typically doesn't have a negative impact on your credit score. In either case, though, you may need to report the debt as income on your tax return. END