I Feel So Embarrassed, Ashamed, and Without Hope Because of My Debt. – Karen


“Dear Steve,

I am 62, divorced, working full time and heavily in debt. I tried Consumer Credit counseling, Debt Settlement by closing what little 401K I had and finally have filed for bankruptcy. My court date is in 1 month and I just received an audit from the IRS and find I owe another 5000 due to my own stupidity.

I used Tax Cut in 2006 to save money and forgot to add my alimony into the wages. I have no idea what to do at this point. To say I am stupid with money and numbers is an understatement, I am ashamed, embarrassed and totally without any hope . I have heard great things about you and sincerely hope you reply

How do I get the IRS to take less than I owe now that I have filed bankruptcy without losing my home

Thank You


Dear Karen,

I hear it in your words that you are feeling like this is a horrible situation that can’t be dealt with. The good news is that I see this as a more positive situation.

The only unfortunate point is that you closed out your protected 401(k) to deal with your debt. I would rather have seen you keep those funds by going through bankruptcy first instead of consumer credit counseling.

The Internal Revenue Service (IRS) is in a different mindset that the mean spirited group that you remember.

In these days of economic strife I actually find that the IRS has become much kinder and friendly to talk with. I would suggest that you be as proactive as possible in reaching out to the IRS at this time and negotiate a monthly repayment plan you can afford. They are more reasonable than you would expect.

The lump-sum settlement you describe is an Offer in Compromise and those are much harder to come by and expensive to deal with. I don’t think you are a good fit for that solution.

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With your bankruptcy to end your past debt problems and an IRS repayment plan on the tax debt it sounds like your financial situation is finally under control. You’ve got nowhere to go but up now, baby!

Now, let’s get to the way you are feeling about the situation. I felt that way when I lived through those times. Nearly everyone of the millions and millions of people with money troubles today will suffer in silence because they feel the same way also. It’s normal.

But the reality is that the only person that thinks negatively about you, is you. Your creditors don’t give a damn. There care was only for your hoped for profit. Now you’ve slid into the “oops” column they are not wasting a single second on judging you.

It has all been unfortunate but there is no sense wasting a perfectly good mistake. Learn from it, forgive yourself, move forward with hope, and most importantly, share what you’ve learned moving forward and help someone else with advice or a hug wile they try to deal with money troubles.

Here is a really big hug for you.

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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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