Owing just credit cards or just the IRS is a heavy load.
But what if you are strugglng with credit card debt and have fallen behind on your taxes, and are understandably sinking under their combined weight?
For a while, it may be manageable – the IRS sometimes takes a while to rear its ugly head, and you can buy a little time by paying the credit cards a little every month and keeping them off your back.
But the monthly credit card payments get you nowhere – despite the good money you are throwing their way, you hardly make a dent in the balances.
And then the IRS come calling. A local Revenue Officer pays you a visit at home or work, or maybe your bank account or wages are garnished, it could even be the onslaught of IRS collection letters filling your mailbox.
And you find out that the IRS really does not care about your credit card problem. The payments you are sending to the credit cards, well, the IRS tells you to send that to them, or they will garnish your accounts. In debtor-creditor law, the IRS is often considered a preferred creditor, meaning that they have a right to get paid before the credit cards.
Your house of cards is crumbling. If you pay the IRS what they want, then the credit card companies are going to start dunning you – calls, letters, third-party debt collectors, threats of lawsuits from lawyers.
There are solutions to slay this two-headed monster.
First, if you owe the IRS under $50,000, they will give you a 72 month payment plan on your taxes and not inquire about your credit card debt. The IRS will not ask you to send the credit card money to them if you can afford to repay the taxes over 72 months. In fact, the IRS won’t even ask you for financial disclosures of where you work, what you drive, how much your house is worth, or if you even have credit card debt. The IRS offers this as a simplified method to repay your taxes. It is called a direct debit installment agreement.