Negotiating a lower payment is one way to pay off your credit card debt at a lower cost. When the lender agrees to settle your debt for a lower amount, say $500 on a $1,000 debt, part of the debt is cancelled. It's good news for you in the short run, but you could end up paying taxes on the cancelled amount.

The Internal Revenue Service requires businesses to report cancelled debts. Those businesses must also send you a form letting you know the debt was cancelled. When you prepare your taxes for that year, you're required to include the cancelled amount. That could increase your tax liability. Learn more about cancelled debts.

You May Owe Taxes on Settled Debts originally appeared on About.com Credit / Debt Management on Saturday, January 9th, 2010 at 00:44:50.

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I sometimes watch home makeover shows and every time the family has a cluttered house, they also have a large amount of credit card debt. I've come to believe that clutter and debt are close relatives. If you have a lot of clutter you may lose your credit card bills or waste money buying multiples of things you already have. If clutter is keeping you in debt, a little cleaning and organizing may be what you need to jumpstart your debt repayment.

Is Clutter Keeping You in Debt? originally appeared on About.com Credit / Debt Management on Friday, January 8th, 2010 at 01:05:24.

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When you put in certain types of applications, your credit report will be reviewed to make a yes or no decision about your application. For example, you can almost guarantee your credit report will be checked when you apply for a credit card or loan.

You can improve the chances of getting your application approved by checking your credit report before you put in credit-based applications. This way you have time to clean up your credit. Read When to Check Your Credit Report to see the specific times you should check your report.

More on Credit Reports:

• How To Read Your Credit Report
• Get a Free Credit Report
• 6 Worst Credit Report Entries

When to Check Your Credit Report originally appeared on About.com Credit / Debt Management on Tuesday, January 5th, 2010 at 00:28:21.

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You'll have to watch your credit card inserts closely at the beginning of 2010. Your credit card issuer will warn you about upcoming changes to your credit card terms as required by Federal law. You might even get a notice of an increased interest rate or switch to a variable interest rate.

Think carefully about opting-out of higher interest rates because your issuer could close your credit card if you reject the new credit card terms.

As you're making plans for the new year, here are 10 credit moves you should make.

10 Moves to Make in 2010 originally appeared on About.com Credit / Debt Management on Thursday, December 31st, 2009 at 11:29:22.

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Soon you'll be opening your first credit card bill after holiday spending. If you overspent, you might get the splitting headache and fatigued feeling that often comes with overindulging. I must warn you: it's going to take a little more than time, sleep, and aspirin to cure this hangover.

If you don't want to be one of those people that carries holiday debt all the way into the next holiday season, you must take action - soon.

The first step to getting over a holiday debt hangover is facing your debt. Step two is putting the credit cards away so your debt load doesn't get bigger. These two steps will put you on the path to recovery. Read Recovering From Holiday Debt to get complete steps on how you can get over your holiday debt sooner.

Suggested Reading:

• Credit Card Payoff Calculators
• Snowball Your Holiday Debt
• Two Credit Card Payback Methods That Work

Suffering a Holiday Debt Hangover? originally appeared on About.com Credit / Debt Management on Tuesday, December 29th, 2009 at 00:10:58.

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