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someone should write a guide on how to buy up your own debt for 1/30th of the cost

At a very basic level, convince the credit card company (or hospital, bank, etc), that they will never collect even a penny from you and incur the hit to your credit rating that such activity entails. To actually purchase the debt, you'll likely need to be licensed according to your local jurisdiction.

Indeed. I know that if I can buy a dollar of debt that I owe for a nickel, I want in on that. It'd make things a lot easier on my pocketbook.

More interestingly, how would the 1099-C work in such a case. Wouldn't it be like matter and anti-matter colliding wiping each other out since you would simultaneously incur a tax-deductable loss and a taxable gain of equal value?

sigh No.

If you buy $10k of debt for $500, the debt buying business' basis in the debt is $500. If they cancel it, they can deduct $500.

If $10k of your debt is forgiven, you get 1099-C'ed for $10k in income.

Net-net, this would cause $9.5k in income if you went through with it.

Still, taxes on $9500 are way lower than the $10000 you originally owed, so it sounds like a win.

Until everyone starts doing this and the whole system collapses, at least. That money isn't coming from thin air.

Sure it is: it's called fractional reserve banking.

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