Debt Settlement Laws - What You Don't Know Can Really Harm You!

By Author: J.J. Yong
Total Articles: 963
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If you find yourself facing a high stack of debts on your desk with no means to pay it off, maybe it's about time you took interest in debt settlements. It is a highly effective way to help your financial situation when you can pay off your overdue amounts with minimum payments. Before you start, it would be wise to know the debt settlement laws so that you can do it all by the book and not be in fault with the law.

Debt settlement is a legal and practical way to get rid of your overdue amounts of debt without filing for bankruptcy, or paying way too much in terms of financial charges. Debt settlement is pretty easy to get a grip of once you understand how to concept works. It is merely working with your creditors to arrange a pay back of a smaller portion of your debt. This payment is usually made in one lump sum, and varies between 20-80% of the original total depending on the settlement agreement you arrive at with your creditors.

Furthermore, like everything else, there are occasional downfalls as well. in this case, there are IRS consequences involved. Depending on the creditors, some may send out an IRS form ...
... 1099 stating that any money saved in a settlement deal is considered income and that would make the sum saved taxable.

But worry not, as you can fill out an IRS form 982 which would state the insolvency at the time of settlement. Insolvency would generally state that you were broke and had absolutely no money and you wouldn't be charged tax on the 1099 income. It would be wise if you could consult a tax attorney to guide you through the process and advice you on the next possible step.

In conclusion, if you do not take interest in the matter, you might find yourself facing a tight financial situation that could majorly affect the quality of your life. So get help now and start a debt settlement.
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