Can a Judge Forgive Your Debt? And Can a Judge Send You To Jail?

Question: A friend of mine is disabled. Her only income is her Social Security disability benefits. She got into a lot of credit card debt, and one of the credit cards got a judgement against her in court.

A friend told her that because of her low income, the court might just maybe forgive her debt. Is this true?

And what would happen if other credit cards brought her to court? Can she go to jail because she can’t afford to pay the debt back? God, I hope not. Thank you for your help. We appreciate your kindness and your consideration with this question. Thank you so very very much.

— Dori in New Hampshire

Howard Dvorkin answers…

Let’s start at the end, because that last question is the easiest to answer: No, you can’t go to jail for unpaid debts. As long as you’re not defrauding your creditors or doing something illegal, trust Debt.com when it says: “No matter what those debt collectors threatened you with, the police won’t be beating down your door.”

If you click that link, you’ll learn that the United States hasn’t imprisoned debtors since the 19th century. It’s no mystery, however, where that fear comes from: Unscrupulous debt collectors either imply it or come right out and threaten it. In 2013, the last year Debt.com could find statistics, the federal government recorded more than 16,000 complaints that “collectors falsely threatened to arrest the consumer or seize their property for refusal of payment.”

With that out of the way, let’s talk about your friend’s debts.

Yes, it’s possible your friend could have her debt wiped clean. It’s called debt forgiveness, and it’s a powerful weapon. However, like all powerful weapons, it can injure more than just the target you aim it at. That’s why Debt.com has a report called, A Realist’s Guide to Credit Card Debt Forgiveness.

I urge you and your friend to read it, because debt forgiveness has gotten a bad name lately. Why? Because bad people are advertising that they can clear all your debts with forgiveness — and don’t worry, there’s absolutely no downside! It’s amazing and only we know how to do it!

Of course, you’ll end up paying these middlemen a hefty fee for a shoddy service, and you might even end up worse than before you contacted them. Think of it this way: Would you pay hundreds of dollars to someone promising a guaranteed weight-loss plan that lets you eat as many cupcakes and potato chips as you want, with absolutely no downside?

If you want a serious diet plan, you should consult your doctor first. If you want a serious debt plan, you also need to consult a professional. I recommend calling a certified credit counselor at a nonprofit credit counseling agency, where your friend can receive a free debt analysis. From there, all the options can be explored, from a debt management plan to bankruptcy.

If you don’t know which nonprofit agency to contact, Debt.com can introduce you to a reputable one. Bottom line, Dori: Your friend doesn’t have to go through it alone.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Ready to seek real credit card debt relief? Debt.com can set you up with certified credit counselors who know how to help.

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I Know There’s A Judgment Against Me For Credit Card Debt, But There Might Be More. What Can I Do?

Question: A few years ago, we found ourselves in a very tough financial situation. So we made the decision to prioritize our bills.

Unfortunately, we fell behind in our credit cards. As time passed, we were able to settle with a few of the cards, but there are a few left that are in limbo somewhere. I know of one that received a judgement against me, and I think there are two more.

The thing is, I haven’t heard from them and I’m not sure what to do. File bankruptcy? Hire a debt settlement company? Or contact the creditors directly?

— Ullisses in Illinois

[Debt.com founder Howard Dvorkin]

This letter is REALLY revealing. Not for what the writer says, but because of what he doesn’t know.

It’s very common for smart Americans to forget to ask basic questions. Like:  How much debt do I owe? Who do I owe it to? And what’s the deadline before bad things start to happen?

Look, I get it. Figuring out your finances is way down the list of fun activities. I’ve been a financial counselor and author for more than two decades, and even though this stuff fascinates me, I know other people look at budgeting like they look at flossing: It’s important, but it’s boring.

Here’s the thing: No one will help you floss your teeth, but there are professionals who can help you with your finances.  It is important to get a debt analysis so you can learn what you need to do. And it’s even easier than flossing, because all you do is call Debt.com.

If you want to get out of debt, knowledge is powerful.

Howard Dvorkin answers…

My answer is going to be general because your question is general. In other words, I can’t be specific because you’re not completely sure how many credit cards you still have open, and which ones have judgments against you.

That said, I can offer you one specific and urgent piece of advice: Pull your credit report. Learn how here: Where and How to Get Your Free Yearly Credit Report. However, I’ll tell you to ignore one part of the advice in that report.

Because there are three credit bureaus — Equifax, Experian, and TransUnion — the law says you’re entitled to one free report from each bureau every 12 months. Debt.com and other experts advise you to pull a report from one bureau every four months. That let’s you notice any irregularities in a timely fashion, then repair your credit either by yourself or with the help of others.

In your case, I’m advising you to pull all three reports right away. Your priority is finding out exactly what you owe and to who — and soon.

In my experience, if a credit card company went to the trouble to take you to court and get a judgment against you for unpaid bills, you owe at least $5,000. Any less, and it’s not really worth the trouble. (Although don’t misjudge what I just wrote: Your card issuer still wants and expects to be paid back. They have other options.)

I’m concerned that you “think” you might have more judgments against you. So I also urge you to contact your creditors right after you pull your credit reports. Rest assured, if you owe them, they’ll be able to tell you.

In these cases, I sometimes hear this faulty logic: “Howard, they haven’t contacted me, so if I ignore it, I don’t have to pay!” While it’s true that there’s a statute of limitations on credit card debt, playing that waiting game is dangerous. First, each state has its own rules, which you can see on this map.

Right now, I’d recommend against debt settlement, which has its own set of drawbacks. While you need to pursue bankruptcy at some point, that’s the very last step. Your first ones are to simply gather all your facts. Once you do that, I’d consult a certified credit counselor for a free debt analysis. You can reach one by calling Debt.com at 855-996-9980.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

If My Husband Owes Taxes, Do They Come After Me?

Question: I have a home and other assets. I recently married and then found out my husband had not filed taxes for 10 years — and owes the IRS $38,000! Is my home, bank account, and assets subject to a lien? Are they at risk? Am I responsible for this debt?

— Debra in Texas

If My Husband Owes Taxes, Do They Come After Me

If my husband owes taxes, do they come after me? A reader doesn’t care about her husband’s old flames, just his old bills. Three of the happiest words in the English language are, I love you. Three of the absolute scariest words, Internal Revenue Service.

When you combine them it can get really confusing. Some of the trickiest financial questions I’ve ever heard were from spouses stuck in tax disputes. Tax problems are complicated enough when one person is involved. When it’s two spouses filling jointly it’s the difference between walking a tightrope and walking a tightrope while giving someone a piggyback ride, and don’t get me started on community property estates.

For that you need a read my much longer answer to Deborah on Debt.com and check out our section titled, “If my spouse owes back taxes and I liable?”. This is a good time to remind couples who aren’t yet married, but are planning to sit down together and make a list of your finances. I’m talking the good, I’m talking the bad, and I’m talking the ugly your assets and your debts.

I’ve always said the best way to deal with the IRS is to never get on their radar. If you want advice for how to budget so you don’t get in trouble consult Debt.com before you say I do.

Howard Dvorkin answers…

Even though I’ve been a CPA and financial counselor for more than two decades, I prefer to consult tax experts on questions like these — just to confirm I’m right.

In this instance, my instincts proved correct, says Don Markland, chief revenue officer for the Tax Defense Network. Debt.com partners with Markland’s firm because of its experience and adherence to Debt.com’s Code of Ethics.

Says Markland…

The easy answer is yes, Debra is liable. Texas is a community property state, and debt created during the marriage is owed by both spouses.

Of course, when it comes to taxes, nothing is easy. So let’s break it down.

What are community property states?

If you live in one of these states — and there are only nine of them —  all the property and debt acquired during a marriage belongs to both spouses. Texas is one such state. (The others are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Washington, and Wisconsin.)

“Income or assets created during the marriage are subject to collections,” Markland says. “Your income and bank accounts are at risk.”

What about before the marriage?

“Generally, premarital assets are not community property and can be protected,” Markland says. Please note the word generally. That’s because other factors come into play. Here’s just one, Debra: Are you filing jointly or single?

“This will greatly influence your returns,” Markland says.

What to do next

First, you should read the Debt.com report that touches on this very topic. It’s called If My Spouse Owes Back Taxes Am I Liable?

While that report is, in my humble opinion, the best and cleanest explanation I’ve yet seen, it’s still not a pleasurable read. That leads me to warn you…

Because tax issues are complex, and because you live in a community property state, you need to consult an expert. Whenever I tell people this, they usually express fear: How much will this cost me?I tell them: You will indeed pay a fee, but if you consult a reputable expert, it’s almost always less than it would cost you to try it on your own — and always less than the cost of ignoring the problem until it catches up with you.

Concludes Markland: “We’d love to talk to Debra and walk her through this. It can be complicated, but we have experts who handle this all of the time.”

I can vouch for that.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

 

When Is A Debt No Longer Collectible?

Question: What does it mean that a credit debt is no longer collectible? My father is now in a home, and when I went through his financial records, I found he owed nearly $2,000 on a credit card from the 1990s! Does he still have to pay that? He says he doesn’t, but he’s also suffering from some dementia. Will I get stuck with this bill, since I’m now taking care of him? My mother died a few years ago, and I’m an only child.

— Regina in New York

Howard Dvorkin answers…

The answer is simple: Your father owes nothing. The explanation behind the answer is a little more complicated. I’ll describe it like this….

Let’s pretend we’re peering into a crystal ball and viewing your father back in the 1990s. He has run up $2,000 on his credit card and has simply ignored his statements. What happens next? If you want all the gory details, read Debt.com’s report, What Happens If I Stop Paying My Credit Cards?

I’ll cut to the chase: Six months later, after his credit card issuer has asked nicely and sternly to please pay what you’ve already spent, the entire amount goes into collections.

So when is a debt no longer collectible?

Debt collectors have a dark reputation, and rightly so. It’s a tough business, and unscrupulous collectors were so pervasive, the federal government passed a law to protect us from them. It’s called the Fair Debt Collection Practices Act. Luckily, it was passed long before your father stopped paying his credit card bill, so he was protected by it.

Another law says the statute of limitations on debt collection is a maximum of 15 years. It depends on where your father was living, because each state is different. (New York is only six years.)

Suppose your father’s debt went into collections even as late as the end of 1999. If it wasn’t paid by the end of 2014, it’s now “time-barred.” That means your father can’t be sued to collect the money. It’s as good as gone.

Even if it wasn’t, you’re not affected unless your name was on the credit card account. I most often hear similar questions from spouses. (Check out Am I Responsible For My Spouse’s Credit Card Debt?)

This all sounds like good news, but I’ll give you this warning: Review your father’s financial records carefully. In my experience, someone who ignored their credit card bill until it went into collections probably didn’t stop there. He may have more recent bills that also went unpaid.

Depending on their dates and dispositions, he could still be pursued by debt collectors. I’ve heard of collectors targeting the children of infirm parents, hoping to scare them into paying. You need to know your rights. Check out Debt.com’s Debt Collection report before responding.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Can A Credit Card Company Sue You After 7 Years?

Question: I was reading on the Internet that if I don’t pay off my credit card bills in seven years, it’s too late for the credit card companies to sue me for not paying. it’s like the statue of limitations for certain crimes. You’re off the hook.

My wife says that’s crazy and wants me to consult an expert. So that’s why I’m writing you. Is this real or not? I hope it is, because I got something like $12,000 or $13,000 on seven or eight cards. It might even be more now.

— Pete in Delaware

Howard Dvorkin answers…

Questions like this one both sadden and frustrate me. I hear them frequently, and I always reply the same way: A little knowledge can be a dangerous (and costly) thing.

In this case, Pete, you and many other people are confusing two different concepts. First, there is a time limit regarding these debts. Second, it’s called a statute of limitations. Third, it’s not what you think.

Can A Credit Card Company Sue You After 7 Years?

Can a credit card company sue you after 7 years? Credit cards are very complicated and so is the law. When you combine those two things you could easily get overwhelmed. That’s why this question about the statute of limitations is so important.

Here’s the problem, there are dozens of statutes of limitations, each state has their own. They determine how long the collection agencies have to sue you for not paying your debts. After that time, they can’t take you to court, but they can keep bugging you to pay up because your debts haven’t disappeared. Then there’s the Fair Credit Reporting Act, a federal law that says many things, but one of them is this: “most negative items on your credit reports must be removed after seven years”.

So again, the debt is still there but anyone pulling your credit reports won’t see it. I wouldn’t recommend waiting around for years hoping you won’t get sued. That’s a stressful way to live and if you do get sued you could end up getting your wages garnished.

Your best bet is to call a professional now for a free debt analysis. Who do you call? Debt.com of course!

If you’ve stopped paying your credit card bills, your card issuer will probably sell your debt to a collections agency after six months. That agency now has as few as three years and as many as 10 years to take you to court and sue you for that debt.

Why the big range of years? Because it depends on which state you live in. Each sets its own rules, and those rules can vary in the details. Thus, it’s impossible for me, in this limited space, to list all the variables. Debt.com assembled this report, which has an interactive map that shows you all the complicated details by simply rolling your mouse over your state.

Now, just because you can no longer be sued for your debts doesn’t mean they’ve gone away. They’re still there.

The reason you’re probably citing seven years, Pete, is yet another rule. This one comes from the Fair Credit Reporting Act, or FCRA. This federal law states that most negative items on your credit report must be removed after seven years.

That doesn’t mean collection agencies won’t still hound you. While they can’t bother you at all hours or make threats — thanks to another law called the Fair Debt Collection Practices Act — they’re not likely to ignore such a large sum.

As you can see, you’re risking a lot by ignoring your debts. If your creditors do sue you, and if they win, you could face wage garnishment. While that’s an extreme, read What Happens If I Stop Paying My Credit Cards? to learn all the scary possibilities.

Before you play chicken with your credit card issuers, Pete, I recommend something else. It won’t cost you anything but some of your free time: Get a free debt analysis from a certified credit counselor. Learn more here. Pete, you might find you have far better options than living several stressful years waiting and wondering if you’ll get sued.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Can The IRS Garnish My Wages Till I’m Broke?

Question: I just received a letter stating my student loan that has been in default is to be offset. I am working. I am also in arrears for child support, which is garnished. I barely make $11,000 a year and I have $300 garnished each month for my arrears.

My question is: Can the government garnish my wages at the same time as my arrears are being garnished? Or do they wait until my arrears are paid off? If they do that, I won’t have anything left to live on!

— Angie in Texas

Steve Rhode answers…

You are living through a tremendously stressful situation, Angie. I wish I could wave a wand and make that pressure vanish. What I can offer you is good information and a plan forward.

1. Look into an offset

An offset is typically a tax refund intercept, unless you’re also getting federal benefits like Social Security. The tax refund intercept is easy to deal with — just don’t get a tax refund. You should adjust your withholding, if any, to get more money in your pocket each month and not in a refund check to be intercepted.

2. Payment plan

Now that’s a short-term solution. For more of a long-term solution on the federal loans, you can get into a $0 per month payment plan that will keep you out of default. In fact, I just recently answered a reader question that dealt with this.

I’m not an attorney. You’d need to speak to an attorney licensed in Texas for specific legal advice, but it appears in Texas you can have up to a wage garnishment that’s up to 25 percent of your disposable income — but not more than 30 times the minimum wage.

If you did get a federal student loan wage garnishment, it would come in the form of a letter and be called an “Administrative Wage Garnishment.” Open it. The letter will instruct you how to appeal the garnishment and most likely get it suspended.

3. Modification

Texas will allow you to modify your mandatory child support garnishment if you can demonstrate the garnishment doesn’t allow you sufficient income to live on. To get the garnishment modified, you’d need to talk to the court or a licensed attorney in Texas.

Thank you for letting me help you find a way forward, Angie.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

How Can I Not Freak Out About The IRS And My Back Taxes?

Question: I just got a letter from the IRS saying me and my wife owe $12,000 in back taxes — from three years ago! That’s when we started our business and had my wife’s idiot cousin do our accounting and taxes.  He only did it for a year because he got arrested for a DUI.

So here are my questions:

  • Why did this take three years?
  • What do I do now? Our business is gone and we don’t have six large lying around.
  • Since this was the idiot cousin’s fault, can we send the IRS after him?
  • Do we need a lawyer? Is the IRS going to lien our house?

Help me out here, I’m freaking out. 

— Stan in Maryland

Howard Dvorkin CPA answers…

Let’s start at the end and work our way back to the beginning. First, don’t freak out.

When you think of the IRS, you don’t often conjure up images of helpful people. However, if you go to the IRS web page, What You Need to Know if You Get a Letter in the Mail from the IRS, here’s what it says under the very first item…

1. Don’t panic.

Believe it or not, the IRS isn’t out to get you. It just wants to get paid. So it will actually work with you. The horror stories of the IRS seizing houses to settle back taxes? Those usually neglect one key fact, summed up in this Debt.com explanation of federal tax liens

Usually, the IRS will only place a tax lien when no effort has been made to resolve a tax debt, despite the numerous letters and notices they have sent.

Even then, you’ll receive a warning that a lien is coming, and you’ll have 30 days to resolve the situation. Since you recently received this letter, you’re in no danger of this nuclear option right now.

Thankfully, “resolving the situation” doesn’t have to mean paying your entire balance on a moment’s notice. As you say, Stan, you don’t have $6,000 laying around. Many people don’t, and the IRS knows that.

That’s why the IRS offers installment agreements. Basically, you pay back the IRS monthly, just like you do a mortgage or credit card balance. Of course, you’ll pay penalties and interest on those installments, so the more you can afford to pay, the less you’ll owe in the end.

As for hiring an attorney, that depends on the complexities of your situation. If you seek what’s known as tax debt consolidation or an offer in compromise, the paperwork can be daunting. However, I’d follow the directions on the IRS letter first and see if you can work out a payment plan that doesn’t kill you.

Finally, about your idiot cousin.

The IRS holds you, and only you, responsible for your tax return. That’s why you sign it — because you’re supposed to review it. In the future, stick with professionals who have a long track record and excellent reviews. Idiot cousins may seem a cheaper alternative, but as you’ve learned, they can cost you later.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

Is It Legal For Debt Collectors To Ring My Doorbell?

Question: Can you settle a bet for me? My girlfriend says it’s illegal for debt collectors to ring my doorbell and threaten me. She says that’s federal law, and they’re not even supposed to call me after dinnertime. She says she even told a debt collector not to call her on Sundays, and they stopped.

But if that’s true, then how come I had my car repossessed on Christmas Day, which was a Sunday and they came in the middle of the night and didn’t even give me any warning?

She also says you can’t go to jail for more than 30 days for being in debt, but what about Bernie Madoff? He ran a Fonzi scheme and got caught when it ran out of money. He got life.

So I think my girlfriend is full of it. Whoever’s wrong has to buy an expensive dinner for the other. So who is it, Howard?

— Andy in Mississippi

Howard Dvorkin CPA answers…

If I understand your question correctly, Andy, your girlfriend may still be dealing with debt collectors — while you’ve had a car repossessed just a few months ago.

Before I settle your bet, I beg you: Settle your debts. I’d worry less about paying for “an expensive dinner” and more about paying expensive interest rates, penalties, and fees.

Financial education can help you conquer your debt

I’ve often written about the psychology of debt, and I see that at work here, Andy. You and your girlfriend have probably struggled with debt for so long, you’ve given up trying to conquer it. I’ve seen many otherwise intelligent people ignore their debts and hope they’ll go away. Of course, they never do. In fact, when debt really piles up, the debt collectors come calling.

There are proven ways to conquer your debts. One of those is financial education. A little can save you a lot, especially in your current situation.

That’s why the answer to your original question is: Neither of you is completely right, but your girlfriend is less wrong.

It’s Ponzi not Fonzi

Let’s start with the obvious. There’s no such thing as a “Fonzi” scheme. It’s Ponzi scheme. The former was the coolest character on the 1970s sitcom Happy Days. The latter was a 1920s crook who popularized the crime of paying investors not with interest on their money, but with money from new investors.

Bernie Madoff got caught when his Ponzi scheme collapsed, but being broke wasn’t why he was sentenced to 150 years in federal prison. He defrauded investors.

Next, let’s talk about the difference between debt collectors and “repo men.” As you can read more thoroughly in the Debt.com report Can a Debt Collector Come to My House?, there’s a difference between recovering debt and property.

Debt collectors operate under a federal law repo men don’t. It’s called the Fair Debt Collection Practices Act, or FDCPA. Your girlfriend is correct about the law being federal, but she’s wrong about some particulars.

For instance, debt collectors can’t call at night. “Dinnertime” isn’t mentioned. Also, debt collectors can’t call at a time when you tell them you can’t receive calls. However, they can’t call you on Sundays regardless. There’s nothing in the law that prevents them from coming to your home, but it does regulate what they can do when they get there.

Here’s a video that sums up the rules…

Finally, you’re both wrong about being jailed for debt. Before the 183os, you could be sentenced to “debtor’s prison.” These days, as Debt.com has reported, “if a collector threatens you with jail time, they’re almost always violating the law and you have a right to fight back.

Sorry for the long answer, Andy, but I hope it convinces you to forgo the expensive dinner and consult a debt expert to get help. If you don’t call Debt.com, I beg you to call somebody.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

What REALLY Happens If You Don’t Pay Your Taxes?

Question: I just found out my boyfriend doesn’t pay his taxes. Like, ever.

He’s 23 years old and has mostly worked as a handyman. But last year he got a job working construction, and I told him that he’ll probably get caught because the bosses there will report him.

He says I’m crazy and the IRS doesn’t have enough agents to investigate little guys like him. I’m thinking about marrying this man someday, but this worries me. If we do get married and he doesn’t pay taxes, won’t I get in trouble, too?

— Amelia in Ohio

Howard Dvorkin CPA answers…

In more than two decades as financial consultant, author, and media expert, I’ve never written or uttered these words: “Don’t worry about paying taxes, because the IRS will never catch you.”

Mark my words: Your boyfriend will get caught.

He had a better chance of avoiding detection when he worked for himself. I think Slate magazine described it best a few years ago…

If you’re self-employed without any major assets or loans, the odds of getting busted are extremely low. In fact, an estimated 7 million Americans fail to file their taxes every year, and in 2008 the IRS examined only 158,000 such cases.

More common than not filing is under-reporting revenue. In your boyfriend’s instance, that might mean claiming he made only $20,000 the previous year, when he really made $40,000.

Will he get away with it? If you look at those numbers above, sure — for a while, maybe. If you figure a career of earning income for 40 years, the odds grow. So does the stress of wondering if this is finally the year he gets caught.

However, your boyfriend now works for someone else. When he was self-employed, there was no one to report him. His company wants to stay in business, so it tracks its employees’ paychecks and reports earnings to the IRS.

That means getting caught no longer requires an IRS agent auditing your boyfriend. IRS computers will catch him when they see he was paid last year and didn’t file taxes on those earnings this year. If you want to scare your boyfriend straight, tell him to check out this Debt.com report called How Does the IRS Find out I Have Tax Debt?

Outcome

More important than your boyfriend’s future taxes are his past taxes. Those are called “back taxes,” and your boyfriend should check out this report for five ways to address them.

If your boyfriend keeps ignoring his tax problems, he’ll have even bigger problems. The IRS has a weapon known a federal tax lien, which can not only ruin your boyfriend’s credit score but can even result in his personal property being seized to pay off those back taxes.

By the way, Amelia, if you had married your boyfriend and didn’t know he wasn’t filing, you might have qualified for something called Innocent Spouse Relief. While this IRS rule comes with a bunch of preconditions, I mention simply to point out: The IRS has thought of everything. That’s why it’s not smart to try to out-think the IRS.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

How Sick Is This Form Of Identity Theft?

Question: In January, I went to an urgent care center after I fell off a ladder. I was treated really good. But last month, I started getting calls from a really obnoxious bill collector. He said I owed $3,000 for my son’s treatment for a broken arm. Here’s the thing: I don’t have a son! At least not one that I know of.

I told the guy he got it wrong, but he and another dude keep calling me. They’re threatening all kinds of trouble. I went back to the urgent care center, and they said they didn’t know anything about this. When I told the bill collectors that the urgent care center would vouch for me, they didn’t care. They want their money, and they’re calling every day. What the hell do I do?

— Paul in Colorado

Howard Dvorkin CPA answers…

You’re not going to find this reassuring, Paul, but you’re not alone. Last month alone, Debt.com reported twice on the growing problem of medical identity theft.

First, we reported that 44 percent of all American adults fear this particular form of ID theft. Then we noted that one-third of all data breaches come from inside hospitals. So what can you do? Most advice on this topic — including Debt.com’s — is how to prevent this sickening kind of theft.

What if it’s already happened, however? That’s the case with you, Paul. There’s a name for what you’re facing. It’s called collector harassment. You can read all about it in Collector Harassment Basics.

Fortunately, there’s a law that governs — and punishes — bill collectors. It’s called the Fair Debt Collection Practices Act, or FDCPA for short. For instance, when you say collectors are calling you “every day,” the FDCPA says can’t call you Sundays or before 8 a.m. or after 9 p.m. on the other days. There are many other restrictions, too…

  • They can’t use obscene language.
  • They can’t threaten you with harm or arrest.
  • They can’t call you without identifying themselves.

If the calls are still coming, you can get a free consultation of your situation by filling out this collector harassment form. Debt.com will match you with a specialist in the field of ending such harassment. To help you, these specialists will charge a small fee, but you don’t pay for the consultation. If you don’t follow up with us, Paul, please consult someone. Bill collectors seldom give up on their own. Someone has to stop them.

Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.