debt Tag

26 Jun Bankruptcy : Why Do I Need To Save My Papers?

You need your bankruptcy papers are a shield against future collection actions for discharged debt. The answer is asimple phrase: "zombie debt". Zombie debt is the phenomenon of old and discharged debt being revived by debt buyers and debt collectors long after the debt has been rendered uncollectible. Check out Zombie Debt Haunts the Discharged and Zombie Debt.

Another reason: refinances or purchases of real estate.

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17 May Debt Management Plans & IRS Form 982 (Part 3)

There is a hidden trap to debt management plans andpaying less than what you owe. Under the IRS rules, someone has realized income from the non-payment of that debt. This is logical, if you think about it. Consider what happens to that $5,000 cash advance if you do not repay it. didn't you just get the benefit of $5,000? If the creditor doesn't get repaid, or is repaid less than what you owe, the creditor has suffered a loss and you have realized a gain. That is taxable income.

In two privious posts, we discussed credit counseling, settlements and Debt Management Plans.See Credit counseling and DMPs, Part 1 andWhat is a Debt Management Plan?, Part 2.

So when you settle a debt for 40% of the total balance, expect to receive a Form 1099 showing that you received income for the other 60%. This is the hiden trap of settlement plans or DMPs, if you pay less than what is owed. At the end of the settlements or the DMPs, you will owe the IRS money. Which would you rather owe money to, Visa or the IRS?

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16 May What is a Debt Management Plan? (Part 2)

A debt management plan is designed to pay off your debt by restructuring your payments over a fixed period of time. In the 'before' times (before the revisions to the Bankruptcy Code in 2005), it was possible to attempt such a payment plan with your creditors.

A DMP (debt management plan) can take several forms. If you have the ability, it is possible to pay off your accounts in full for less than what is owed by making a lump sum payment. This lump sum payment could have been as little as 25% of the total balance. More recently, lump sum payments need to be much larger, in many cases as much as 80% of the balance due.

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