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Legal and Effective Tax Debt Relief

For people that need tax debt relief, two things are looked for a program that is effective but more importantly, one that is legal. Dealing with tax issues is a big deal and because of the connection with the government, not something a person wants to play around with so finding the right program that follows all the laws is critical. The problem is that while many tax debt relief programs exist, some are offered by companies that are not honest, which means important information is hidden from the consumer.

One option for tax debt relief would be for the person to work with a debt settlement company or a governmental program. With this, a representative of the company works on behalf of the person in debt to get the creditor to accept a settlement at which time the debt would be considered paid in full. For instance, if someone needed tax debt relief for $4,000 because of past due taxes, a debt settlement might result in the creditor accepting 50% off the amount owed at which time the account would be closed. Therefore, the debtor would pay $2,000 and the financial obligation ended.

Using a debt settlement strategy for tax debt relief is certainly beneficial for many reasons but one negative factor remains. First, the positive aspects of debt settlement are that the debt is paid off, making budgeting far easier and the person avoids going through a bankruptcy, which would have a negative impact on the personís credit report for up to 10 years. The downside is that while tax debt relief gets debt paid off, a negative report would still go to the credit bureaus but this is far less hurtful than a bankruptcy.

Another consideration associated with tax debt relief specific to using a debt settlement is that anything the person would save over $600 would be considered income. That means the individual would be sent a 1099 showing savings as income, which would then have to be claimed and taxes paid. Although this might seem a little strange when trying to deal with tax debt relief, the savings of a debt settlement compared to taxes paid on the savings would make perfect sense.

A common misconception regarding tax debt relief is that if there is property attached or that the person could have his or her wages garnished. People unfortunately are told that a creditor has the right to take legal action as a way of claiming money owed but in truth, none of this is factual. Although a person that gets tax debt relief might receive a collection call, once that agency understands that a settlement was accepted, by law, they must stop all harassing attempts to get money.

Of course, no matter how tax debt relief is used, the key would be for the individual to work closely with an honest and reputable company or agency, one that can outline all the details of the process to include advantages and disadvantages, and then walk the individual through each step. If the person needing tax debt relief does not receive appropriate answers or feels uncomfortable at any time with the service being offered, he or she should consider this a red flag and choose another company to assist.

Living in a time of financial uncertainty is hard enough but then for the person that needs tax debt relief, the last thing they want or need is to be sucked into a fraudulent process for getting help. The good news is that according to the National Debt Relief Initiative, more and more creditors are willing to do what they can to get people back on track. This includes not only credit card companies, medical bills, and other standard bills, but also people needing tax debt relief. Therefore, the possibility of getting help is realistic, giving people a chance for a new start.

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