Debt settlement using a laywer

[maxwell18]

Wondering if anyone has used a lawyer for debt settlemen and how did it turn out. Can't or won't do chap13 too much income after stripping second mort and repo boat and motor and credit cards. Means test figured with Social Security but adding all back in I would be paying $3500.00 every month. Any ideas would help.

[lrprn]

Means test figured with Social Security but adding all back in I would be paying $3500.00 every month. Any ideas would help.

Can you pay off *ALL* your unsecured debt within five years? If the answer is no, then chances are good that Ch 13 is a better option than debt settlement.

Also in case you aren't aware, if you go the debt settlement route, the IRS will count any decrease in the amount you owe the unsecured creditor over $600 as income and tax it accordingly.

To avoid the tax hit, the IRS recognizes five situations where a cancelled debt does not have to be reported as income.

(1) Bankruptcy – the debt was already discharged through a bankruptcy proceeding.
(2) Insolvency – your total debts exceed your total assets at the time your debt was settled or deemed non-collectable.
(3) Indebtedness is due to a qualified farm expense.
(4) Indebtedness is due to certain real property business losses.
(5) Discharge of your debt was treated as a gift. (Extremely rare)

Can you prove at least one of the above to the IRS to avoid the tax hit?

[forgotten]

(6) Amount forgiven on debt of primary residence between 2007 and 2012.

[maxwell18]

reply

Thanks for reply..If I can get some debt reductions on on c/c it may possible to pay all off in five years. I heard about the tax thing but really think a lot about it. Just wonder , is there many people out there paying $3500.00 back in chap 13? We are 67 years old and getting the feeling going to grave in chap 13. No credit forever just being a realist. Not whining

Thanks

[forgotten]

Thanks for reply..If I can get some debt reductions on on c/c it may possible to pay all off in five years. I heard about the tax thing but really think a lot about it. Just wonder , is there many people out there paying $3500.00 back in chap 13? We are 67 years old and getting the feeling going to grave in chap 13. No credit forever just being a realist. Not whining

Thanks

Your income would have to be really high, or your expenses really low for your payment to be that high. It is just my wife and I living in the midwest, we make 6 figures and have a $950/mo payment. But yes, if either of those 2 apply to you it would be possible to have a payment that high.

If you go the debt settlement route your credit will be just as bad as if you filed for bankruptcy.