The average consumer debt in the United States is $96,371. Most people have no way to cover these expenses.
If you’re one of the many Americans who are drowning in debt, there is hope for you. There are three ways to qualify for debt forgiveness, which means you won’t have to pay anything back. Read on to find out if you’re eligible.
Insolvency is when your total liabilities exceed your total assets. If you’re insolvent and can prove it, you may be eligible for debt relief. To qualify, you must file a petition with the court.
You also have to follow IRS debt forgiveness rules related to filing Form 1099-C and 982.
When you’re disabled and unable to work, it’s time for you to consider applying for debt forgiveness. You will be required to provide documentation from the Social Security Administration that your next scheduled disability review is in five to seven years. You must also prove that you were paying taxes on time before your disability.
If you’re approved for debt forgiveness, you will be subject to a monitoring period. During this time, officials will evaluate your case to ensure that there have been no developments that allow you to work.
Bankruptcy is one of the debt relief options available as a result of insolvency.
You must declare bankruptcy through court filings. You will have to pay filing fees, but they’re less than what it would cost to pay off all of your creditors.
Your unsecured debts will be erased. In some cases, the court will possess all of your assets and distribute them to creditors so they can recover some of their lost funds.
Debts Eligible for Forgiveness
Student loans, mortgages, and credit card debts are all eligible for forgiveness. Secured debts, such as car loans and home equity loans, are not eligible. Child support and alimony payments also do not qualify for forgiveness in most circumstances.
Finding a Debt Forgiveness Lawyer
When you’re ready to file for debt forgiveness, it is highly recommended that you find an experienced attorney to represent your case. The rules regarding debt forgiveness, especially when dealing with a large amount of debt, can be complex and require special knowledge.
Look for an attorney who has a few years of experience dealing with debt forgiveness cases. They should also have excellent communication skills. You should be able to ask questions regarding their successful cases and get a reply within a few hours.
It’s also best if your lawyer can provide you with references. Contact past clients and find out what their experience with the attorney was like.
Manage Debt More Effectively
Asking for debt forgiveness shouldn’t feel embarrassing. You’re taking steps to improve your financial situation, and that’s something to be proud of. If you’re struggling with debt and looking for a way out, contact a lawyer who can help.
Until you find a lawyer, browse our finance articles for money management ideas.