Debt relief programs can offer a solution to financial hardship, and there are several types of relief programs that may be available to you. To find the right program for you, it is important to review the types of debt you have accumulated, your income and the amount of debt you have.
In order to achieve debt relief, it is also important to consider why you accumulated debt in the first place. For example, if you have a history of poor spending habits, it is imperative that you work on those habits in order to ensure that you do not find yourself in debt again in the future. In doing so, you will ensure that once you have achieved financial freedom, you will retain the freedom that you have earned.
About Tax Debt Relief
If you are seeking debt relief from taxes that you owe to the Internal Revenue Service (IRS), it is worth taking the time to learn about the programs that are offered by the IRS to those who are experiencing financial hardship. When seeking tax debt relief, it is important to explore the options that you may have with the IRS as well as alternative loan programs that may be able to help you pay down your IRS debt for good.
Like most types of debt, tax-related debt accumulates interest. This interest begins on the date that your taxes are due for the year. The IRS also charges a failure-to-pay fee of half a percent of your unpaid taxes each month that your taxes remain unpaid. In addition to these penalties, a debt that is large enough or goes unpaid long enough could result in the IRS either seizing your property, such as your home or other financial assets.
About IRS Debt Relief Programs
If you are in need of tax debt relief, the IRS offers short-term (120 days or less) and long-term payment plans. While the IRS charges a fee to set up a payment plan, you will receive a reduced fee by enrolling in automatic payments. The fee charged to enroll in a long-term payment plan is $31 when setting up automatic payments online and $149 when setting up a payment online with manual payments.
Costs are higher if you need to set up a payment plan over the phone with an agent. Interest will still accrue while you are making payments on your debt. Alternatively, you may be eligible for an IRS fresh start based upon your:
- Ability to pay.
- Qualifying monthly expenses.
- Asset equity.
The IRS offers a “compromise” to qualifying applicants who have accumulated a tax debt that they cannot pay. The Offer in Compromise (OIC) program allows applicants to make an offer that is lower than the total amount that is owed to the IRS. An initial lump sum payment must be made that is at least 20 percent of the offer amount unless the applicant meets Low Income Certification guidelines. If an offer is accepted, a payment arrangement can be made for the remaining amount of debt.
If you are interested in this tax debt relief option, it is important to know that there is a $185 non-refundable application fee. However, you do not need to pay this fee if you meet Low Income Certification guidelines.
About Alternative Debt Relief Loans
If you do not want to commit to one of the debt relief programs that are offered directly through the IRS, you may be able to obtain a loan that will help you pay down your tax debt. However, you will then be responsible for paying the loan that you took out to pay the IRS.
If you are considering a debt relief loan, it is important to examine the interest rate that you will be paying on the proposed loan carefully. If you will be paying more in interest on the new loan than the fees and interest that the IRS will charge you each month on your unpaid debt, then it may be better to simply work out a payment arrangement with the IRS.
Learn About Credit Card Debt Relief
Credit card debt relief can be achieved in one of several options. However, before considering a debt relief program for credit card debt, it is worth taking the time to evaluate whether or not you can pay down your debts with your creditors through payment arrangements.
Typically, debt relief programs should be considered when you have no hope of repaying your unsecured debt within five years or when the total amount of your unsecured debt is half or more of your gross income.
Credit Debt Relief Through Bankruptcy
Debt relief can be achieved by filing for bankruptcy, but bankruptcy will have a lasting impact on your credit score and make it more difficult for you to qualify for a loan for years to come. However, bankruptcy is capable of erasing most form of credit card debt and unsecured personal loans.
Depending on the state you file in, you may have to give up some of the property that you own. Bankruptcy is a three- to four-month process and it is important to start by speaking to a bankruptcy attorney.
About Credit Debt Relief Programs
If you are in serious need of credit card debt relief and you are already behind on payments to your creditors, a debt settlement may be a good option for you. Debt settlement is the process of paying a lump sum payment to a creditor for less than the amount that you owe in order to cancel out a debt.
Debt settlement companies will negotiate on your behalf to all of your qualifying creditors. However, debt settlement can and often does impact your credit score negatively for years to come.
Credit Debt Relief Loans and Balance Transfer Credit Cards
You can apply for debt relief loans and balance transfer credit cards that carry a zero percent interest over a promotional period in order to save money on your interest charges. This is a good option if you can pay down your debt within the promotional period offered by the loan or credit card agency. If you cannot, it is crucial that you compare interest rates beyond the introductory period.
Find Out About Debt Relief Companies
If you are looking for companies that can help you with debt relief programs that you qualify for, you need not look further than the most common and reputable agencies. However, it is important to always ask an agency about their fees for their services in order to ensure that you will not end up paying more than what you currently owe. You can find relief through agencies such as:
- Greenwise debt relief
- Accredited debt relief
- Progressive debt relief
- National debt relief
- Optima tax relief