Debt Discharge

AAA

DEFINITION of 'Debt Discharge'

The cancellation or forgiveness of a debt. Debt discharge results in taxable income to the debtor unless the forgiveness is a gift or bequest.

INVESTOPEDIA EXPLAINS 'Debt Discharge'

When a debt is discharged by an institution, the debtor will usually receive a Form 1099-C that shows the amount of debt forgiven. The debtor must then report this as miscellaneous income on the 1040.

RELATED TERMS
  1. Debt Relief

    The reorganization of debt in any shape or form, so as to provide ...
  2. Debt Rescheduling

    A practice that involves restructuring the terms of an existing ...
  3. Non-Recourse Expense

    An accounting term that sometimes refers to the cost of absorbing ...
  4. Bad Debt

    A debt that is not collectible and therefore worthless to the ...
  5. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  6. Debt Service

    The cash that is required for a particular time period to cover ...
Related Articles
  1. Bankruptcy Protection For Your Accounts
    Retirement

    Bankruptcy Protection For Your Accounts

  2. Understanding Credit Card Interest
    Retirement

    Understanding Credit Card Interest

  3. Student Debt: Is Bankruptcy The Answer?
    Budgeting

    Student Debt: Is Bankruptcy The Answer?

  4. No Debt Forgiveness For The Tax Man
    Taxes

    No Debt Forgiveness For The Tax Man

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center