If I’m in financial trouble, can I renegotiate my debt with my creditors?
Renegotiating with your creditors can help you buy more time or settle your debts when you can’t keep up with your bills. Explaining your situation in detail to your creditors may not be the best approach. Using an outside third party is better. This way you don’t have to disclose very much information. Be aware of the following when considering debt renegotiation:
- New bankruptcy law of October 17, 2005 allows the court to garnish wages for up to 25 percent and for over five years. This is thanks to the lobbying power of the credit card companies. Many people were pushing off their unsecured debt fast and easy, so they card companies helped push this new law into practice.
- Tax issue: If you do get a lender to reduce a debt, the reduction becomes taxable income, and you may have to pay income tax on that amount. Technically this is true, but not all creditors will file the 1099 form with the IRS.
For more information on how this works call Alan at 801-292-1099.