A reader is upside down on her car, owes back taxes, and can't pay her credit card bills. Believe it or not, she still has options.
Question: According to my latest credit report, I have $25,000 in debt.
I’d been making regular payments on my car loan (which I am upside down on) for years. Never missing a payment until just a few months ago. I changed jobs and locations, and the new job barely paid the rent. So I fell behind on my credit card payments as well as the car payment.
For years, I have missed payments on various accounts, and my credit score is now down to the 500’s. I cannot seem to make enough money to keep up with my everyday bills, much less the additional expenses. I live alone and have tapped out my family and friends with loans.
Now, having said that, my next admission is so scary, I am paralyzed with fear to even tell anyone. Oh God, here it goes: I owe back taxes, of which I have not filed in at least five years. Why? Because I know I will owe and cannot afford to pay. I know, I know, it is a stupid reason. I also do not want to go to jail. I don’t look good in orange. Little humor there.
I want to clear up my debt. I have a state job now as of one month, and a part time job. Thought about bankruptcy, not sure it is the answer for me. Where do I start? I can’t lose my car to the repo-man.
— Jessella in New York
Howard Dvorkin answers…
I usually don’t publish letters this long, simply because they’re so daunting (and emotionally draining) for Debt.com readers to get through. I’m making an exception because Jessella’s story is important, as is her exasperated tone.
Sadly, Jessella’s story is typical. You might see yourself in some of her stubborn debts. So let’s break down Jessella’s situation, and perhaps help others who are struggling just like her…
Because you fear back taxes above all your other debts — as well you should — I asked my friend Don Markland to reassure you. Markland is the chief revenue officer for Tax Defense Network, which helps more than 10,000 customers a year solve their tax debt problems with the IRS.
“You don’t go to jail for taxes unless you evade or refuse to pay,” Markland says. “So Jessella should be fine.”
Of course, you still need to pay your taxes. I recommend you read Back Taxes: End Your Challenges with Unpaid Tax Debt. You have options, ranging from installment agreements to something called “offer in compromise.”
Who can help: While you can tackle these options yourself, firms like Markham’s are experts at finding the best option quickly and painlessly.
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Article last modified on October 16, 2018 Published by Debt.com, LLC .