Hi, I'm new here. I am seeking advice on my current situation. I appreciate your time upfront.
1996-2000: Attended college and borrowed 12k. Paid off about 8k and then defaulted on 4k in 2004.
2001-2003: went to a graduate school and borrowed 72k. Never made a payment. defaulted in 2004. I get bills from 4-5 different collection agencies, and I'm clueless right now.
2002: Lost money in the stock market and didn't file for taxes. Later, IRS started sending me bills for $32K in taxes, which has increased to more than $45k due to interest and penalties.
October 2005: filed for Ch 7 to clear off some credit debt($20k?? or so), but didn't help with the IRS/student loans.
I was young and foolish, and I ignored phone calls and just ran from the reality. As much as I regret now, the figures have more than doubled since the default(in 2004), and I just can't handle the situation right now. I knew it would bite me some day, and I came to a decision that I should do something now rather than later. I have a wonderful family now, and I am so sorry that my family has to share this burden now.
I have been working as an independent contractor since 2005, and perhaps this is why IRS/fed hasn't been able to garnish my earnings so far. I don't have much savings, and I rent.
If anyone has been through what I'm going through right now, I'm desperately seeking for an advice. I really want to start on a rehab somehow, but I'm without a clear direction as of now. Any comment will be appreciated. Thanks,
Seeking advice on tax/student loan defaults
Started by
jeriko1013
, Dec 31 2011 05:09 PM
11 replies to this topic
#1
Posted 31 December 2011 - 05:09 PM
#2
Posted 31 December 2011 - 06:38 PM
One more thing, with regard to the 2002 tax issue, I don't have the 1099 from 2002. I called up my brokerage(ETrade), and they told me it got wiped out after 7 years, which is the regulation. So as of now, I'm without evidence that I didn't make money in 2002. How do I wage something against the IRS in this case? Would IRS share 2002's 1099form they got from ETrade? Thanks,
#3
Posted 02 January 2012 - 02:48 PM
Have you been filing with the IRS since 2002? I would probably start by finding a good local tax specialist (I would avoid online firms) that has a good reputation and references. The first thing they will do is get you caught up on unfiled returns, as the IRS will not deal with you if you have not been filing returns. Next step would be an Offer-In-Compromise (OIC), which could greatly reduce the amount you own down to something you can afford to pay back (They look at recent income and weigh that more heavily). I think you'll be surprised that the IRS is very fair in terms of settling for lesser amounts with an OIC.
As for the student loans, if I understand correctly, you own about $75K. A typical monthly payment is 1%, so expect to pay around $750 month. For rehab you will have to contact the collection agencies and request rehabilitation. Are these government or private loans? How many collection agencies exactly?
As for the student loans, if I understand correctly, you own about $75K. A typical monthly payment is 1%, so expect to pay around $750 month. For rehab you will have to contact the collection agencies and request rehabilitation. Are these government or private loans? How many collection agencies exactly?
#4
Posted 03 January 2012 - 02:16 PM
Have you been filing with the IRS since 2002? I would probably start by finding a good local tax specialist (I would avoid online firms) that has a good reputation and references. The first thing they will do is get you caught up on unfiled returns, as the IRS will not deal with you if you have not been filing returns. Next step would be an Offer-In-Compromise (OIC), which could greatly reduce the amount you own down to something you can afford to pay back (They look at recent income and weigh that more heavily). I think you'll be surprised that the IRS is very fair in terms of settling for lesser amounts with an OIC.
As for the student loans, if I understand correctly, you own about $75K. A typical monthly payment is 1%, so expect to pay around $750 month. For rehab you will have to contact the collection agencies and request rehabilitation. Are these government or private loans? How many collection agencies exactly?
Thx Jaybee for your reply.
I did not file in 2002 for the reason being that I lost money. same goes for 2003, 2004, 2005, and 2006(none of which has been an issue with the IRS). But in 2002, I'm guessing that since I didn't file, the IRS probably got a 1099 form from Etrade, and just based the net income on the total sales/purchase report, which could be erroneous if I had a position carrying over to 2003.
as for the student loans. the original principal was around 72k. now after many penalties and interests, it's between 140k-150k. Is there a way to waive off the penalties and interests? I've contacted few collection agencies, and they didn't care about my financial status and my family. They flat out said you have $xxxx in the bank, $xxxx available to borrow from my credit cards, PAY NOW!!!....... I've stayed away since then. Would it be possible to consolidate these loans? I'm looking to hire a lawyer for this, but the cost is also an issue. All my loans are government loans, and there's 5 collection agencies after me as of now.
I am in deep regrets and will face the issue now rather than later. My income for 2009 was 32k, 20010 was 47k. 2011 will be around 75k........would this also become an issue? thank you again.
#5
Posted 03 January 2012 - 09:17 PM
A 75K income will definitely hurt your negotiating stance with the IRS, but a good CPA that specializes in tax resolution (you don't need a lawyer) can probably use your outstanding student loans to get you a fair OIC. Then again, a good CPA will probably charge $1,000-$1,500 for filing old returns + the OIC, but it will be worth it. Look locally - many have free consultations and visit at least 2 so you can compare prices (check for client testimonials as well). I would definitely talk to the IRS first and establish your monthly payment to them (if there even is one - who knows!)
While you are waiting for your CPA/specialist to do his or her thing, I would do research and read up on the benefits of both consolidation and rehabilitation and figure out which option is best for you (rehabilitation is a newer program). Your best bet would be to call the DOE/Direct Loans and try to weigh out your options with them. Dealing with collection agencies won't work - they will demand money and pretty much tell you anything you want to hear as long as you pay them, so cease all contact with them for the time being. Also there is a new consolidation program that just went into effect as of January 2012 - I don't know much about it personally but it is something you should inquire about.
While you are waiting for your CPA/specialist to do his or her thing, I would do research and read up on the benefits of both consolidation and rehabilitation and figure out which option is best for you (rehabilitation is a newer program). Your best bet would be to call the DOE/Direct Loans and try to weigh out your options with them. Dealing with collection agencies won't work - they will demand money and pretty much tell you anything you want to hear as long as you pay them, so cease all contact with them for the time being. Also there is a new consolidation program that just went into effect as of January 2012 - I don't know much about it personally but it is something you should inquire about.
#6
Posted 03 January 2012 - 11:36 PM
A 75K income will definitely hurt your negotiating stance with the IRS, but a good CPA that specializes in tax resolution (you don't need a lawyer) can probably use your outstanding student loans to get you a fair OIC. Then again, a good CPA will probably charge $1,000-$1,500 for filing old returns + the OIC, but it will be worth it. Look locally - many have free consultations and visit at least 2 so you can compare prices (check for client testimonials as well). I would definitely talk to the IRS first and establish your monthly payment to them (if there even is one - who knows!)
While you are waiting for your CPA/specialist to do his or her thing, I would do research and read up on the benefits of both consolidation and rehabilitation and figure out which option is best for you (rehabilitation is a newer program). Your best bet would be to call the DOE/Direct Loans and try to weigh out your options with them. Dealing with collection agencies won't work - they will demand money and pretty much tell you anything you want to hear as long as you pay them, so cease all contact with them for the time being. Also there is a new consolidation program that just went into effect as of January 2012 - I don't know much about it personally but it is something you should inquire about.
Thanks again jaybee. Regardless of how my case turns out, I thank you.
So far, after talking to 3 different attorneys, I haven't pulled out much info, but I did make an appointment tomorrow to evaluate my situation. Some of these attorneys are really really expensive....... I spoke with a CPA(much nicer) who said he can't do much without a 1099 form from 2002. I'll definitely post an update on the process. Thanks,
#7
Posted 03 January 2012 - 11:39 PM
Jaybee, what are your thoughts on those tax relief agencies? I've talked with 2 of them today, and they provided me with much info, and frankly much more helpful than the attorneys I've spoken with. Only thing is that they want the fees up front.....kinda sketchy.
#8
Posted 04 January 2012 - 10:46 AM
You really don't need an attorney, and if you feel comfortable negotiating with the IRS, you don't even need a CPA/specialist. Personally, I would avoid the online tax relief specialists - I've heard some good things but I've also heard some horror stories ($1,000s in extra fees). If you do hire someone to negotiate with the IRS, keep in mind there's a good chance you will have to give them power of attorney - something I didn't feel comfortable doing with some sketchier agencies.
Look for a local CPA/agency that specializes in tax resolution that you can visit in person (hopefully with a free consultation). They should take all your info and lay out a complete plan of attack that documents all of their fees upfront.
Look for a local CPA/agency that specializes in tax resolution that you can visit in person (hopefully with a free consultation). They should take all your info and lay out a complete plan of attack that documents all of their fees upfront.
#9
Posted 04 January 2012 - 03:56 PM
Can't offer much advice, but I do know you can request the missing 1099 from the IRS with a 4506. The form is available on their website.
#10
Posted 08 January 2012 - 09:43 AM
An attorney wont be any benefit for the student loans. All it is telling the CA's is that you have money to spare and pay an attorney.
Either rehab it as suggested or go straight to consolidation. Unless you are offering them a settlement, and you are probably only looking at the collection costs being waived, they are not going to settle off on any of the interest.
Either rehab it as suggested or go straight to consolidation. Unless you are offering them a settlement, and you are probably only looking at the collection costs being waived, they are not going to settle off on any of the interest.
#11
Posted 21 January 2012 - 09:48 AM
I know it's hard and I have been there. I went through a divorce that lasted two years and ended up settling for owing the taxes during that time. I couldn't pay and didn't file. To make things worse we had consolidated student loans with my name first so I became the one that had to pay. But I have, cleared up almost all of this and here is how.
I used an attorney that got the IRS to back down and settle for a $25 payment/garnishment on 5 kids and about 75k income. Found out we could have done this ourselves by going to the tax office and meeting with a rep, going over bank accounts and bills. Take everything you have. But we also had my wages garnished one period that took 2,000 of about 2,700! Once you start to negotiate a payment plan stick too it and work with them as much as possible. They will have all your tax documents that you need in order to file.
Student loans. You will also have to make payment arrangements here and, from my experience, they were worse than the IRS as for taking my pay. But make sure they know about the IRS debt and account for that. Also go back to the IRS and see if they might lower your payment when considering your student loans. Make sure to focus more on loans than taxes. After ten years of making payments the IRS will drop the amount owed. Well, 10 years from when you filed! The student loans are 30years!
After 9 months your student loans will be rehabilitated. Sorry, when paying the student loans get them into a rehab program to clear your credit! Then also work on making sure the IRS does not have a lien on you. If they do, ask for the credit agencies to remove it by sending them the IRS lien release letter you receive after making several payments. Ask for this prior to making a payment arrangement. I did and got one even though my taxes were 52k. If the credit agencies don't remove it...resend. Mine came off all 3 by the second try.
Now. Seriously. Join the military to have your student loans paid off. 63k paid in 3 years, less taxes of about 21k. And you can defer the taxes while actively serving. You might not get a clearance, but you will make, with a grad degree, 2k per month, free housing, another 323 in free food, free medical, free electric and utilities, and if overseas another 500 to 1500 per month. Yea, it does suck at times but it can feel good to have thousands in the bank.
In two years I have paid off 20k in taxes, 35k in student loans and saved almost 18k! My credit score has gone from 530s to 685 and will be around 760 by the end of my 3 years. By then I'll have paid off 28k in taxes, 48k in loans,and saved close to 24k in cash and another 30k in retirement. My wife now works as a GS making another 2.5k per month which helps and we have 5 kids..
It isn't impossible, but takes a lot to do!
I used an attorney that got the IRS to back down and settle for a $25 payment/garnishment on 5 kids and about 75k income. Found out we could have done this ourselves by going to the tax office and meeting with a rep, going over bank accounts and bills. Take everything you have. But we also had my wages garnished one period that took 2,000 of about 2,700! Once you start to negotiate a payment plan stick too it and work with them as much as possible. They will have all your tax documents that you need in order to file.
Student loans. You will also have to make payment arrangements here and, from my experience, they were worse than the IRS as for taking my pay. But make sure they know about the IRS debt and account for that. Also go back to the IRS and see if they might lower your payment when considering your student loans. Make sure to focus more on loans than taxes. After ten years of making payments the IRS will drop the amount owed. Well, 10 years from when you filed! The student loans are 30years!
After 9 months your student loans will be rehabilitated. Sorry, when paying the student loans get them into a rehab program to clear your credit! Then also work on making sure the IRS does not have a lien on you. If they do, ask for the credit agencies to remove it by sending them the IRS lien release letter you receive after making several payments. Ask for this prior to making a payment arrangement. I did and got one even though my taxes were 52k. If the credit agencies don't remove it...resend. Mine came off all 3 by the second try.
Now. Seriously. Join the military to have your student loans paid off. 63k paid in 3 years, less taxes of about 21k. And you can defer the taxes while actively serving. You might not get a clearance, but you will make, with a grad degree, 2k per month, free housing, another 323 in free food, free medical, free electric and utilities, and if overseas another 500 to 1500 per month. Yea, it does suck at times but it can feel good to have thousands in the bank.
In two years I have paid off 20k in taxes, 35k in student loans and saved almost 18k! My credit score has gone from 530s to 685 and will be around 760 by the end of my 3 years. By then I'll have paid off 28k in taxes, 48k in loans,and saved close to 24k in cash and another 30k in retirement. My wife now works as a GS making another 2.5k per month which helps and we have 5 kids..
It isn't impossible, but takes a lot to do!
#12
Posted 29 March 2012 - 09:16 AM
Jaybee, what are your thoughts on those tax relief agencies? I've talked with 2 of them today, and they provided me with much info, and frankly much more helpful than the attorneys I've spoken with. Only thing is that they want the fees up front.....kinda sketchy.
I had similar issue with the IRS. I dealt with the IRS directly and they were actually very nice. Much better than any collection company really. They explained my options and I'm glad I didn't pay some other agency to do it for me. Other posters are right about some of these "helpful" companies you see advertised. They can promise you anything in exchange for your payments to them, but they can turn out to be just money drainers and not really satisfy your problem. Anyway, that's just my experience.
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