3 ms·

If you don’t have liquidity to cover the taxes on the imputed income.

• toomuchtodo 4y ago
  Even at an extortionate 30% APR and assuming a worst case 10% state income tax rate, that puts payments at ~$100/month to save ~$17k assuming $2k in tax on $20k forgiven (plus interest). I cannot speak to all states, but some will offer a payment plan at prime plus some basis points if you can’t afford your tax due at tax time. That’s cheap money to retire a chunk of debt. My concern would be those folks trying to block debt forgiveness efforts, and their chances of success. Better to get it done sooner and pay some tax versus holding out and possibly getting nothing. (educational purposes only, not financial advice)