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Oh, Pam, first of all, I'm so sorry for the loss of your daughter, then I hate she still had student loans; were they the federal or private? and was she still in school? I'm concerned about my son getting into that, aggravated today about him even having to apply but then the fact they let you send the stuff in without signing it, they just don't tell you they won't do anything with it till you do the they lollygagged around another week before they did so now there's a problem and school is of course now closed for a week; dontcha love it?
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She had both federal and private. The 1099 was for the federally insured loan.
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Any loan that is written of that is 500.00 or more will generate a 1099 to the IRS and the tax payer is required to pay taxes on that as unearned income. That is why if you make deals with creditors you need to be prepared at tax time. This extra income can sometimes bump a person into a higher tax bracket. Seems unfair but after working in the tax office for 11 years trust me, many people hit with this when they had debut written off.
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