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When you do not pay your bills, the credit card company usually gets after you about it. Eventually they will get the collection agencies involved if you do not respond to their inquiries. After it is all said and done, you may file for bankruptcy, or you may be able to negotiate some other form of payment that both you and your credit card company can handle.

But if, in the long run, you just cannot pay your debt, your credit suffers. Along with some form of punishment or another, you are no longer obligated to pay the debt. Around this time is when you may receive a 1099-C form.

What Is a 1099-C Form?

So you may be standing next to your mailbox looking over this form in your hands, wondering what it is, and what your credit card company wants to squeeze out of you this time. What does it mean when a creditor sends you a 1099-C form anyway? A 1099-C form is a form that basically states formally that your debt is forgiven.

What?

If you have owed money on your credit card, have resorted to the fact that you will never be able to pay it back, and go bankrupt or choose a similar escape, the credit card company will write your debt off. This means that the legally relieve you of that debt that you owe to them on your credit card. This 1099-C form is the legal document that states this to be true, giving you and they proof of the debt forgiveness.

What About the Money?

When you receive such a form, your debt, as we have established, is forgiven. However, because you bought things with this money and did not pay it back, you must count it as income. When you fill out your tax forms, you must include the amount of money that was part of your forgiven debt as income, because really, that’s what it is… free money to you.

Of course there are the prices you have to pay, so that in all actuality it is not free. Your credit reputation is damaged for a very long time, and any chances of you getting a mortgage or a large loan are very slim. You can, however, with credit cards and other forms of credit, build your credit back up to a descent number now so that when that penalty is removed from your credit report, you will have perhaps even better credit than you did before.

Paid in Full

If you end up settling your debt for a lower price than what you originally owed, the credit card company will accept less and still record that you “paid in full”. When this occurs, make sure that they do not report the remaining amount of debt to the IRS making you count it as income. If they report that you have paid in full when the debt paid was a smaller amount that the original, you still do not have to count that as income on your taxes, because they have accepted that as full payment rather than partial.

What Is FAFSA and What Is It About?

The FAFSA is the starting point of almost every kind of student financial aid in the United States. Ever wonder who the largest provider of financial aid is? Well it’s the federal government.

Every year, it gives out more than $70 billion in grants, loans and work-study awards to millions of students. No matter who you are, you simply have to complete the FAFSA, which stands for the Free Application for Federal Student Aid.

You can find the FAFSA online, at high schools, at most libraries, or at a college financial aid office. It will list the deadline of June 30th, but your school’s deadline may be in early spring. You should get it in as soon as possible after January 1st.

You will need tax forms in order to fill out this form and if you or your parents have not completed them, you should estimate the information and make the corrections later. It is very important that you get the form in on time before the money is allocated.

Even if you’re applying to 12 schools, you need only complete one FAFSA. Always double check that your information is accurate and fill out the form completely. A failure to do so could lead to a costly delay in processing.

Make sure that you submit all required forms along with your application and any additional paperwork requested. It’s best to beat the deadline by as much time as possible. Certain types of aid are offered on a first-come, first-served basis.

Applying online is the fastest way to submit your form and get your results. You will need to request a PIN number from www.pin.ed.gov. Also, filing online can help you catch mistakes quickly and make corrections.

Other Need-To Know Facts About the FAFSA

If you are a male, be sure that you have registered for Selective Service. If you’re over the age of 18, male and have not registered for Selective Service, your FAFSA will be rejected.

Don’t lie on your FAFSA. The government randomly flags a certain percentage of FAFSAs for the school to verify. If they find out that you lied, you will not only lose your aid, but you can be charged with a federal crime.

If your parents are divorced, the parent you lived with the most in the last tax year is the one whose income you will include on the application. Whether your parents claim you as a dependent on their taxes has nothing to do with whether you’re considered a dependent in terms of the FAFSA.

You are considered a dependent and have to include your parents’ income on the FAFSA unless you meet a list of requirements such as you are over the age of 24, you are married, you are in grad school, you’re an honorably discharged veteran or ward of the court.

After You Submit Your Form

Once you have submitted your FAFSA, it goes to the Central Processing System (CPS). The CPS uses the Federal Methodology to calculate your results and create your Student Aid Report (SAR).

This is then sent to you, your schools, and your state aid office. Keep a copy for your records. Regardless of the school, certain aid will be available to you as long as you qualify, such as: Pell Grants, Direct Loans, and Federal Family Education Loans