There are different alternatives to bankruptcy, which many people are unaware of.
Those who owe large debt to the IRS and struggle to make ends meet consider bankruptcy the only exit.
Indeed, filing for bankruptcy can be an effective solution.
But, it can have serious consequences and should be considered only as a last resort.
In this post, we introduce you with three alternatives that you should explore before filing for bankruptcy.
First, we will briefly explain what is bankruptcy.
Bankruptcy is an option for business debts
Bankruptcy may be the best option, especially if you have very large business debt.
But, bankruptcy will not always solve your tax problems.
Certain types of tax debts to the IRS are not eliminated by bankruptcy procedures.
If you owe taxes, it is important to first have a clear picture of your financial situation and then consider all your options.
It is possible to work with debt and regain control of your finances without the need to file bankruptcy.
This will depend on the amount of money you owe, to whom you owe, and the assets and income you have.
Contact a tax relief firm
Tax attorneys have more experience with the entanglements of tax laws than bankruptcy attorneys.
A tax attorney will assess your tax situation and review the options available to deal with your tax debt.
If you believe you need bankruptcy relief, a tax attorney may refer you to an attorney who specializes in the matter.
However, there are good alternatives to bankruptcy that a good tax attorney knows.
If the lawyer is good, he/she will know all the IRS programs available to you.
It will often help you reach a settlement for your tax debt with the IRS.
This can be an excellent alternative to substantially reduce the amount of taxes owed from previous years.
Additionally, a tax settlement with the IRS, also called an Offer in Compromise, can also be a great step in getting your finances back on track.
Ask other creditors about lower interest rates
It’s easy to get caught up in high credit card interest rates and exponentially growing debt.
With interest rates ranging from 18% onward, it can be very difficult to keep up with fees and almost impossible to pay off debts.
If you file for bankruptcy, your credit card balance becomes unsecured debt, and the credit card company may receive nothing.
To avoid this, creditor companies may be willing to accept a payment less than the amount owed.
They may also agree to lower the interest rate, accept lower monthly payments, or release late fees.
If your financial situation is very difficult, you could even have a grace period where you stop making payments.
You just need to pick up the phone and call to find out what are your options.
Similarly, you may also be able to reduce any penalties associated with your back taxes.
A tax professional can let you know if you qualify for First-Time Penalty Abatement or Reasonable Cause Penalty Abatement.
Refinance your debt
If you do not qualify for an agreement with the IRS and the credit card provider and lenders they are not willing to negotiate with you. There is a third option to help you save money and avoid bankruptcy.
You could get a lower interest rate, as well as lower payments by refinancing your mortgage loan.
For this you will have to contact several lenders to make sure that you are really getting the best terms.
Local banks and mortgage lenders often have more flexible terms.
They may also give you lower interest rates than a national bank branch.
A lower interest rate can save you a good sum of money in the long run and allow you to pay off debt faster.
If you have a federal Tax Lien or Wage Levy from the IRS, you will not be able to qualify for a new loan.
But, at Global Tax we got you covered. Our firm can help you free yourself from them.
Your allies to start again
For those facing financial difficulties, filing for bankruptcy can mean a new beginning and a new path to financial recovery.
But, bankruptcy also has its downsides.
It can lower your credit score and make it difficult to access new loans.
Also, it will not free you from all types of tax debts.
It is important to remember that bankruptcy is not the way out and you may want to consider other options.
The three alternatives to bankruptcy in this article will give you that push you need to start over.
But, without the stigma and long-term negative impact of bankruptcy petitions.
If you are considering bankruptcy, please contact us first to consider your alternatives.
Our clients do not have to speak directly to the IRS at any time.
We will help you save money and time.
As well as reducing your tax burden with an agreement or debt mitigation.
If you want to start again, request an initial consultation today.
Our experienced team at Global Tax offices is waiting for your call.