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Tax Season is the Best Time to Tackle Old Debts

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Tax season is usually the time of year that people sit down to take an honest look at their finances. For many people, taking an honest look at their finances includes taking a look at the amount of debt they have accrued in the past year. If this is the case for you, and you are struggling to find solutions to get out of debt, now may be the best time for you to evaluate your options and set up a plan of action to get yourself debt free in 2016.

There are 3 options when attempting to get out or settle old debts:

  1. Pay in full
  2. Bankruptcy
  3. Debt Settlement

 

Paying your Debts in Full

This may be the best option for you if you have under $5,000 in outstanding debt and you are expecting a big tax return.

This is the option that your creditors would prefer that you take, because it involves you paying the total amount that they report you owing. If you only have a small amount of debt and you are expecting a big tax return this year, now may be the perfect time to pay off those last few lingering accounts. Put your tax return to work for you by using it to get debt free through paying off your old accounts.

Filing Bankruptcy

If you have been struggling with your current debt for multiple years now, and you have already explored debt settlement plans, bankruptcy may be your only option left. Your tax return this year may be the lump sum of money you need to retain a bankruptcy attorney and get started towards your clean slate.

Bankruptcy should always be treated as a last resort, since it can take years to financially recover from. If bankruptcy appears to be your only remaining option, it is better to file sooner rather than later. Delaying only postpones your financial recovery even longer, and struggling to pay back debts only to file bankruptcy in the end anyways is a terrible waste of time and money.

Debt Settlement

If you don’t have the money to pay all of your debts in full, but you are not all the way to your last resort of filing bankruptcy, debt settlement can be a powerful tool to consider. Debt settlement saves you huge amounts of money compared to paying your accounts in full, and does not do the damage to your financial health that filing bankruptcy does.

Debt settlement involves negotiating with your creditors for a reduction in the amount that you owe. While reductions can vary, reductions of up to 80% can be obtained through this process.

While debt settlement is a process that you could undertake yourself, there are many advantages to retaining a law firm to engage in debt settlement on your behalf. Probably the biggest benefit is that a debt settlement attorney understands the complicated process of obtaining settlements, and can ensure that proper documentation is in order before paying out any money. Also, a law firm that engages in debt settlement will be able to obtain larger reductions than people who try to negotiate on their own. Typically, the cost of hiring a debt settlement attorney is offset by the greater amount of savings they are able to negotiate for.

Tax season is a great time to get started on a debt settlement program for a number of reasons. First, you have a much clearer picture of your finances after preparing your taxes, and so you know how much money you can devote to paying off your debts. Second, by having your tax return as a lump sum to get started you stand to save even more money than you would on a standard payment plan. This is because a lump sum today is worth more to a creditor than a long-term payment plan for more money.

If you would like to speak to a debt settlement attorney about getting debt free in 2016, give us a call at McCarthy Law (855)-976-5777 or visit our website. We would be happy to review your situation, and let you know which your best option for getting debt free is.

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Tax Season is the Best Time to Tackle Old Debts
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Tax season is the best time to tackle and settle old debts. Tax season is usually the best time of the year to look at your financial status.
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McCarthy Law, PLC
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Tax Season is the Best Time to Tackle Old Debts was last modified: September 28th, 2016 by Kevin Fallon McCarthy
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Kevin Fallon McCarthy is the McCarthy Law PLC’s managing attorney and an experienced Phoenix debt attorney. Mr. McCarthy has also worked as general counsel for a large corporation. He has corporate counsel experience in human resource matters, general corporate governance, and union class action litigation.
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