Friday, September 18, 2009
Any accounts in collection? Go to this website to check them out
If you currently have any accounts in collection, check out this website to make sure that the agency collecting on the account isn't one of the worst of these scumbag agencies....http://www.budhibbs.com/am_worst_collection.htm
Monday, September 7, 2009
The Truth About 1099-C : Insolvency
As many of us who have settled out debts for less than the amount owed, we are always told that the credit card company will send a 1099-C for the amount forgiven. We are also told that we may have to pay taxes on the amount forgiven. Don't worry too much about this. As I explain below, there are situations when you don't have to claim these amounts as income and pay taxes on them. such as insolvency, bankruptcy and foreclosure. My explanation of form 1099-C below deals only with debtors that were insolvent at the time of the cancelation of any debt. Forgiveness of debts for foreclosure or bankruptcy are not discussed below.
When a debt is settled, the credit card company will send a 1099-C with the amount forgiven. For most of us in a situation where we have to settle our debts, WE DO NOT HAVE TO CLAIM THE FORGIVEN AMOUNT AS INCOME AND WILL NOT HAVE TO PAY TAXES ON THAT AMOUNT.
First, if you look at the instructions that come with the 1099-C, you will see that the instructions indicate that "some canceled debts are not includible, or fully includible, in your income..." Further, the instructions indicate that you should "not include canceled debts in your income to the extent that you were insolvent immediately before the cancellation of the debt." For further instruction, you can look at IRS Publication 4681, which further defines insolvency.
The IRS defines insolvency as when the total of all of your liabilities exeeded the fair market value of allof your assets immediately before the cancellation. Assets include everything that you own. For an easy way to determine whether you were insolvent, there is a worksheet to fill out on page 6 of IRS Publication 4681.
If you fill out the worksheet and confirm your insolvency, then all you have to do is fill out and file with your taxes, IRS Form 982.
Many people are scared or worried about settling their credit card debts because they think that they will incur a larger tax bill. Prior to settling any debts, go to IRS Publication 4681 and complete the worksheet on insolvency. If you are insolvent, then settle away....
*This post is not meant to give tax or legal advice. This is merely a guide on possible resolutions to problems that may arise as you settle your debts. Please consult a tax attorney or other tax professional if you have questions or need further guidance. Each individual's personal circumstances are different and you may need professional assistance.
When a debt is settled, the credit card company will send a 1099-C with the amount forgiven. For most of us in a situation where we have to settle our debts, WE DO NOT HAVE TO CLAIM THE FORGIVEN AMOUNT AS INCOME AND WILL NOT HAVE TO PAY TAXES ON THAT AMOUNT.
First, if you look at the instructions that come with the 1099-C, you will see that the instructions indicate that "some canceled debts are not includible, or fully includible, in your income..." Further, the instructions indicate that you should "not include canceled debts in your income to the extent that you were insolvent immediately before the cancellation of the debt." For further instruction, you can look at IRS Publication 4681, which further defines insolvency.
The IRS defines insolvency as when the total of all of your liabilities exeeded the fair market value of allof your assets immediately before the cancellation. Assets include everything that you own. For an easy way to determine whether you were insolvent, there is a worksheet to fill out on page 6 of IRS Publication 4681.
If you fill out the worksheet and confirm your insolvency, then all you have to do is fill out and file with your taxes, IRS Form 982.
Many people are scared or worried about settling their credit card debts because they think that they will incur a larger tax bill. Prior to settling any debts, go to IRS Publication 4681 and complete the worksheet on insolvency. If you are insolvent, then settle away....
*This post is not meant to give tax or legal advice. This is merely a guide on possible resolutions to problems that may arise as you settle your debts. Please consult a tax attorney or other tax professional if you have questions or need further guidance. Each individual's personal circumstances are different and you may need professional assistance.
Thursday, September 3, 2009
Settle Your Debts!
There are many of us out there that have made mistakes in our lives (we are all human) and racked up unmanageable debts. Likewise, a lot of us are behind on those debts or have defaulted on them all together. Don't Despair! There is a way out that works for everyone. The credit card companies (and their rotten debt collectors) will settle for 30% to 50% of the balance owed.
A lot of us are also embarassed by this situation and we try to ignore it. Don't. You can settle and you can do it yourself. Do not be afraid and DO NOT USE A DEBT SETTLEMENT COMPANY. (More on these rip-off artists later). Below is my quick and easy guide to settling your own debts. But be aware, the process can be slow and you will be harassed. Just be patient and good things will happen. I've done this myself and it works.
Phase I
During this phase you may have suffered some sort of personal setback (loss of job, reduction in income, or just unmanageable debt). You will have missed a payment or realized that you can no longer service your debts. Do not worry, while your credit card company may start calling you (every day) just explain that you can't make a payment at the moment. Be firm. Do not agree to make a payment that you can't afford. Do not let them intimidate you.
Phase II
Three months have passed and you have not made a payment. At this point, you have a choice, ask for a hardship plan and begin to make payments, or, if you can't afford to make payments, ask for a settlement. The credit card company will not be that receptive, but ask. And ask for a settlement of 10% to 15% of the balance. The first time you ask, the credit card company may laugh, may tell you that you are crazy, and may tell you that you are a deadbeat.
IGNORE THEM.
Once you make the first offer, the credit card company will make an offer to settle for 90% to 95% of the balance owed. Politely decline (unless you can or want to pay it). The phone calls will continue. I suggest that you get caller ID so that you aren't talking to them every day. But be patient. Talk to them every couple weeks and ask for a settlement each time. You can increase your offer slightly each time you speak with them and they will do the same. Keep this up until you get an offer that you can afford. During the time it takes to get a settlement, put money away so that when you reach an affordable amount, you can pay it right away. This process may take 3, 4, or 5 months, but eventually you should be able to settle for 50% of the balance. You may be lucky, or stubburn enough, and get a settlement offer for less.
If you reach a settlement with the credit card company, you can pay it immediately by electronic check. You don't have to worry about a credit card company. They have federal and state regulations and you don't have to worry with them like you do with debt collectors.
Phase III
If you reach phase III, then you have thus far been unsuccessful, but it's not over! At around 180 days past due, your credit card may charge off your account and give it to a debt collector for collection. You start the negotiation process all over again. Start at around 20% and work your way up. Eventually, you will get a settlement. Again, keep putting money away so that you can settle when you reach an agreeable and affordable amount. However, with a debt collector, be very wary of paying them right away. Debt collectors are the worst characters and will lie, cheat and steal to get any money from you that they can. Pay them only with a money order and demand the settlement in writing before sending in the money. Also, demand that they confirm receipt of the payment and that the account is settled.
Phase IV
Debt paid off. It may have taken a little time, but everyone got what they wanted. This is so easy! And DO NOT FEEL BAD. The banks have put themselves in this situation and they deserve what they get. And don't be naive, the bank has still made money, just not as much money as if you had completed their 30 year payoff plans.
I have used this method, and I continue to use this method, with several credit cards and I have received settlements of between 30% and 50% of my debts. This plan works and the best thing is, ITS SO EASY!!!!!
Congratulations and Cut Up All of Your Credit Cards! Cash Only is the new American Motto!
A lot of us are also embarassed by this situation and we try to ignore it. Don't. You can settle and you can do it yourself. Do not be afraid and DO NOT USE A DEBT SETTLEMENT COMPANY. (More on these rip-off artists later). Below is my quick and easy guide to settling your own debts. But be aware, the process can be slow and you will be harassed. Just be patient and good things will happen. I've done this myself and it works.
Phase I
During this phase you may have suffered some sort of personal setback (loss of job, reduction in income, or just unmanageable debt). You will have missed a payment or realized that you can no longer service your debts. Do not worry, while your credit card company may start calling you (every day) just explain that you can't make a payment at the moment. Be firm. Do not agree to make a payment that you can't afford. Do not let them intimidate you.
Phase II
Three months have passed and you have not made a payment. At this point, you have a choice, ask for a hardship plan and begin to make payments, or, if you can't afford to make payments, ask for a settlement. The credit card company will not be that receptive, but ask. And ask for a settlement of 10% to 15% of the balance. The first time you ask, the credit card company may laugh, may tell you that you are crazy, and may tell you that you are a deadbeat.
IGNORE THEM.
Once you make the first offer, the credit card company will make an offer to settle for 90% to 95% of the balance owed. Politely decline (unless you can or want to pay it). The phone calls will continue. I suggest that you get caller ID so that you aren't talking to them every day. But be patient. Talk to them every couple weeks and ask for a settlement each time. You can increase your offer slightly each time you speak with them and they will do the same. Keep this up until you get an offer that you can afford. During the time it takes to get a settlement, put money away so that when you reach an affordable amount, you can pay it right away. This process may take 3, 4, or 5 months, but eventually you should be able to settle for 50% of the balance. You may be lucky, or stubburn enough, and get a settlement offer for less.
If you reach a settlement with the credit card company, you can pay it immediately by electronic check. You don't have to worry about a credit card company. They have federal and state regulations and you don't have to worry with them like you do with debt collectors.
Phase III
If you reach phase III, then you have thus far been unsuccessful, but it's not over! At around 180 days past due, your credit card may charge off your account and give it to a debt collector for collection. You start the negotiation process all over again. Start at around 20% and work your way up. Eventually, you will get a settlement. Again, keep putting money away so that you can settle when you reach an agreeable and affordable amount. However, with a debt collector, be very wary of paying them right away. Debt collectors are the worst characters and will lie, cheat and steal to get any money from you that they can. Pay them only with a money order and demand the settlement in writing before sending in the money. Also, demand that they confirm receipt of the payment and that the account is settled.
Phase IV
Debt paid off. It may have taken a little time, but everyone got what they wanted. This is so easy! And DO NOT FEEL BAD. The banks have put themselves in this situation and they deserve what they get. And don't be naive, the bank has still made money, just not as much money as if you had completed their 30 year payoff plans.
I have used this method, and I continue to use this method, with several credit cards and I have received settlements of between 30% and 50% of my debts. This plan works and the best thing is, ITS SO EASY!!!!!
Congratulations and Cut Up All of Your Credit Cards! Cash Only is the new American Motto!
September 2009 Status Report
We are now in month 9 of our 2 year plan and have successfully paid off or settled $10,538.80 in debt! Its a little slow going at this point, but we have big plans in the works, including a settlement of almost half of our outstanding debt for 20% of that amount! I will post on that once it is a done deal. Our current status is below:
1. CitiCards (Amex)- $8,960.47
2. BofA CC- $3,416.29
3. BofA LC- $37,525.40
4. CitiCards (Student Visa)- $2,362 (Settled in January for 35% of balance owed!)
5. USAA- $12,693.10
6. WAMU- $1,102.49
7. Capitol One- $1,663.79 (Settled in August for 40% of balance owed!)
8. Chase Cards- $1,374.46 (Settled in March for 50% of balance owed!)
9. Credit Union- $1,395.22
10. Victoria's Secret- $242.45
11. Car 1- $3,503.10
12. Car 2- $11,766.95
13. Harley- $3,600
14. Bally's- 424.80
Total Debt- $84,630.27
1. CitiCards (Amex)- $8,960.47
2. BofA CC- $3,416.29
3. BofA LC- $37,525.40
4. CitiCards (Student Visa)- $2,362 (Settled in January for 35% of balance owed!)
5. USAA- $12,693.10
6. WAMU- $1,102.49
7. Capitol One- $1,663.79 (Settled in August for 40% of balance owed!)
8. Chase Cards- $1,374.46 (Settled in March for 50% of balance owed!)
9. Credit Union- $1,395.22
10. Victoria's Secret- $242.45
11. Car 1- $3,503.10
12. Car 2- $11,766.95
13. Harley- $3,600
14. Bally's- 424.80
Total Debt- $84,630.27
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