Posts Tagged ‘repayment plan’

With the excess lending practices of the last few decades, before the recession caught up to us, many people have found themselves in deep waters financially. After all, it’s easy to spend money offered to you today that you hope to have in the future to pay back. But what if that money offered gets you so far into debt that you can’t see the light at the end of the tunnel? Whom can you turn to for help with your debt?

When it comes to handling your debt, you have options to help you create a repayment plan. You can go with debt consolidation, use a debt management company, or make your own arrangements for repayment. When considering those options, there are some things to keep in mind. Know your exact amount of debt and if it’s an amount you can handle by yourself. Decide if you are willing to pay for financial expertise and how much. Understand how it will affect your credit.

You will have to contact your creditors to make self-payment arrangements if you decide to go it alone. Most credit card companies and creditors are more than happy to work with you to make payment arrangements. They may even offer a settlement arrangement that could cut your bill in half. While this will negatively affect your credit score, it does have advantages. It can free up money to pay other debts and could save you from bankruptcy. If you do this for several of your debts, you could save thousands of dollars.

If you use a debt management company, they will work with you to come up with a debt management plan, or DPM, and they will negotiate with your creditors for a repayment plan. With them, you can determine a monthly amount that you can afford to pay that will go toward your debt. This amount may go into a special debt account or may go directly to the debt management company. If you decide to use a debt management company, make sure they are reputable and accredited. Carefully examine their fee structure so there are no surprises.

A debt settlement company will work out settlement arrangements with your creditors, and can usually negotiate a better settlement than you could on your own. The drawback is that they will generally charge a fee based on your amount of debt. When choosing a debt settlement company, try to find one that does not charge fees until the end of your debt repayment, one that can stop your creditors from calling you, and one that is accredited and listed with the Better Business Bureau.

Whatever method you decide to use, take steps to keep yourself from falling into the same spending habits in the future. While a debt management company can give you financial counseling, you can easily examine your own finances and discover many ways to keep you out of debt in the future.

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The IRS has found that you owe them back taxes, now what? If this is your current predicament, you will still have several options. The best advice that you can get will be to talk with a tax attorney in order to come up with a plan that will be most beneficial to you. Depending upon your personal circumstances you may want to set up a repayment plan to pay back the money, or ask for an offer in compromise.

If you decide to set up a repayment plan, your attorney will help you to figure out a reasonable monthly installment plan and then help you to set up this plan with the IRS. Once the IRS sees that you are making an effort to repay them their money they will be willing to work with you to come up with a plan that you can afford to stick to. Your attorney will play a crucial role in establishing a repayment plan.

Your other option will be to get an offer in compromise. If you opt for this option you will also need an attorney to represent you and to present your offer to the IRS. Basically, your attorney will take the amount of money that the IRS has fined you and refigure that amount. Sometimes your attorney will come up with numbers that are substantially lower than what the IRS says that you owe.

Next, your tax attorney will present their findings to the IRS and asking them for a specific dollar amount to be paid out to them in one lump sum in order to satisfy the amount of debt that you owe to the IRS in back taxes. This amount of money will be limited to the amount of money that you can produce in cash in a lump sum payment.

The IRS then will have the option of accepting your offer in compromise or denying it. If you have hired a skilled tax attorney to represent you, odds are favorable that the IRS will accept the offer and then you can pay off your debt in one lump sum. This will be the easiest way to get the amount of debt that you owe to the IRS reduced and the fastest way of paying it off. Once the entire compromise agreement has been reached and paid you will start off with a clean slate and owe the IRS nothing.