Debt Settlement Tips
How To Negotiate With Your Creditors

Can you get a loan to payoff negotiated debts? What taxes do you have to pay on settled bills?

We offer these debt settlement tips to help you negotiate with your creditors, get a debt settlement loan and help you determine the taxes you have to pay.



First, check to make sure the creditor hasn't already "charged off" your debt; or written it off. Did you get a notice from the creditor that this was done? Did you have to claim the written off debt as income on your tax returns? If yes, then the debt is legally dead, and you already paid taxes on the income. In this case, move to the next debt in line to be paid off.

Next, verify what the Statute of Limitations are in your State before you try to arrange the pay off a debt.

Collectors only have a specific period of time to collect on a debt so you need to find out if the statute of limitations in your state have passed.

If the debt is older than the statute of limitations, inform the bill collectors about this fact so that they will not annoy you for an uncollectable debt. Remember the original creditor or the assigned collection agency can't collect from you if the SOL is expired (they can try however!).

Debts usually disappear from your credit report after 7 years. If the debt has not been paid for 7 years, it cannot legally stay on your credit report. You can challenge this listing on your credit report and it will be removed.

Keep in mind that the length of time a late payment can remain on your credit report is not connected to the statute of limitations. There is an important distinction to make. Even if a debt is cancelled from your credit report after 7 years, you could still be legally sued for the debt if the statute of limitations for your debt in your state is not over.

In fact, you can consider yourself “free” if the debt has been erased from your credit report and the statute of limitations is up on this debt as well. This means that you can stop worrying about your debt only if enough time has passed for both the legal debt collection statutes and the credit report limitations too. When this is the case, your debt becomes uncollectable, it disappears from your credit report, and there’s basically nothing else you must do from here on for this particular debt.

What happens if you need to wipe off your debts because they are not past the statute of limitations?

Paying off your debts can be time-consuming nightmare that people may find so threatening that they rather leave it to Consumer Credit Counseling Services. But keep in mind that you can often arrange a better deal for yourself if you take things into your own hands.

Although CCCS's primary goal is a valuable one, they usually forget to negotiate on how the account will be reported, which means that although your debt is settled, your credit report will be ruined. And besides settling your debt, your goal should be to negotiate how this debt will be reported to the major credit bureaus.

With an increasing number of people getting into head over heels in debt nowadays, you can now find debt settlement programs that will help decrease your debt by 25 - 50%.

This means that your account will be closed and a payment plan will be developed to help you get out of debt.

In some cases, you can qualify for a debt settlement loan to make the reduced final payments to your unsecured creditors. This is a great way to get out of debt fast and make just one monthly payment (a LOT less than you are paying now each month), it's almost like instant debt elimination! Check it out here to see if you qualify.

The True Realities & Risks of Past Due Debt

Many people simply don’t know what the risks are that come hand in hand with overdue debts.

Yes, it is possible for a creditor to take legal action against you and even win a judgment, making it possible for your creditor to take (garnish) part of your income and to have the sheriff seize your property.

Nevertheless, in the case of credit card debt, the chances of this are somewhat limited. They would simply lose too much of their precious time and expense to sue you. But this doesn’t mean that the possibility does not exist, the higher the balance you owe on one account, the higher the chance this will happen!

Many people think that their debts are so serious that there is nothing left for them to do besides filing bankruptcy.

They are simply frightened by those terrible stories told by collection agencies, especially when it comes to garnishment and seizure of property.

However, collection agents usually forget to mention that before any of these actions take place, the creditor must first go to court. Therefore, due to lack of proper information, many people file bankruptcy too fast.

Bankruptcy should be used only if all other alternatives are exhausted.

The risks of actions for garnishment, judgment, and seizure of property should be appropriately evaluated against the chance that such radical procedures will ever take place. The risk, and the decision to take that risk, is completely in your hands.

Debt Settlement Taxes ... You Have To Pay Tax

Yes, it really is true, you do have to include the written off amount on your tax return as income. You will receive (usually in January for the prior year) a 1099 Tax Form from each creditor you settled with.

The 1099 form tells you how much you have to claim as income on your tax return. This should be the difference between the principal you owed minus the settled amount you paid. In some cases, depending on how you arranged your settlement, it could include some interest as well.

But this isn't all bad, considering you maybe only paid 50% of what you owed; and Uncle Sam wants maybe 15% of the writeoff, you still come out 42.5% ahead! It's a win-win!




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