Income Tax Settlements
Should you choose to settle some of your old debts for less than the full balance here are a few tips.
NEVER let a debt collector know you have money, don't let that words I get a tax refund pass your lips. If they ask, tell them no or that you pay taxes and do not get anything back.
This tatic will help you to negotiate a much lower settlement than you would have gotten for this time of year.
Debts that are less than two years old I can honestly say that you likely not get less than 70 cents on the dollar. Debts that are 2-3 years 60 - 50 and 3+ years will depend all on the amount being owed. I've seen an account settled (70k debt) for 10% before, but it was also 8 years old.
Negotiating is key. If you aren't good at it then find someone who is whether it be a friend or a settlement company. Be aware that you must give the agency permission to speak to anyone else other than you. Some states it does require that you also give permisson for a spouce to discuss your account.
Should you negotiate a settlement be prepared to follow through with the agreement. Have a fax handy, Kinko's, Relatives, Grocery store, so that you can recieve your written offer more quickly.
Remember a collection agency does not have to settle any account that you have in their office. So an or else attitude itsn't going to help you any.
If you get a jerk, request to speak with someone else or call back. Over all I think you will not find too many of those durring this time but you never know.
A first time settlement, meaning you have never done one ever before, WILL lower your credit score by up to 100 point. If it isn't your first it won't matter as much.
Ask the agency if they report PAID instead of settled to the CBR agencies. It does make a difference expecially if it is your first settlement.
If you do settle an account or even if you are paying one off ask when you can get your zero balance letter. It is usualy within 30 days of paying the bill. This is one of the most important pieces of papers you can recieve from a collection agency. Because it states that you did honor your contract. Do not forget to get this paper and don't let any collector tell you that it's mailed out automatically because 8 times out of 10 it isn't. You must cal and request it.
Thanks for all the valuable information you've posted here. I w
Thanks for all the valuable information you've posted here. I will be keeping this post for future reference.
Thanks FYI for all the wonderful tips here. This is really going
Thanks FYI for all the wonderful tips here. This is really going to help many dealing with debt collectors.
So are you saying that if you have never settled with a company
So are you saying that if you have never settled with a company it will bring your credit down pretty bad?? I was thinking about settling with CBCS on an old MCI account. They were going to settle for $400.00 and the original amount was $706.59. It is on my CR, would you settle or just make pmt arrangments with them??
What type of debt is it and how old is it? The idea of collectio
What type of debt is it and how old is it? The idea of collections is to get it resolved as quickly as possible. If a payment plan is going to be a long drawn out affair, more than 6 months I'd say personaly, then it might be in your best intrest to settle so that way it will cycle off of your report or be reported as paid/settled more quickly so that your future creditors can see that you satisfied your agreement.
A first time settlement does hurt your credit score. It's somehting many collectors don't discuss with unsuspecting debtors because liquidation rate is important.
Ultimately the choice is yours. You have to decide what is best for you.
When you settle you have to claim it on your following years tax
When you settle you have to claim it on your following years taxes right? I thought i read that somewhere but wasnt sure.Also say you have alot of debt and you cant afford to settle on all of it at one time,and you were considering bankruptcy,which would hurt you credit more filing or settling possibly one account and leavign the others in collection? Just curious not sure yet how the whole credit score thing works.
You only have to claim it if you saved 600 or more dollars in th
You only have to claim it if you saved 600 or more dollars in the settlement.
If you do settle and save more than $600, do you get a form (lik
If you do settle and save more than $600, do you get a form (like a W2, but not a W2) or is it up to you to be honest and just put that on your taxes?
You will recive the form, it isn't up to you to claim it because
You will recive the form, it isn't up to you to claim it because the IRS already knows about it.
This is the part I've been fearing the most. :roll: I settled
This is the part I've been fearing the most. :roll:
I settled a very old account for pennies on the dollar.
I have a medical bill that is two years old. I've been hoping t
I have a medical bill that is two years old. I've been hoping the CA would offer me a settlement. I can afford to pay the full amount but do not want to (long story). Should I just pay it and be done with it? it is the only negative thing listed on my credit report.
John Just get it out of the way so you never have to worry ab
John
Just get it out of the way so you never have to worry about it again. They could start tacking on some interest (I think).I would try making them an offer.
Here it is Feb 2nd and I have not received a 1099 for the remain
Here it is Feb 2nd and I have not received a 1099 for the remainder of my debit after settlement. Should I still put the balance as income on my taxes, or wait until the CC/CA sends me something?