Recent Posts in DOR Category
| February 24, 2010 |
| Settling a Debt for less than you owe can cost more than you think |
| Posted By Robert Kovacs |
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Yes settling a debt for less than you owe will save you money but it is not going to save you as much as you think.
When you settle a debt with your credit card or other creditors for less than you owe the amount forgiven is taxable income.
For example if you owe Bank of America $20,000 and they forgive $10,000 the forgiven $10,000 is treated as income to you which you will pay taxes on at year’s end. The creditor will issue you a 1099.
Also debt settlement for less is reported on your credit report and can negatively impact your credit score.
In bankruptcy debts are discharged through a court order. Discharged debt in bankruptcy will not be taxed or reported as income.
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| February 03, 2010 |
| If you owe the IRS or DOR filing bankruptcy will put you in an interest free payment plan |
| Posted By Robert Kovacs |
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If you owe the IRS or the Massachusetts Department of Revenue (“DOR”) back taxes then filing bankruptcy may help.
Filing bankruptcy under chapter 13 or 11 will put you into an interest free repayment plan. Yes, you will have to pay the IRS or DOR back, but it will be INTEREST FREE, penalty free, and you will be able to do it over 5 years in chapter 13 and possibly even longer in chapter 11.
It should also be noted that some taxes will get discharged in bankruptcy meaning you never have to pay them back.
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