I am employed and make a pretty good hourly rate, but am out of work between jobs, and have a not so dependable income. I have substantial debts and seek to learn the various options available to me.
When starting a business about 10 years ago, I fell into a $100K debt hole, consisting entirely of unsecured debts when the business failed. I have judgments against me but have only heard from a small handful of law firms as of late, and make small monthly payments to keep myself out of court.
I have a horrible credit rating, but have no real plans to get credit cards or a mortgage.
(and even feel slightly protected from identity thieves since they would get refused if they tried to get credit in my name)
I also have substantial tax debts, to the tune of $20K to the IRS
. Plus I have next to nothing put aside for my taxes for 2012. I am on an installment plan for the back taxes and pre-pay when I can. I make that my priority far and above paying the credit card debt
. I have been offered settlements as low as 30 cents on the dollar, but worry this kind of deal would simply deepen my tax debt, since the 70% "gift
" of the amount forgiven is taxable. So I do not want to shift my burden from owing unsecured debts to owing more back taxes that a sweet sounding settlement could do to me.
One law firm to which I made $50/month payments, when I was employed, returned the check and said the account was close by the client. So that debt just disappeared, probably for good.
What real obligation am I under to pay?
Does this obligation ever go away? Or does the willingness to pay law firms, on older and older debts, diminish as the debts age?
I do not want to consider bankruptcy, since I fear a court would not be friendly towards me. Even though I earn a high hourly rate when working, I am between assignments often and that reduces by annualized income. Also, having my own consulting company, I feel a bankruptcy on my record wold look very bad. I get contracts
in spite of my bad credit, but avoid applying to asset management companies, which have stringent credit requirements.
I have my own company which I use to contract myself out to clients, and have been told I would not qualify for the Chapter #7. I have also been told Chapter #13 is costly.
I think the easiest route is to maintain the payments to the law firms and get any new law firm onto a monthly payment plan; Hope to strike it rich one day to be able to make a settlement with the credit card companies; but first get past 100% of my back taxes and to the point where I could file quarterly income taxes and be sure I am not accumulating a tax debt.
I forgot to mention, any repayment agreements I ever signed, I have broken due to unemployment
. So any repayments I am making are strictly voluntary and/or verbal agreements.
Is maintaining the status quo my best option?