Debt Settlement

If you are having trouble paying your credit cards or are falling behind in other bills it may be possible to settle some of your debts for less than the full amount that you owe. We will evaluate your situation and help you decide whether settlements would be beneficial to you. 

What can be done to settle your debts?

  • Negotiation with creditors
  • Other companies that do this
  • Can it work?
  • Tax Consequences of Forgiveness of Debt

Negotiation with creditors

It is possible to negotiate with creditors and settle debts for less than the amount that is owed. This is a difficult process but it can be done in appropriate circumstances. There are risks related to whether the creditors actually have the authority to settle the debt and whether the tax consequences make the settlement worth the risk. We will evaluate the risk and help you decide whether settlements would be beneficial to you. We don not want you to spend money to settle debts and then have to file a bankruptcy anyway.

Other companies that do this

There are many companies that advertise on TV and on the internet that they will settle your debts and keep you out of bankruptcy. Many of these are very expensive programs that are designed to collect fees from you and will not be successful in the long run.

Can it work?

Debt settlements can work in rare circumstances. It requires that you have sufficient funds to pay both the settlement and the tax liability associated with debt forgiveness. It helps if you have a small number of creditors. He more creditors you have the more risk that settlements will not be successful.

Tax Consequences of Forgiveness of Debt

When a creditor forgives a debt or settles for less than the total amount that you owe this can result in a tax liability that is unexpected.

The IRS treats forgiveness of debt as personal income that results in income tax. We will help you determine if you plans will result in tax liability and minimize the risk that you will have hidden tax liability.