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Archive for July, 2012

How to Handle State Tax Debt

Posted on: July 31st, 2012 by admin No Comments

We’ve spent a lot of time on our blog discussing various strategies and techniques for handing IRS tax debt. However, state tax debt can be a big struggle for many Americans all over the 50 states. If you’re struggling with tax debt owed to your state, there are a few things you should know about debt negotiation and the resolution process.

4 Steps to Combat Tax Debt

First, be assured that this tax debt isn’t just going to disappear. Even if you’re convinced that the information is inaccurate, state governments are quite the large machines. They aren’t going to let you off the hook just because you claim there’s been an error. Address the situation as early as possible for the best results.

Second, get a professional on your side. Debt negotiation is a lot easier – especially when negotiating tax debt – when you have a CPA or tax lawyer backing you up. Get someone with plenty of experience for tackling your situation.

Thirdly, get every scrap of evidence that will back your case. Hand this over to your tax lawyer. (Get used to practicing full transparency in order to achieve the best results.) Let your tax lawyer create a plan of attack. Be willing to ask questions about anything you don’t understand. After all, you are ultimately the one responsible for your case – not your lawyer.

Fourthly, submit your appeal to the state. This may take some time, so make sure you’re putting forth the very best case when you submit your tax debt negotiation plan.

Debt Cautions: Don’t Settle

Posted on: July 30th, 2012 by admin No Comments

One of the most important debt cautions we can offer our readers is the importance of not settling for debt negotiation plans that don’t offer you the relief you really need. For people who are struggling with debt, but consider repayment to be a feasible option, debt negotiation can be a great way to get relief. However, for those who are in serious debt and are likely to experience persistent financial hardship, debt negotiation is only going to delay the inevitable (bankruptcy), and harm you in the long run.

Why You Might Need Bankruptcy

The truth is, you might need bankruptcy. Debt negotiation is a great method for some people. But, if you are facing a financial hardship in the form of debt that you know won’t ever be repaid, don’t waste your time (and money) going through the debt negotiation process. Instead, start investigating the bankruptcy process.

Bankruptcy isn’t nearly as scary as you probably think it is. You won’t lose everything you own, and you certainly won’t be viewed as a moral failure. In actuality, the bankruptcy code was created for people like you who are facing undue financial hardship.

It’s understandable that you want to get yourself out of debt. But, when that simply isn’t possible, bankruptcy is a great alternative. Remember, don’t settle for the debt negotiation route when what you need is solvency now.

Foreclosure Alternatives: Filing for Bankruptcy

Posted on: July 27th, 2012 by admin No Comments

If you’ve been receiving some letters about foreclosure from your mortgagee, you might be feeling overwhelmed as if you have no other options. You should know that you have foreclosure alternatives. While mortgage debt can feel quite oppressive, you should know that foreclosure isn’t the only way to get rid of your mortgage debt. In fact, you might even be able to avoid foreclosure altogether and catch up on your mortgage payments. Here’s how…

File for Bankruptcy & Keep Your Home

Does it sound like an offer only available to a select few? Well, you might be surprised to learn that thousands of people like you are filing for bankruptcy in order to save their homes from foreclosure. Here’s how it works:

Filing for bankruptcy protects you from having creditors hounding you day and night. Collections completely cease while you’re under the protection of bankruptcy. Usually, people who take advantage of this foreclosure alternative file for Chapter 13, a form of bankruptcy that restructures debts. It does not provide immediate solvency like other forms of liquidation bankruptcy (e.g. Chapter 7).

While you’re under the protection of Chapter 13, your debts are reduced and reorganized (including your mortgage debt), and you have more time to make your mortgage payments. This is a great method for anyone struggling with other debts in addition to mortgage debt!

Initiating Credit Negotiations with Your Card Provider

Posted on: July 26th, 2012 by admin No Comments

Are you struggling with your finances? Has debt negotiation proven to be of little benefit for you? If so, you might benefit from initiating credit negotiations with your credit card provider. Credit negotiations can be a great way to demonstrate good faith and cut a deal with your credit card company.

Suggestions for Getting Started

Anyone who is owed money, whether a small bank, large corporation, or credit card company, likes to know that their borrowers show good faith intentions to repay them. Demonstrating good faith intentions is an essential first step.

You might be struggling with making your payments, but your lender may not realize that you’re struggling. Alerting them of your financial situation before you start missing payments can work in your favor. You may even be able to enter into some credit negotiations that result in a better deal for you.

Also, try coming up with a payment plan that you think is feasible. The more transparent you can be about your financial situation, the more realistic your payment plan will appear. Pitch your payment plan to your card provider, and see what the response is. You might be surprised how well-received this strategy can be!

Credit negotiations are always better than debt negotiation. Just as you’d rather get an oil change than have to overhaul an oil-thirsty engine, credit negotiations are more desirable than debt negotiation.

Tax Debts Cost Some Their Home

Posted on: July 25th, 2012 by admin No Comments

The confusing and outdated laws that drive some sectors of the financial and legal world have never been so frustrating. Local governments, stooping to a new low, are now seizing property from homeowners over tax debt as low as $400! It’s a shocking move that has more than a few consumer protection agencies up in arms!

What You Should Do

The Associated Press reports that outdated state laws are allowing local governments to file tax liens against property owners who have outstanding tax debt as low as $400. If that debt remains unpaid (which it often does because of poor communication and misunderstandings), then that tax lien can be sold to banks and investors.

While the banks and investors who purchase the tax lien don’t actually own the house, they do own the right to seize the home later on. The homeowner has the ability to purchase the lien, but the fees and interest make the lien expensive.

If the owner doesn’t purchase the lien, the lien-holder can then sell the home at a huge profit margin! This technically-legal but highly unethical behavior is taking advantage of hard-working homeowners’ small tax debts. Some are saying that this new practice is even worse than foreclosure because it’s so unexpected.

Furthermore, because these homeowners could be current with their mortgage payments and not struggling with foreclosure, the shock of a small tax debt coming back to haunt them can be quite frightening! Make sure to check your tax debt records and insure that you are staying current.

Smart Tips for Avoiding Debt

Posted on: July 24th, 2012 by admin No Comments

No doubt, you’re well aware that our nation is a debt-driven nation. From the federal government and major corporations, all the way down to non-profits and the lower classes; nearly every transaction in our society involves the use of debt and/or credit. While a financial obligation isn’t an entirely bad thing when it’s paid off on time, it can become a huge problem when handled irresponsibly. Make sure you’re avoiding debt when at all possible with these smart tips!

3 Tips for Avoiding Debt

1. Use a debit card or cash whenever possible. For many people, credit cards will usually land you in debt negotiation with a major lender. Don’t allow yourself to get to this point. Instead, avoid credit cards when at all possible and use cash or debit cards to stay debt-free!

2. Never take on a debt without a clear and defined plan for how you will repay it in full and on time. When you accept a loan or other form of debt without thinking critically about how it will be repaid, you set yourself up for failure. Always be forward thinking with your financial habits!

3. Pay yourself back, interest-free, instead of a lender. If you have money in a savings account, consider spending part of that on necessary purchases instead of taking out a loan to make ends meet. Then, pay your savings account back the same way you would pay a creditor. If you “miss a payment,” it’s not as big of a deal. Plus, you don’t charge yourself interest!

Avoiding debt can be a lot easier when you use these three smart debt control techniques. Plus, you won’t end up going through debt negotiation later on!

Prioritizing Your Mortgage & Avoiding Foreclosure

Posted on: July 23rd, 2012 by admin No Comments

It seems like foreclosure has been in the news headlines for five years running now. And, while things are starting to get better, the truth is that many families still continue to struggle with foreclosure. Of course, there are many factors related as to why people’s homes are foreclosed on, but ultimately it comes down to one thing: not making your mortgage payments.

Prioritize Your Mortgage at All Costs

This advice may seem obvious, but we’re very serious. We know it can be hard to stay on top of mortgage payments. If it was easy, there wouldn’t be so many instances of foreclosure all around the country. However, prioritize your mortgage at all costs.

Nothing is more important than your home. After all, once you’ve sunk a lot of hard-earned equity into your mortgage, the last thing you want is to see it all lost through the foreclosure process. And, equity aside, your home is so much more than just money.

If you’re struggling to stay on top of your mortgage, consider what expenses in your life can be eliminated. Are you using a budget to guide your purchasing decisions, or are you guided by impulses? If the latter is the case, work on re-structuring your expenditures.

Furthermore, consider debt consolidation tactics that can make your other financial obligations more manageable. Prioritizing your mortgage might mean other things have to fall to the wayside. While no one wants to have any kind of debt, you might have to be willing to take on debt in other areas of your life in order to meet your monthly mortgage payment.

Debt Management Strategies: Snowball v. Slow and Steady

Posted on: July 20th, 2012 by admin No Comments

Different strokes for different folks. The phrase applies to many situations, but it’s especially apt for debt management strategies. Money is a sensitive issue for nearly everyone. Whether you feel on top of the world with a good income and no debt, or whether you’re swamped with bills you can’t pay and are barely making enough to survive. But, the point today is simple. If you have debt, you want to get rid of it. There are two distinct approaches you can take, which we’ll cover here.

Snowball

The snowball method is quite a popular one amongst all of the various debt management strategies. Essentially, you take all of your debt, consolidate it into a single bill, and then you start hacking away at it, taking out the biggest bites you can month after month. If you think that sounds intense, well, you’re right. This is an especially popular method with people who are suffering under a lot of credit debt.

The snowball method is a great way to get rid of a lot of debt. Of course, it takes serious dedication in order to be successful. But, you can do it! Cut back on expenses, and hone in on what hurts the most: credit debt.

Slow & Steady

Or, you might find that a slow and steady approach works best for you. This strategy isn’t a way of saying “be lazy” or “procrastinate.” Rather, you have a lot of essential expenses, and this method allows you to work at your debt without making drastic, 180 degree turns in your habits.

Debt management strategies can be all over the map. These are just two methods that work for a lot of people. How you choose to eliminate credit debt, is up to YOU!

Why You Should Avoid Payday Loans

Posted on: July 20th, 2012 by admin No Comments

You’ve probably seen the flashing signs and unkempt store fronts advertising payday loans for your entire life. And, now, as you run into some financial troubles, it might be tempting to walk inside and see what all this payday loan business is about. In two words, we can tell you: no good. However, give us a couple minutes to expound. We have a short list of why you should never take out payday loans.

Don’t Take These Loans!

Payday loans make money by charging extremely high interest rates. In fact, these places are so notorious for their high interest rates that many states have legally capped the rates that can be charged. Also, because payday loans are so easy to get, they can be too tempting for many people!

You can end up paying rates that translate to 300% in annual interest! This is absolutely insane. Even if you’ve fallen on hard times, look for other options. Also, many people get trapped into a lifestyle that depends on payday loans. This kind of debt can be more costly and damaging than other kinds of credit debt. Don’t fall prey to the cycle.

Lastly, if you’re considering payday loans, then your credit score is probably not in great shape. However, taking out a loan from one of these places won’t do it any favors. It could even damage your score!

All forms of credit debt can be messy and undesirable, but this can be one of the worst forms. Try to find alternatives. And, if you absolutely must take out a loan from one of these places, repaying it as soon as possible should be your top priority!

Money Management Skills Before Foreclosure

Posted on: July 19th, 2012 by admin No Comments

If you find yourself facing foreclosure, and it seems impossible to find any way out, the best thing you can do for yourself during this time is to be financially prepared. If you are financially prepared, you might actually find foreclosure to be a relieving experience. No longer will you have to deal with an overbearing, unaffordable mortgage. And, you won’t have to deal with the dreaded calls and letters from your mortgagee.

Skills You Need

As you approach your foreclosure date, you want to start building a nest egg. When you have this reserved money in your back pocket, it makes the foreclosure process much more bearable. With a little extra cash tucked away, you don’t have to worry about finding housing after you go through the foreclosure process.

Start cutting expenses now! As a homeowner, you know that a house can be a huge drain on your budget. But, many of these expenses can probably be eliminated when you consider the fact that you won’t have to deal with your house a few months from now.

In this situation, landscaping and inessential home repairs should be the first to go. Also, cut back (or eliminate!) extra services and amenities (e.g. premium cable packages, security systems that you don’t use, etc.).

And, of course, budgeting and saving are good money management skills to start implementing now. Developing these skills before foreclosure will better prepare you for life after foreclosure. Additionally, you’ll have a new skill set to help you make financial decisions in the future!