My husband and I are both public school teachers. We have had two children in the last 5 years, and we have not had a raise. We pay $1200 a month in daycare along with our mortgage, student loans, and the other standard bills. We have leaned on our credit cards, and we now owe almost $40,000 in cc debt.
I have recently contacted Accredited Debt Relief to discuss a debt settlement option. (My husband and I currently owe almost $40,000 in cc debt.) Today, the financial consultant that I have been speaking with emailed me to ask if I have any more questions. I replied with some questions, and I felt that his answers were not rock solid.
For instance, I asked if I could be taxed on the difference between what I owe and what I may pay through this settlement agreement. His answer was that the credit card company could issue a 1099, but he doesn’t see that happen very often.
I simply feel that the answers are weak, so I requested a copy of the contract that we will be asked to sign. His answer was this “We are not allowed to send out blank agreements.
I’m required to go over that with you at the time of enrollment. All calls are required to be recorded and its against our compliance accreditation. The numbers I went over with you are the same you will see when we go forward.’ Is this true? I feel uncomfortable with the lack of solid information that I have.
I have the utmost of respect for teachers. My mother was a teacher for many decades and I certainly know the effort you put in.
In reading your question I actually bust out loud laughing when I read what the representative said about the 1099. That is ridiculous.
It does not sound like the salesperson you’ve been talking with is all that current on the realities of settling the debt. But in their defense, their job is to sell you, not tell you the truth or educate you.
The correct answer to the 1099 question is actually on the Accredited Debt Relief site. Apparently the sales person hasn’t taken the time to learn their own website. What else don’t they know?
Q. Am I going to I owe taxes on whatever debt was forgiven?
Officially the Internal Revenue Service has determined that any forgiven debt should be considered as taxable income. That will mean you will have to pay taxes on that settlement at the end of the year. Surprisingly enough, the IRS can help in certain hardship cases. You’ll need to fill out Form 982 to describe your situation and apply for an exemption. – Source
Asking for a copy of the contract first is not only entirely reasonable but any resistance to provide it should raise concerns.
I’d suggest you first read How to Get Out of Debt. The Honest and Unvarnished Truth and The Truth About The Success Rates, Failure Rates and Completion Rates of Credit Counseling, Debt Settlement, and Bankruptcy. They will give you a great overview of what we need to deal with to get you moving in the right direction.
Then use the free How to Get Out of Debt Calculator to review your options.
Once you’ve identified a company you want to work with, then follow my step-by-step guide on what you should look for and expect from a good debt relief company.
Please post your responses and follow-up messages to me on this in the comments section below.