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I’ve Been Happy With Donaldson Williams But Stressed About Owing Taxes. – Heather

“Dear Steve,

I been working with Donaldson Willams on my debt settlement for about 6 months now. They have been great and I’ve settled one account so far with 3 more to go. I was feeling great about my progress but it being tax season (I’m a freelancer and pay my own taxes) I now need to pay a huge amount of taxes for last year and 1st quarter this year which means at this time I have no money to put towards my remaining settlements. Will need to go on a payment plan for last year’s taxes and will try to pay this year’s taxes for I don’t want to fall behind again. And, I just relized I will be taxed on the money DW saved on my debt which means I will owe the IRS even more next year. Very stressed! I really don’t know what to do at this point. There’s only so much money coming in so, I will only be able to save so much for my debt settlement and put towards my taxes. There are also other bills such as food, medical, car an d school that I need to pay which I’m struggling to do, as well.

Have been thinking I should now just file bankruptcy? But, I have been current on my accounts that I didn’t put into my settlement agreement with DW. Can I file bankruptcy if I’m current on some and deliquent on others? How long does it really screw up your credit score? I’m so stressed and confused. I’d love to get some guidance. Please help.

Heather”

Don’t miss our free Get Out of Debt – “How To” Guide Series on a number of topics, for loads of practical advice, tips, and help to beat back debt. – Click Here

The Answer

Dear Heather,

If you are insolvent after settling your debts you can ask for a waiver of tax liability from the IRS by filing Form 982. You would only have a tax liability for the amount of debt forgiven above the point at which your assets equal your liabilities and you become solvent.

Bankruptcy is always a legal and viable option to put your debt behind you quickly. If you have questions or are considering you can click here to find a local bankruptcy attorney.

There is nothing preventing you from filing bankruptcy even if you are current on your debts.

To ease your mind you might want to think about talking to a local bankruptcy attorney and then compare your options and your current situation and evaluate which approach makes sense today.

If you did decide to file bankruptcy it is very easy to rebuild your credit rather quickly. Read this guide.

There is nothing wrong with proceeding with bankruptcy if that is a better solution for you currently. And reciprocally if you feel the Donaldson Williams solution is working for you and you now feel better about your tax liability, you might decide to stick it out.

Bottom line: Revaluate your situation with all the facts and update your decision.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

Ive Been Happy With Donaldson Williams But Stressed About Owing Taxes.   Heather
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If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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