Another credit/debt question

noffgurl · October 2014

I know some of you mentioned in my previous post to get a payment plan/payoff amount in writing. How do I do this? Do I write first and say this is what I can afford to do or do I ask them what they will allow me to do?

CuriousKiddosMama · October 2014

I would just call. And it may take a couple tries until you find somebody who can and will work with you.

abrewer5 · October 2014

I don't have any experience but I would imagine once you call and get a verbal agreement, you would then ask for them to send the agreement via mail or email for your record purposes.

Xstatic3333 · October 2014

Ditto PPs. The impression I've gotten is that they'll try to get you to send a check, but if you don't have the agreement in writing they may demand more later. Good luck with the negotiations!

brij2006 · October 2014

PP's are correct. Call and negotiate the payoff amount, then have them mail or e-mail you a statement saying that the amount will be paid in full with the amount agreed to. You do not give them a penny until you receive that statement. Also, they will want you to make the payment right then and there with access to your checking account. Do not allow them to. Tell them no, and that you will send them a cashiers check or money order once you receive their statement of the amount to pay your account in full.

Otherwise they can continue to pull money from your account to satisfy the loan (and they will). If you don't get a statement then they can come back later and say that you owe X amount still, but there's nothing in writing stating that you paid it off. Then you are SOL.

noffgurl · October 2014

brij2006 said:

PP's are correct. Call and negotiate the payoff amount, then have them mail or e-mail you a statement saying that the amount will be paid in full with the amount agreed to. You do not give them a penny until you receive that statement. Also, they will want you to make the payment right then and there with access to your checking account. Do not allow them to. Tell them no, and that you will send them a cashiers check or money order once you receive their statement of the amount to pay your account in full.

Otherwise they can continue to pull money from your account to satisfy the loan (and they will). If you don't get a statement then they can come back later and say that you owe X amount still, but there's nothing in writing stating that you paid it off. Then you are SOL.

So not a personal check?

brij2006 · October 2014

noffgurl said:

brij2006 said:

PP's are correct. Call and negotiate the payoff amount, then have them mail or e-mail you a statement saying that the amount will be paid in full with the amount agreed to. You do not give them a penny until you receive that statement. Also, they will want you to make the payment right then and there with access to your checking account. Do not allow them to. Tell them no, and that you will send them a cashiers check or money order once you receive their statement of the amount to pay your account in full.

Otherwise they can continue to pull money from your account to satisfy the loan (and they will). If you don't get a statement then they can come back later and say that you owe X amount still, but there's nothing in writing stating that you paid it off. Then you are SOL.

So not a personal check?

Nope. Then they can have access to your checking and pull out more money.

smerka · October 2014

Be aware that if they agree to take less than you owe, you might wind up with a 1099-C at tax time and you might have to pay tax of the amount forgiven.

noffgurl · October 2014

smerka said:

Be aware that if they agree to take less than you owe, you might wind up with a 1099-C at tax time and you might have to pay tax of the amount forgiven.

Is there any way to calculate this to prepare for it?

formerlyGDaisy09 · October 2014

noffgurl said:

smerka said:

Be aware that if they agree to take less than you owe, you might wind up with a 1099-C at tax time and you might have to pay tax of the amount forgiven.

Is there any way to calculate this to prepare for it?

I would guess that it would be the amount times the tax-rate your income+the forgiven amount falls into...you can find that on the IRS website. if you're on the edge of a tax-bracket that could mean a significant amount. so if they forgive $2000 and you're taxed at 25%, you better be prepared to pay $500 in taxes on that forgiven amount, better than paying the full $2000, but something you should be ready for.

for example, I had to pay taxes on the tuition I got paid through work, I fall right on the edge of the 15% and 30% threshold...so almost all the tuition money was taxed at 30%. I also have a job that gives me a 1099...so to avoid having paid too little tax at the end of the year I pay 25% of my take-home from that job in estimated payments every quarter.

smerka · October 2014

If you are insolvent at the time of the debt forgiveness, then you don't have to pay taxes on it. To figure out if you are insolvent, you add all your assests and subtract all your debts. If the number is negative, you are insolvent.

Another credit/debt question

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