New York Debt Settlement
Having past due bills can be quite stressful. In addition to knowing that you owe your creditors money that you are unable to pay, you also may have to deal with past due notices in the mail, constant calls from debt collectors, lawsuits, damage to your credit score, and the possibility of foreclosure or wage garnishment. While it may be tempting to simply ignore demands for payment, there are other options for debt relief. Instead of ignoring your debt it is better to consider solutions that would result in the debt being paid or eliminated. There are several options to consider such as filing for chapter 7 bankruptcy, filing for chapter 13 bankruptcy or securing a debt consolidation loan. Another option is debt settlement. Debt settlement is the process of negotiating with your creditors payment arrangements that would allow you to pay less than the total amount that you owe. If you are faced with significant debt that you are unable to pay, an experienced New York Debt Settlement Lawyer may be able to help you negotiate with your creditors new payment terms that will allow you to eliminate your debt in a more manageable manner.What is debt settlement?
Debt settlement is the process of negotiating with your creditors to reduce the amount of debt. The benefit to the creditor is that instead of waiting for you to pay the entire amount owed or instead of going through the process of suing you to get paid, the creditor would get some of the money owed relatively quickly. A debt settlement arrangement typically requires the debtor to pay the agreed amount in a single lump sum payment soon after the agreement is made. The creditor agrees to forgive the remaining balance. As long as you stick to the new repayment terms, the creditor will not be legally permitted to require you to pay the amount that was forgiven under the terms of the debt settlement agreement.What types of debts can be settled?
While many types of debt can be settled through negotiation, there are some types of debts that cannot be settled. Debts that can be settled include credit card bills, retail store accounts, unsecured personal loans, medical bills and balance owed after an auto repossession.
Debts that typically cannot be settled through conventional debt settlement negotiation include your mortgage, the amount owed on your apartment lease, home equity loan, court-ordered child support or spousal support, criminal fines and penalties, and government-backed student loans.What are the tax consequences of settling debt?
If you settle a debt with a creditor for less than the full amount, your income may be affected for purposes of tax reporting. The IRS treats forgiven debt as income. A company that forgives $600 or more of a debt's principal is required by the IRS to send you as well as the IRS a Form 1099-C. The purpose of the Form 1099-C is to make sure that you report the amount of settled debt as income. Even if the amount of debt that you settled was less than $600 or even if you do not receive a Form 1099-C, you still must list the amount of debt settled as income.
Successful debt settlement may be a way to avoid wage garnishment, foreclosure, repossession, and bankruptcy. However, successful debt settlement requires the understanding of negotiation strategy. The staff at Stephen Bilkis & Associates, PLLC has extensive experience helping clients eliminate debt, responding to creditors' claims, filing for chapter 7 and chapter 13 bankruptcy, and dealing with other issues related to debt relief. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your debt issues.