Posts Tagged ‘Debt’
Credit Card Debt Settlement – It may be worth sacrificing your credit score
Anyone in advertising will tell you that the most effective marketing campaign is one that manages to attach an emotion to a product. Clothes, makeup and weight-loss products are marketed to women on the basis that the they will feel sexier, prettier and more attractive, ultimately leading to love. Cars, beer and aftershave are marketed to men on the basis that the they will be “cooler” and attract prettier women. Coca-Cola and McDonald’s show people laughing and having fun, suggesting they will feel happy when drinking a Coke or eating a Big Mac.
Similarly, we are taught through lending practices, parental suggestion, bank advertising and social pressure that a poor credit score suggests not only the loss of untold dollars due to higher interest rates on loans, but amazingly, that a high credit score makes you a “good” person and a low credit score makes you a “bad” person. Who hasn’t seen the silly television commercials that suggest you’ll be driving a junker car and working at the Renaissance Faire if you have a low credit score?
This identity-attachment we place on our credit score is so subtle that most people do not even realize it is affecting their financial decisions. I’ve actually met people who would love to buy a home but stop themselves with a fear-based rational such as, “I might lose my job and not be able to make my mortgage payments.” What does that actually mean? The deeper thread goes like this, “And if I miss my mortgage payments I may have to sell the house for less than I owe, or worse, foreclose, and that would hurt my credit score and that would make me a bad person.” People don’t actually put those words to their thoughts but that is the emotional journey they take that prevents them from buying a home.
We’re taught to treat our credit score as if it is part of our identity and guess what? It isn’t.
If you currently have a low credit score and find yourself suffering from the belief that you are a failure, that you are not good with money, or that you don’t deserve a loving spouse, great kids, a good job and “the pursuit of happiness” as much as everyone else does, then discard those thoughts right now. Having a bad credit score doesn’t make you a bad person any more than not wearing designer clothes or driving a sports car makes you unloveable. Your credit score is a product, just like everything else advertised to you, and it IS NOT connected to your identity.
What your credit score IS, is one piece of an overall financial picture that includes your income, your expenses, your investments, your assets, your business, your retirement savings and your debt. I’m suggesting that you look at that whole picture and not make financial decisions based solely on whether or not you might affect your credit score.
If you’re in debt, what that means is that there may be some financial choices available to you, some as small as skipping a credit card or mortgage payment, some as large as bankruptcy or home foreclosure, and inbetween options such as a short sale or debt settlement, that may be viable even if they will lower your credit score.
I know, that’s a bold statement, one that most people would disagree with on face value. To see what I mean, lets look a little deeper.
Your credit score is a vague, logarithmic calculation that assesses risk for lenders. A low credit score doesn’t mean the borrower can’t get a loan. People just out of bankruptcy court routinely receive credit card offers in the mail and we’ve all seen commercials for “low credit, no credit” car loans. More likely than having no access to credit, a low credit score simply means that the borrower will pay more for credit in the form of higher points and interest.
The banking industry would have you believe that, in addition to being a “bad” person, those points and interest on future loans will cost you SO MUCH money that you couldn’t possibly ever consider doing anything that would lower your credit score.
Let’s do the math on what a low credit score might actually cost. Say you are buying a $25,000 car, $5,000 down and $20,000 financed. If you have a “good” credit score, you might get a 5% loan. Over 60 months, the total interest paid will be $2645. With a median credit score you might get a 6% loan which would amount to $3199 in interst. A bad score with a 7% loan, $3761. The difference between the high score and the low score is $1100 in interest over 60 months, about $18 a month.
What about with a house? Say you want to buy a $500,000 home with 20% down (sorry, the 0-10% down days are over for awhile). So you’re financing $400,000 for 30 years. At 5% you’ll pay $373,000 in interest. (I know, brutal, right? Almost 100% interest over the course of the loan. Most people never consider what a home will actually cost by the time they are done paying it off, but that’s another article). At 7%, you’ll pay $558,000 in interest. A difference of $513 a month for 360 months.
The point is, IT’S NOT THAT BIG OF A DIFFERENCE. $18 a month on a $25,000 car. $513 a month on a $500,000 home. Yes, sure, $500 a month is not meaningless, but it’s not the, “oh my gosh I might hurt my credit score what am I going to do?” doomsday heart palpitations that so many people have when they even consider the notion of their credit score being under 700, or under 600.
If you already own your home and don’t intend to borrow money for any big ticket items in the near future, your credit score becomes even less of a factor in your overall financial picture.
When I had an 800 credit score, I was able to get over $200,000 in credit to pursue a business venture. When the business venture didn’t work out as planned and I couldn’t meet my monthly interest payments on my cards, a bankruptcy attorney told me about the process of negotiating settlements on credit card balances, to pay them off for less than the amount owed. My first question was, “how will that affect my credit score?”
In about six months of settlement negotiations, I reduced my credit card debt from $212,000 to $30,000 and I had $115,000 in debt written off. This reduced my credit score by about 200 points, to just over 600.
But I had $115,000 in debt written off, not to mention all the interest I would have paid on the $212,000 in debt at 18-29% over years of minimum payments. I couldn’t buy enough new cars in my lifetime at 2 or 3% higher interest to add up to more than I saved by settling my debt.
Had I been the homebuyer in the example above, I would have paid $185,000 more in interest over 30 years, compared to saving $115,000 in six months.
The point is, if you’re in debt, debt settlement may be a viable option that will save you more money in the long run that you’d save by having a higher credit score and paying a point or two lower on your next car loan.
I’m not suggesting that anyone abandon their credit score to the wind and adopt unsound financial habits. I am suggesting that in the conversations you have with your attorney, accountant, spouse and self, give credit score considerations their proper due. They are a single part of a large financial equation, not the end-all, absolute factor that your lenders and silly television commercials would have you believe.
Owe Back IRS Taxes? Pay IRS Debt to Avoid an IRS Tax Levy
Pay IRS Debt when you owe Back IRS Taxes
IRS Offer in Compromise for Back IRS Taxes: An IRS Offer in Compromise is a way to settle Back IRS Taxes. You likely won’t be able to settle Back IRS Taxes for “Pennies on the Dollar” as promised by many shady promoters, but you will be able to avoid IRS Tax Levy issues if you make timely payments toward your Back IRS Taxes settlement.
It’s not easy to qualify for an Offer in Compromise to settle your Back IRS Taxes. One rule of thumb is to determine if you can pay your IRS Debt in full before the time the IRS has left to collect on your Back IRS Taxes expires. If you have no funds or assets to pay IRS Debt with, you may qualify.
IRS Installment Agreement for Back IRS Taxes: An IRS Installment Agreement allows you to pay your Back IRS Taxes in monthly payments. This is the most common method to Pay IRS Debt.
Again, as long as timely payments are made, you can avoid an IRS Tax Levy like an IRS Bank Levy or IRS Wage Levy. With an IRS Installment Agreement, the IRS will determine how much you pay toward your Back IRS Taxes based on your financial situation.
IRS Currently Non Collectible for Back IRS Taxes: IRS Currently Non Collectible is not technically a way to Pay IRS Debt. Instead, this is a way to help those who owe Back IRS Taxes but can’t afford to Pay IRS Debt. If you are in a financial bind, the IRS will allow you a temporary reprieve from collection efforts, like an IRS Tax Levy, so you can get your financial situation back in order.
Pay IRS Debt before an IRS Tax Levy Strikes
IRS Tax Levy Details: An IRS Tax Levy can strike at any time when you owe Back IRS Taxes. The only way to prevent an IRS Tax Levy is to pay IRS Debt in a timely manner or pay IRS Debt in full. The two most common types of IRS Tax Levy are the IRS Bank Levy and IRS Wage Levy. An IRS Bank Levy seizes all the funds from your Bank Account, while an IRS Wage Levy takes the funds right from your paycheck!
Get Help to Pay IRS Debt: If you need help choosing the best method to Pay IRS Debt, consider consulting with a knowledgeable professional. It’s difficult to avoid an IRS Tax Levy when you owe Back IRS Taxes. Be sure to set yourself up on the right IRS payment plan so you can pay IRS Debt and avoid an IRS Tax Levy.
Prevent IRS Tax Debt by Submitting an Amended Tax Return on Your Past Due IRS Taxes
This is the situation: you’ve organized all your appropriate receipts and tax forms, and you have done the proper math to establish your Internal Revenue Service Tax Debt. You’re certain you have examined and double checked each Internal Revenue Service Tax Debt figure. You then send in your return, and sure enough, you remember a credit you forgot to figure in. Or maybe you had some extra income that you didn’t take into account when calculating your Internal Revenue Service Tax Debt. Regardless how prudent you may be, occasionally, you may need to turn in an amended tax return to avoid an IRS Tax Debt on Back IRS Taxes.
Why you Should File an Amended Tax Return on Back IRS Taxes Owed
You may want to file an Amended Tax Return on your Back IRS Taxes if your filing standing, total earnings, total number of dependents, or expenses were documented erroneously. The IRS will take care of simple math problems for you, so you don’t have to concern yourself with turning in an Amended Tax Return to prevent an IRS Tax Debt if that is the only issue that needs repairing on your return.
How to file an Amended Tax Return on Back Internal Revenue Service Taxes
You can submit an Amended Tax Return to stop further IRS Tax Debt on your Back IRS Taxes by utilizing Form 1040X. Regardless if you filed your yearly tax return and Internal Revenue Service Tax Debt in an electronic format or via physical mail, your Amended Tax Return can not be sent in an electronic format. You can file an Amended Tax Return inside 3 years of your original income tax filing, including any time extensions. It is in your best interest to submit an Amended Tax Return as soon as you realize a transgression on your Back Internal Revenue Service Taxes. Take into consideration that penalty fees and interest collect on Back IRS Taxes. If the IRS detects the inaccuracy on your Back Internal Revenue Service Taxes before you, you could have a larger Internal Revenue Service Tax Debt to repay.
Sow how does the Amended Tax Return Process Function?
The IRS first verifies that your explanation for a modification is acceptable when they first receive your Amended Tax Return. They’ll then look over the associated paperwork you furnished and review it to your Back IRS Taxes. If they want more information to make a decision about your Amended Tax Return, you’ll be mailed a statement on paper saying so.
Should an additional IRS Tax Debt on your Back IRS Taxes be a result from the Amended Tax Return process, you will be expected to pay the additional Internal Revenue Service Tax Debt in full via check through USPS mail. Should the review on the Amended Tax Return bring about a larger reimbursement rather than an IRS Tax Debt, your refund usually arrives between 8 to 12 weeks.
Even if Extra Cost, You File an Amended Return ASAP
Of course if you were convinced that an Amended Tax Return on your Back Internal Revenue Service Taxes would bring about an additional refund rather than an additional IRS Tax Debt, you would be quick to file one. However, you should wait until you receive your first refund before submitting your Amended Tax Return information on your Back IRS Taxes so as to avoid any paperwork confusion. Once you receive your check, however, you can cash it during the time that you’re waiting for your additional refund from your Amended Tax Return on your Back Internal Revenue Service Taxes.
It’s always best to correct any info you submit to the IRS. Do not think that just because you missed a detail, the Internal Revenue Service will too. Definitely bet on the IRS to look for a reason to collect more on Internal Revenue Service Tax Debt from you. Again, if the IRS records the mistake on your Back IRS Taxes first, you can be held accountable for the penalties and interest that have accrued on the Internal Revenue Service Tax Debt from your Back IRS Taxes.
Do You Owe The IRS Taxes? Remove IRS Back Taxes Now! We Offer The Best IRS Tax Debt Settlement!
When you Owe the IRS, it’s simple to take care of IRS Back Taxes if you are aware of all available IRS Debt Settlement choices. Today you can get your economic affairs back on track with an IRS.gov Debt Settlement agenda. Although the plans may not be public knowledge, these IRS Debt Settlement plans are available to everyone who owes IRS Back Taxes and are provided by the US government. Listed below are some Resolutions for IRS Debt Settlement Problems that be helpful when you Pay what you owe the IRS when you have IRS back taxes.
Non-Disclosure Installment Contract: This specific IRS Tax Debt Settlement option to pay the IRS Back Taxes you Owe the IRS applies only to debts under $25,000, and you have to pay all that is owed to IRS.gov. With this IRS Non-Disclosure Agreement, you have as many as 60 months (or less, depending on the collections statute) to pay back what you Owe the IRS. For instance, if you Owed the IRS with just one month remaining because of the statute of limitations, your repayment term to Pay Your IRS Back Taxes cannot extend thirty days.
Penalty Fees & Interest still increase on what IRS Back Taxes you Owe the IRS during your IRS Back Taxes repayment term with a IRS Non-Disclosure Resolution. you’re able to pay more than your agreed amount and have that extra payment amount put towards the principal you owe the IRS rather than to the interest on your IRS Back Taxes. Another bonus of this IRS Debt Settlement Plan is that all property, money, and liabilities (including spending habits) are protected and remain private. Void of all financial disclosure, there are fewer records to look over, and your case to pay IRS Back Taxes can be finished within as little as fourteen days.
Partial Pay Installment Settlement: This IRS Debt Settlement plan can apply to any size debt of IRS Back Taxes you can Owe the IRS, unlike the Non-Disclosure Agreement. It does require financial disclosure, and your payment agreement for your IRS Back Taxes is based on this disclosure. The 3 kinds of options to this IRS Installment agreement are:
IRS Payment Plan: This IRS Tax Debt Settlement agreement is for people like you who Owe Taxes to the IRS and need an “affordable” monthly amount. Take note that there may be a huge variance between what IRS.gov deems an affordable payment and what you consider an “economical” payment on your IRS Back Taxes.
This particular IRS Tax Debt Settlement option mandates financial disclosure of your assets, income, and expenditures. IRS.gov compares your settlement proposal to the amount they believe you are going to be able to afford, based on the financial information you reported. Doing this takes into consideration all properties and equity, even if you’re not able to get hold of them. For this reason, unless you are completely destitute with zero chance of ever being able to pay what you Owe the IRS, you won’t qualify for this IRS Settlement plan on the amount of Back Taxes you Owe the IRS.
If you happen to Owe the IRS, it’s urgent that you’re completely informed all of your IRS Debt Settlement plans to pay all of your IRS Back Taxes. Keep in mind that these are just a few of the IRS Tax Debt Settlement plans that are available to you when you Owe the IRS. Realize that you have rights, be aware of your tax debt options, & get out of IRS tax debt today!