anyone with this sort of debt?

iVillage Member
Registered: 04-30-2007
anyone with this sort of debt?
12
Sun, 06-22-2008 - 10:50pm

Hello,

New to the board, but have read a few of the discussions. I don't like that we all seem to be in some sort of financial crisis, but it does make me feel a little better to know that I am not alone.

It seems that there is a lot of credit card debt out there, and that a lot of us are just trying to make ends meet with our monthly living expenses.

Luckily, I don't have a massive amount of credit card debt, although I do have a visa that I have not used for several years. I believe it had a balance of around $400.00 at last check. That balance is now at $1000.00+, and not on purchases!! $600.00 in fees!!!

I have medical bills for an emergency room visit that I have not been able to pay. I also have some outstanding bills for my son, who visited the ER with a shoulder injury a couple of years ago. Insurance has picked up there portion, but I still cannot cover the remaining balances. I believe there may still be an outstanding bill for my husband at a time when we did not have insurance, so we still have that hanging over our heads somewhere. I'm guessing the total of these bills is around $4,000.00

We struggle to keep our mortgage current, due to the bank taking it upon themselves to escrow our property taxes...(which are outrageous by the way)...causing our monthly payment to increase by $300.00. With the housing market in such shambles, we know that putting our house on the market would be pointless at this stage.

These are situations that worry me, and most certainly have hurt my credit rating, but the debt that really worries me is the money we owe to the IRS. We believe that it is due to the fact that we did not completely file in 2002. My mother had passed away at the end of 2001, and we were not sure how to file, due to the split of the assets to my sister and I. I was listed as the beneficiary, and all monies were in my name, but we were supposed to figure out how each of us could claim our portion of the inheritance. It was confusing to say the least..... our tax preparer did not offer much assistance.... time went by, and we forgot about it, until we received a letter just a few months ago for the IRS. We have also had to use a large portion of our childrens 529 college funds to keep us from losing our home, and to keep our heads above water. There are penalties in doing that, and I'm guessing that some of what we owe to the IRS may be due to those withdrawals. We owe state taxes, as well. Not a huge amount, but enough that when the end of the month comes, and we have paid our living expenses... there just isn't much left. We have contacted the IRS, and each year we have been entitled to a refund.... they take it, which is fine with me, but I'm afraid that this may not be enough. My husband has a good job, and most people would say that he makes really good money, but we are still struggling. (Note.. he was unemployed for several months in a three year period 2001 - 2004, which at times I feel we are still playing "catch up"). We own another property in town, which we owe nothing on, but had some major water damage to the home this winter from busted water pipes. We are now trying to figure out how to finance the repairs so that we can rent out the house, or move into it ourselves, in hopes of selling our home. We owe property taxes on that home, that we cannot pay. Our bills each month consist of our mortgage; one car payment (another vehicle is a company car, and another is paid off); auto insurance; an equity loan; utilities; GAS which we all know is outrageous; groceries; and the all too familiar expenses of raising 4 children... two of whom are in college. In all.... I think we have a total of roughly $25,000.00 debt to the IRS, and the county for property taxes. The equity loan is around $50,000. and our mortgage is $1600.00/month (we owe roughly $150,000.00 on the home which was built 8 years ago.)

Sorry to be so lengthy, but I just felt the need to jump on here tonight and see if anyone has a solution to this sort of debt. I'm wondering if I should be afraid of some official coming to my door and dragging me off to prison in front of my children!!!! I also work, but have been a mom for most of my life, so I have no legitimate experience to get into the high paying work force at the present time. I have been admitted to a community college for the fall, but doubt that I will have the finances to go. I am trying to better myself, and I feel that I keep hitting road blocks along the way.

I think I keep my head in the sand because a lot of the financial lingo intimidates me, and I don't understand a lot of it. A medical bill will come in the mail, and I will toss it on the desk, and forget about it. Tax forms.... forget it... I will never understand any of that. My husband is a bright guy, and he is usually good about getting on the phone and talking to people about these things, but I am so worried at this point, and I am so worried about our retirement, that I just don't know how to remedy this. We have exhausted our savings... we are in our mid-40's, and retirement will be here before you know it.

Thanks for listening, and taking the time to respond if you have some input.

tj

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iVillage Member
Registered: 11-17-2007
Mon, 06-23-2008 - 12:46am

Welcome to the board

iVillage Member
Registered: 05-09-2002
Mon, 06-23-2008 - 11:40am
I don't have a ton to add but I wanted to say that as far as the medical bills go, definately call them and get the info on what is owed, etc.
Daisypath Anniversary tickers
iVillage Member
Registered: 05-09-2005
Mon, 06-23-2008 - 1:57pm

Hi,
You said, "the debt that really worries me is the money we owe to the IRS. We believe that it is due to the fact that we did not completely file in 2002. My mother had passed away at the end of 2001, and we were not sure how to file, due to the split of the assets to my sister and I. I was listed as the beneficiary, and all monies were in my name, but we were supposed to figure out how each of us could claim our portion of the inheritance. It was confusing to say the least..... our tax preparer did not offer much assistance.... time went by, and we forgot about it, until we received a letter just a few months ago for the IRS."

You need to list the tasks you have in getting things organized. Obviously, you really don't want a problem with the IRS. Was the mom's estate probated? Did you have a lawyer handle that? Because part of probating an estate is to make sure the "estate taxes" are paid. At least in California,they are paid BEFORE you get anything. So you personally should not have had to pay any taxes on the inheritance.
I think you need a lawyer to figure out the tax situation in your case. You either need to return to the probate attorney if you had one, or get a good tax attorney. You could probably start locating an attorney by calling your county Bar association and telling them what the problem is. They should be able to refer you to an attorney who can handle the problem. Usually the first consultation is free, or for a very low fee. All I know is how California works, but I'm guessing there are similarities in your state. You need to start with getting the Fed and State taxes cleaned up. If you owe, and can't pay, the attorney should be able to either get a payment plan set up, or have them agree to take less. I really don't think this is something you can do on your own.

Then that $1,000.00 credit card bill: either call them yourself and ask to have the amount you owe reduced (a settlement amount), or ask to have a payment schedule set up. Ignoring it won't make it go away. You could contact a Consumer Credit Counseling service to see if they would negotiate for you if you really really don't want to call them (the credit card folks) yourself.

I know you don't like the increase in your mortgage, BUT maybe you should be glad you are being forced to pay the property taxes all along. If they didn't escrow the taxes, you would have to be dependable enough to put the same amount into savings each month -- and when you are stretched thin, it's awfully hard to force your self to do it.

I totally agree that you should contact the hospital -- go in yourself -- be clear that you really don't have much money. See if they will reduce what you owe and set up a reasonable monthly payment. Nothing ventured, nothing gained. And especially the bill for your husband when you did not have insurance. See if at least they will take the amount that the insurance (if you had had insurance) would have paid. It would have been significantly less than what you were charged since the insurance companies negotiate deals with the hospitals.

I'm guessing that you had (have) insurance on the unoccupied home with the broken water pipes and damage. Did you contact them to see if there is coverage for the damage? Worth a phone call if you haven't already. If you could sell this paid for house, it might solve a lot of your financial problems.

Is the equity loan you refer to a "home equity loan"? If so, you might want to see if you can refinance into a lower rate than what you are now paying on it -- maybe combine the first mortgage and second into one loan. Or do what Mary Ann usually suggests and transfer that loan to a credit card at a low rate. That way, you home is not at risk if you are unable to pay the home equity loan.

You should also get a copy of your credit report at: annualcreditreport.com
This is free -- there are 3 major credit reporting companies. Many people suggest getting one from each one every 4 months. You should get one for yourself, and for your husband. You can print it directly from your computer. See what has been reported about you. It might not be as bad as you think -- and if it is, it will give you more incentive to clean it all up.

Honestly, if you can just make the first phone call (and I suggest finding a tax attorney as the priority) you will feel so much more in control, and not so much like you are drowning with no stick to hang onto.

So, make a list and force yourself to make some phone calls. Do it -- if you don't it will only get worse and that nagging worry just doesn't go away.

As far as you going to the community college for course work -- great idea if you know WHY you are going -- what it the ultimate goal? You would have to have a job goal in mind, not just going for the sake of going. And since it is going to cost $$ that you don't already have, I'd put that on the back burner for now. BUT you could and should look for a least a part time job -- deliver papers, pizza, work at UPS at night. Anything to start cleaning up the bills.

Hopefully your kids are handling their college expenses -- you really can't -- and if you have been, remember, your retirement is coming faster than you think, and what is your funding for that???????

Post here, we'll help keep you on track if you want.

Hope that helps,
Megan

iVillage Member
Registered: 04-30-2007
Mon, 06-23-2008 - 4:20pm

Thanks for the input. Really..... you have all suggested things that I already knew for myself. I guess I just needed someone to confirm, and set the motivation in motion.

I plan on getting all bills gone through, and organized, and sending whatever I can at this point. To respond to the subject of me finding a job to help out.... I am actually working two jobs, and have always worked part time while raising my chidren. My husband travels a lot with his job, and we have no family close by, so I have tried to stay home as much as possible with my kids. Before my husband lost his job of 13 years back in 2001, we were doing quite well. Like many people... unemployment took it's toll for a while, and we are still feeling the impact of that.

The home equity loan was actually a personal line of credit, so I suppose that is just as bad as having a credit card. We don't use that line of credit anymore.... just still paying on it. That payment is automatically withdrawn from our bank account.

Not sure if medical bills have gone to collections yet.... one of the things to determine as I am organizing the mess.

We have obtained a credit report, and I can assure you that it is not good. Another thing that bothers me.

We did not have insurance on the other property that we own. We went to insure it last year, but because it was still in "remodel" phase.... the insurance company would not insure it because it was not fininshed, and no one was residing in it. They said that it has to be considered "liveable" to insure. It still needed a kitchen. So, that is now our mess to cover.

As far as putting my education on the back burner.... I don't want to keep putting it off. I want to get the education ASAP, so that I can get into the work force making a better income. Continuing to work at low-paying jobs is not going to get us out of this mess, so my thinking is this..... the sooner I can get a "real" job, the sooner I can get started on saving for the future. I will still keep my job, and take classes when convenient, and on-line when possible. I do know what I want to study, so it's not just going for the sake of going. My three oldest kids are working, and they always help to save spending money for college. So far.... the 529 funds have paid for their educations, but it is now getting to the point of taking out some student loans, since we have utilized some of that 529 for "hardship" monies.

As for the IRS..... we most definitely are not going to pay them until we have a better explanation as to what the amount is for. I had a friend who worked for the IRS, and he said that a lot of people get ripped off by the IRS and don't even know it. They are intimidated by the letters so they just take it for truth, and pay it. I will be more cautious in my payment to them. Not sure if we need an attorney at this point, but will keep that in mind if we don't seem to get a satisfactory response with the IRS.

Again.... thanks for your motivation, and support, and suggestions. I will check in for more advice, and keep you posted on my progress.

tj

iVillage Member
Registered: 04-12-2007
Mon, 06-23-2008 - 4:40pm

Hi,


I just want to say that I would encourage you to take it one thing at a time.

iVillage Member
Registered: 04-30-2007
Mon, 06-23-2008 - 11:12pm

Thanks Robyn

It is most definitely overwhelming right now! It is so hard coming up with a plan that will work. We don't spend frivously... I mean, I haven't bought any big tag item in years, other than a new washer and dryer, because ours went out. Even then... I bought from a scratch and dent sale, and a close-out item. There are a lot of things that we need around our home, but we have put off making any purchases because of the debt hanging over our heads.

Anyway....... thanks again for the words of encouragement.

Avatar for sullengurl
iVillage Member
Registered: 02-16-2004
Wed, 06-25-2008 - 12:19pm

Take this from someone who knows about education and related debt.....just make sure that your college degree is HIGHLY in demand where you live (meaning that you will have no problem getting a job once you are finished immediately) and pay for it out of pocket as much as possible.


Honestly, student loans are no longer the low interest deal they once were. The interest rates are climbing up there. Plus, you can no longer claim them if you go bankrupt. If you default, FORGET IT! I have read people's stories of having thousands upon thousands of dollars of debt that

 


 



iVillage Member
Registered: 04-30-2007
Wed, 06-25-2008 - 4:46pm

Thanks for the insight, sullengurl. I'm sorry that you are having such difficulty right now. It makes me worry about the opportunities for my children, let alone myself. I have two in college at present. As far as what I am considering getting my education in.... one is nursing, which is what I went to college for way back when. The other consideration is teaching. I know that both will be needed in the near, and distant future, and I believe that I would be happy in both careers, but teaching appeals to me for the added bonus of having my summers free. I'm thinking of those years in the future where I will hopefully have grandchildren, and can spend some quality time with them.

Well.... good luck to you and your job search, and in getting your debt under control.

At this stage of the game... I'm not sure what the answer is for anyone trying to make ends meet in today's economy.

tj

iVillage Member
Registered: 10-10-2007
Sun, 07-27-2008 - 4:52pm

I know this is kind of an old posting, but I found it while browsing and just want to say, you should definitely consult an attorney about the IRS. There are many issues that you can raise as defenses that only an attorney would know about. One I can think of off the top of my head is that the statute of limitations might have run already if this debt is from 2001 and they have yet to collect. Only a tax lawyer can know for sure, but it will probably be well worth your while! They can also deal with the estate taxes and anything else. Sometimes all you need is to file an amended tax return.

I had an issue when I was in college where the accountant my father paid to do my taxes messed up and forgot to report that I had sold a bunch of stock from my college fund to pay for tuition back in 2002. They held on to my refund for 2005, which I had been counting on, so I went right away back to the accountant. Turns out, I shouldve gotten a larger refund in 2002- not that I owed them anything, even though they were keeping my refund because I couldve owed them something! I never got my 2002 refund because the Statute of Limitations had run already so they didn't have to give it back, but I did get my 2005 one right away.

Point being- if they have been keeping your refund thinking you owe taxes and you actually dont, YOU'LL NEVER GET THAT MONEY BACK and there's NOTHING you can do about it! So please, go see a tax professional ASAP!!!!!!!

iVillage Member
Registered: 04-30-2007
Sun, 07-27-2008 - 10:33pm

Thanks for your post. I have been advised by others to seek some sort of legal consult, as the IRS has been known to take what they are not actually entitled to. I would hate to think that I am SOL to any refunds that they have already helped themselves to.

I will definitely be looking into some advice before I send any more to them.

Thanks again.

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