Dealing With Income Tax Liens


Income tax liens

Falling behind on federal income tax is a very serious matter. In fact falling behind on any kind of tax be it federal, personal or business, signifies a dire financial situation. Tax payments is something that cannot reflect on your credit report till the time a delinquent status and/or a lien has been filed against you.

There are several reasons why you should make payment of your overdue taxes your top priority. The IRS can affect many facets of your life and the first thing they can do is file a lien against a property that you own so they can levy it if necessary.

Surprisingly, many people tend to ignore taxation defaults while concentrating more on the money that they owe on their credit cards, home and a car. Other creditors may give you problems and will for the money that you owe them. But any money that you owe taxes to the IRS is much much more serious. They can take away many of your things including a home, your car, your bank account balance, your insurance cash value just to recover the debt. So paying the IRS off should be your first priority.

Even if you pay off an outstanding tax obligation, the law allows it to remain on your credit report for the period of seven years more from the time that it was paid off. An unpaid tax lien can stay on your report indefinitely.

But the most serious aspect is that the IRS has the right to put a lien against something you own and take it away to recover its debt.

A lien represents the security for tax debt and the action used to seize your property in order to partially or fully satisfied the debt is called a levy. If there is an IRS lien being reported on your credit report it means that some of your property has already been adjudged for recovery of the debt. In many cases this is mostly your home as it is a most valuable asset and liable to give the maximum recovery for the tax debt. In this case the property is automatically encumbered and you cannot even sell your home until the IRS is paid. You cannot refinance or get a home equity loan to pay the IRS. In such a situation, the IRS tax debt becomes only second in priority to the payment on your current mortgage. In some circumstances, although rare, the IRS can go as far as to force you to sell your home to pay it.

As already mentioned, the IRS can put a lien on and access many of your assets which includes bank accounts, income, cash value of life insurance, real estate, vehicles, money owed to you by others, inheritance, proceeds from lawsuits, Social Security benefits and even retirement accounts. If you owe the IRS for business taxes, it will conceivably hamper your chances of future income by seizing your business bank accounts and businesses assets. You are also not liable for protection by your state laws. The IRS transcends those laws and there virtually no protection from the IRS.

Once again clear communication may help you in this situation. As with other kind of debts and creditors, you may be able to enter into installment arrangement to get your taxes paid off. This will not be easy. The IRS is strict when it comes to payment of taxes. And just like other collection accounts you should have a plan. Small token payments may only confuse things for you and the IRS. Take the advice of a professional attorney in order to come up with something tangible and workable. Don’t sign anything just because the IRS or the representative asked you to or because you think you’re doing something that is going to help your situation. Start by getting a copy of the publication put out by the IRS called “Taxpayer Bill of Rights”. But if you have doubts about how to manage the obligation to the IRS without realistically putting your family’s financial security in jeopardy, contact a attorney or accountant immediately. Usually the money spent on professional advice will be well worth it.

A formal method of submitting a settlement offer to the IRS is called an “offer in compromise”, OIC. Because an OIC is quite tedious and requires complete and accurate and truthful disclosure about several aspects of your financial life, it is a serious undertaking. Therefore it is best to hire an accountant or attorney who has lots of experience in the area.

However, the cost of the accountant or the attorney can be prohibitive. Especially if you all looking for good expert advice to deal with a serious matter like that of the IRS. Make sure you know and understand the fee schedule before you hire him or her. If using a professional accountant or lawyer seems too expensive keep in mind that it may cost you more in interest, fees and penalties if you don’t hire someone qualified to handle the IRS matter.

How To Face Difficulties In Making Student Loan Payments

Student loans are slightly different in treatment from other kind of loans. For one thing, it is possible for a student loan that has gone into collection to be brought to current status which is almost impossible for any other kind of loan.

People are often surprised later on in their lives as to the amount of burden a student loan can be. People end up taking a student loan to finance their undergraduate and post graduate studies in hope of being able to pay for it when they get well-paying jobs. However, the loan can become large specially if you have used it to finance living expenses as well. Sometimes things just don’t move the according to plan and student loans end up becoming a big burden. It is not uncommon for professionals to be still paying the off student loans many many years after having received their degrees.

The first thing that you need to understand regarding a student loan is, what the kind of student loan that you have. Loans provided for technical or other specialty schools are often financed by the school directly, in which case, you may be able to treat these debts like any other revolving debt or personal loan and negotiate them or include them in bankruptcy. However, most of the student loans even when seemingly sponsored by a well-known private banking institutions are more likely than not insured by the Federal government. You cannot deal with the federal government loan in the aforesaid manner.

The good news is that the federal government student loan programs offer many breaks in an effort to help students out to get them to the point where they can pay the loans off. There are relief programs which may assist you in the payment of your loan such as reduced payment arrangement, forbearance or deferment. If you expect to fall behind on your payments, it is almost inexcusable not to communicate with your lender and discuss other options. Many times you simply have to notify their office that you are having difficulty making your payments and they will actually walk you through the options that are available to you.

But once you default on your student loan, it can stay with the loan department for several months or years or it may go to a collection agency or it may be turned over to a litigation lawyer. The course of action also depends on how much you hope, how far past are you and what the records reveal about your efforts to communicate with the original lender or the subsequent collector.

Another important fact to remember about the federal student loan is that the IRS can get involved. Because of the simple fact that it is a part of the same system as the federal loan insurers, IRS can stronghold any and all tax returns refunds you may be entitled to until the debt is paid in full, including additional interest, fees and penalties.

If you know ahead of time that the IRS is going to keep any tax return refunds, or it has already done so in the past and you still have balanced on your student loan account, you may want to take the advice of your accountant and tax advisor to help you calculate the precise numbers the exemption necessary to bring you close to flush on your tax return.

If you do get your student loan deferred, the account will be reported on your credit files as well. If the account is reported in default but is now actually in forbearance or deferment status you need to let the CRA’s know that by using a dispute letter. Do not complicate or convoluted the issue, simply let them know in your letter that your student loan numbers so-and-so is not in default but in deferment and that they should correct this indication and mail you a copy of the updated credit report within 30 days.

If you need any assistance regarding a student loans contact the Federal student aid information Center at 800-433-3243. Communicating with your lender and asking for help when it is required for a student loan payment is probably the best way to tackle the situation. So do not be afraid to make the call.

How to Deal With A Possible Foreclosure On Your Home

Handling A Foreclosure

Depending upon the state where you live in the United States of America foreclosure on your home can happen in as little as a few weeks following a delinquent mortgage payment. Hence, the situation is to be taken very seriously. If you’re already late on a mortgage, make sure that you’re taking the necessary steps to deal with the situation.

The first thing that you need to do if you find yourself missing a payment on your mortgage is to analyze your financial situation. You need to carefully adjust your financial priorities and take a close look at your income and expenses. It is time to carefully and accurately assess your monthly financial responsibilities.

Not surprisingly, many people have a tendency to keep up with the smaller bills instead of the larger ones because it is easier and provides a sense of accomplishment to have achieved getting some bills paid. That is all very well but ask yourself this. Would you rather lose your cell phone or your house? Your entire mortgage payment should be your top priority, second only to food and health care.

What makes payment on a home loan even more of a priority is that the it is foolhardy to even consider making partial payments. Even if the mortgage payment is less than by a single dollar, mortgage lender can adjudge your agreement to be incomplete and consider the loan to be in default which brings you closer to the possibility of a foreclosure. As already discussed in the previous post regarding repossession, if you anticipate financial difficulties in the future which will prevent you from meeting your existing mortgage application, you should contact the lender. He may be able to offer a health plan that will help you cope with the financial difficulty for a couple of months. Many lenders have programs that allow them to reduce mortgage payment for a couple of months you can get back on your feet again. They also have mortgage deferment plans available, some of which are supported by the federal government. This is especially helpful if you’re facing a temporary financial setback and hope to be able to access the funds required to make the payment on the mortgage in the next couple of months. Doing simply nothing about it or just make the situation worse.

As stated before, the foreclosure process and the time frame differs from one state to another. But the steps involved are pretty much the same. Once you miss a payment your lender will surely send you a notice regarding a missing payment and the additional fees and interest that you have accrued. If you cannot bring your mortgage account current within a few more weeks your lender would instruct you that your account is slated for foreclosure proceedings.

You must understand that the economic conditions around real estate are not too great and have undergone a lot of slump in recent time. The mortgage lenders do not want to go through the foreclosure proceedings because at the end of the day it means a loss for them. The procedure is expensive and they almost never ever recover the amount of money that is owed to them by the original borrower.

So it is in your best interest as well as mortgage lenders to try and work together solution. However, if things continue to proceed towards the unfavorable outcome of foreclosure, you may have to come up with the entire amount of the mortgage all at once to save your home.

At this point he should make a note of the fact that if your home is secured with a deed of trust instead of a mortgage, as is allowable in some states such as New York, the foreclosure process moves even faster because the lender does not have to go through several of the formality involving court proceedings. The deed of trust allows for a non-judicial process that does not involve a court.

Once the proceedings for foreclosure have started, the lender will place a notice of sale in the local newspaper. You have a chance to convince a lender to reinstate your loan up until the time that he actually sells the house. This can be difficult at this stage but it is still possible, specially if you are able to come up with all the money that you owe the lender.

The final step is when the lender accelerates your loan. The only way to recover from home at this point is to pay the mortgage balance and within just a few days.

However, as mentioned before, the real estate industry is going through a difficult time. Mortgage loans are seeing the lowest interest rate that they have in decades. Owing to this situation, a mortgage lender may be more willing to work with you if you can come up with any kind of solution to the problem. Your best bet is to come up with some sort of a payment plan with your existing lender that minimizes his loss.

Another way to get out of this situation is to sell your house fast. The trick here is to advertise your home for sale, show to prospective buyers and accept an offer and finalize the sale all before your home is auctioned off to the highest bidder to someone other than you.

How To Deal With Re-Possession


In our modern society, credit gives us access to many fine things in life. By using credit and loans from financial institutions, common folks can afford cars, homes and former education. Unfortunately, sometimes circumstances arise when you cannot keep your end of the bargain as a consumer and you lose the right to possess these things. In this section we will talk about how to deal with some of the very difficult financial situations including repossession, foreclosure, student loans and tax liens.


If you are late on making payment on your automobile, you run the risk of having your vehicle repossessed. Upon missing a payment, the lender will send you a notice and inform you about the amount you owe along with the extra interest and fees that you may have accrued. Ignoring this notice from the lender will not do you much good because it will definitely lead to repossession.

There are options available to you when dealing with a possible repossession.

Contact The Lender As Early As Possible

First of all, if you have a good and positive and long history with the lender regarding payment, you should call him and apprise him of any future problems you anticipate in being able to meet the payment obligation. If you can make this call before the account gets actually late, you might not only be able to get some concessions from the lender but also be able to prevent a negative mark of late payment from arising on your credit report. A lender usually reports of payment as late after it is more than 60 days delayed. Your finance company may accept partial payment for a period of time or it may have a program where you can have one or two month’s payment obligation deferred and transferred to the end of the loan. So definitely call and ask. Not communicating with your finance company and waiting till the last moment is usually counterproductive. Also, ignoring the notice from the lender is also not going to make the problem go away unless you expect to come up with the money in the next couple of days.

Consider voluntary repossession

The second option to you is that if you have no hope of being able to make good on the payment in the future, you have no option but to let the vehicle go. In such a case you can consider voluntary position. Not only does this help you save face with the lender but also save you the embarrassment of having your vehicle repossessed at an embarrassing time, at an inconvenient place and before you had the chance to remove your personal belongings.

Either way, the disadvantage of repossession is that it will still be indicated on your credit report as a form of re-possession and your credit score will be hit anyway. And you will still probably be financially obligated to render. The financial obligation to the lender continues because once does lender re-possesses your car he will try to sell it in an auction to recover as much money as you can. The lender usually does not recover the full outstanding amount which gets compounded with fees, interest, towing, storage and auction expenses.

The difference between the sale price and the debt that you now owe is referred to as deficiency balance. You can also have a deficiency balance on a leased vehicle. Your lender will probably apprise you of the revised outstanding amount of the loan. It is just as likely that a collection agency will now be the handed the account to recover money from you.

Once again it is equally important to contact the lender to find out if he has some sort of an internal policy program to help consumers out of their financial hardship. Specially if you expect to be able to make the payment in a few days, call the lender and ask them if they can excuse a month or two of payment by extending the length of your loan.

For example, a 60 month loan can be made into a 62 months loan if two months payment can be deferred. If they approve of your request they were likely do so in writing and mail you a letter with any contract for you to sign. You stand a better chance of convincing the lender about your financial problems by communicating with him before the account gets totally delinquent which usually happens after 120 days of nonpayment.

Remember, a car loan is a secured debt. If you become delinquent by 60 days or more, you increase your chances of having the asset of the property repossessed. Repossession is a possible consequence for nonpayment of any secured debt. Creditors and lenders are legally allowed to confiscate personal property that you use as a collateral for the debt.

But as far as your credit report is concerned, don’t simply ignored repossession sections because you don’t want to face it any more. Start by looking at the balance that is showing. Because of all the alleged costs added and subtracted from the loan, there’s a good chance that the balance on your credit report is not the same balance of the collection agency is trying to collect. It may even differ by several thousands of dollars. If this is the case it may be inaccurate and you should dispute this item with the credit reporting agencies directly. As with any collection matter, if the credit does not have the account as an active issue, the chances of it being able to locate all necessary documents in order to verify that the lessens as time goes by the.