My question involves collection proceedings in the State of California.

Occasionally I get offers from CC companies to settle debt for less than the full amount.

I have heard that if a settlement is reached and I make a lump sum payment, the amount "forgiven" is taxable and the company issues me (and the IRS) a 1099? Any advice about that? I also read somewhere that if you can prove you could not have paid off the amount that was "forgiven" then the IRS will not enforce the tax.

In your experience, and I know this varies from company to company, what percentage will a credit collection company accept?

I have one arbitration award against me, the original debt in 2003 was $32K, it went up with interest and the arbitration award in 2006/2007 (can't remember exact date or amount, have to find the letter, but I have a letter from March of 2006 saying I owed $38K - that could have been before the arbitration award however)...got a letter today saying the balance was $61K! I can't believe that even with interest and fees, it could have gone up that much in two years. But that's a separate issue. I'm writing to the debt collector to have them verify the debt.

The original card issuer was MBNA. The letter I got today says "...your account has been plaed with NCC for collection by Genesis Financial Solutions." I assume Genesis has purchased the debt. NCC is "a division of Commonwealth Financial Systems, Inc."

Also, is there a limit on the interest that can be charged on debts that have been placed in collection, or have gone to arbitration?