Although filing for bankruptcy may seem like the only viable option if you are up to your ears in debt, that is not always the case. While it is the most optimal resolution for some taxpayers, there are alternatives to filing for bankruptcy that can achieve the same results.
If you owe back taxes to the IRS or state, filing for bankruptcy might not necessarily clear your debt accrued from back taxes. In order to decide what steps you should take to resolve your financial situation, it is imperative that you understand and analyze the options.
There are many factors that you should take into account, such as the amount owed, who the creditors are, and your current financial situation, when coming up with a plan to fix your debt. Listed below are three alternatives to consider before filing for bankruptcy:
3 Alternatives to Explore Before You File
1. Contact A Tax Relief Firm
The first thing many people do when they are drowning in debt is contact a bankruptcy lawyer. Although bankruptcy lawyers can assist in specific situations, they are not as familiar with the complex tax regulations and laws as a tax resolution specialist.
Working with a firm that specializes in tax resolution is often the most effective way to settle back taxes owed to the IRS or state, especially if you owe a substantial amount in back taxes. Additionally, a tax resolution firm can ease your overall debt as well as helping you get your finances in order.
2. Request a Lower Interest Rate On Other Debts
Credit card interest rates have been trapping consumers in a black hole of debt for ages. Many people struggle with keeping up on the charges and fees accrued on credit card balances, especially when they owe more than 18% in interest.
Though you might have the notion that your credit card issuer might not be receptive to requests it doesn't hurt to ask. Furthermore, your credit card issuer will be more inclined to negotiate a payment plan with you when they discover you are considering filing for bankruptcy.
The IRS may occasionally remove penalties and interest from your tax debt, so it’s important to reach out to our firm to see what your options may be.
3. Refinance Your Debt
Finally, if your credit card issuers and lenders refuse to compromise on your interest rates, you still have options on how to save money and avoid bankruptcy. By refinancing your existing debt through a personal loan, home equity line of credit or another means, you could significantly reduce your interest rate, saving you tons of money.
If you choose to follow this route, keep in mind that it pays to shop around. The more you can lower your interest rate, the more money you can save - and the faster you will be able to pay off your debts.
It can be extremely difficult to refinance your debts if you have an IRS tax lien or wage levy. Our firm can get these released and help you get on financial track.
A bankruptcy filing can provide a fresh start for those in dire financial circumstances, helping them recover and rebuild their shattered monetary lives.
Even so, bankruptcy is not the only way out, and it is important for those considering this solution to research the alternatives first. The three bankruptcy alternatives listed above can also give you the fresh start you need, without the stigma or long-lasting impacts of a bankruptcy filing.
We highly recommend readers to reach out to our firm first. Our clients never have to talk to the IRS, and tax resolution through our firm can save you money and time in the long run. You might also be eligible for other relief programs or get your penalties and interest forgiven. Reach out to our firm today for a consultation at (855) 605-1500⠀