If you know that you are in a substantial amount of debt, then you should know that there are numerous options available. If you want to find out more, take a look below.
Offer in Compromise VS Installment Agreements
If you are torn between choosing an offer in compromise or an installment agreement, then you should know that the notable downside of an installment agreement is the finality. When you agree to an installment agreement, you are giving the IRS the chance to review your financial situation every two years. This ultimately means that if the completion date is over two years away and your financial health improves then the IRS can then demand more money from you. In other words, the IRS are agreeing to a small payment now, but they have hopes of getting a bigger payment later on. With an offer in compromise on the other hand, it’s more difficult for you to get approval but you also have more closure at the same time. When your agreement has been finalized and you have your bill paid, the tax debt will then be settled. This is done regardless of how much money you are able to make later on. With an installment agreement, you can get faster approval and you do not need to put down a lump sum payment. You can also get lower payments every month when compared to an OIC.
Offer in Compromise VS Bankruptcy
Filing for bankruptcy is easily one of the most common solutions out there when it comes to debts that you cannot afford to pay. That being said, it does come with its own share of limitations. That’s why it’s a good idea for you to look into the alternatives that are available so you can deal with your debts. There are many situations where an offer in compromise is the best way for you to deal with your debts if you cannot afford to pay. If the IRS is the only creditor that you happen to be dealing with, then you may be better off going with an Offer as opposed to filing for bankruptcy.
When you look at the way the minimum payments are computed, you will soon find that you can get a good deal through an offer in compromise as well as bankruptcy. If you have zero assets and not much income, then you can use an OIC to eliminate all of your tax debt without paying much at all to the IRS, in the same way you would bankruptcy.
There are circumstances where your IRS debt will not qualify you in terms of you being discharged for your bankruptcy. That being said, there are timing considerations that you need to think about when it comes to your discharge. There are also some complex rules that you need to follow if you want to come out on top. If you want to discharge your debt in terms of bankruptcy then you have to make sure that you have a detailed review of your transcripts and you also need to make sure that you have all of your tax documents in order as well. There are also some debts that can never be discharged through bankruptcy, regardless of what your circumstances are.
If you have IRS debt, then bankruptcy won’t usually be an option.
At the end of the day, being in debt can be tough. You may feel as though you are not able to resume your day to day life while you are in debt and that you are limited by the amount of things you can do. If you want to get out of debt, then your first option would be for you to try and take control of your situation. This can be done by contacting a reputable debt agency. They will work with you to make sure that you are given the right help in terms of your situation and they will also help you to know if there is anything you can do to try and claim for either bankruptcy, installment payments or an offer in compromise.
If you want to take that next step or if you want to try and make sure that you are not missing out because of lack of information, then the best thing that you can do is contact us today at Karim & Associates. We can help you with all of your tax relief needs and our team are some of the best in the business.