Maryland  |  Tax Law

Legal Question

Asked on: 3/17/09, 10:14 pm

Will I owe taxes on truck loan

I received a no asset chap 7 bankrtupcy discharge Jan 2008. A dump truck, financed with a bank, is still in my posession and the bank is willing to let me have the title, lien free, in exchange for a CD they have been holding for collateral. They do not want the truck anymore. Will I owe tax on the forgiven amount since this entire debt was discharged in the bankruptcy. I would like to keep the truck. Would this arrangement constitute a new contract with the bank? I could not afford to pay taxes on the large amt that will be written off by the bank.

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