bored7one4

DV or dispute with bureau new collections that just reported on my credit report?

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Calling can be very dangerous.  You could be setting yourself up for abuse by calling.  The only reason to call is to 1.) get the collection agency's address/phone number/fax number  2.) possibly feel them out for a debt settlement.

 

It's definitely best to write them first.  

 

It's ALWAYS a good idea to do a debt validation when you get the first letter.  

 

Collection abuse by an original creditor is extremely rare (unless it's a Payday account - lot's of abuse in that segment). The typical experience when calling the OC to verify is fairly straightforward: they will just look up your account and tell you who they sold or placed the account with. 99% of the time they won't even attempt to collect since another entity is handling it. 

 

Writing a letter demonstrates that you care. It's not an advisable move. Consumers priorities in this situation should be to maintain a very low profile and to mingle with the "herd of the 80%" until they're able to financially address the debt. Writing a letter puts you on their radar. A consumer is better off staying off that radar until they're in a financial position to resolve their account. All negotiations should be done verbally and payment should only be remitted once you have a settlement letter in hand.

 

It's ALWAYS a good idea to do a debt validation when you get the first letter.

 

Why?   

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Jared...Although I find it extremely hard to beleive that the "collector of the year for 1999" got that award by ALWAYS playing by the rules and being polite and honest with the debtors he callled, on the off chance that you did work for a reputable colection agency (cough, cough), let me point out that the vast majority of CAs do not operate as polite and reasonable companies.

 

Most CAs run roughshod over consumers who do not know their rights and use verbal abuse and intimidation to entice the 'least sophisticated consumer" into doing things they may not otherwise do.

 

Calling the OC to verify that you owe them money 99% of the time gets you auto-transfered to the CA.  Nothing good comes from that.

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@jared_strauss

 

Well, we keep going round and round with this discussion.  I maintain it's a good idea to do debt validation becuase: 

 

  • The collection is on your credit report and the only way to remove is debt validation or dispute with credit bureaus
  • You don't know if all of the fees and charges are legit. 
  • You don't know if a collector has the legal right to collect.  

Most of the people here have been advised that you can't settle with a collection agency, something I strongly disagree with.  You are saying that it makes debt settlement harder? But debt settlement with the collection agency is possible.  Is it your experience that a written agreement is given?  How did that work in CACH? 

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@jared_strauss - so you're saying that if a debt collector has no documentation that a debt is valid, that the consumer should go ahead and pay it?  Not ask for debt validation, but simply allow that debt to stay on your credit report when there is no proof?

 

You said that most cases have about 10% of the documents they need to prove a debt in court.  This seems to be all the more reason that you should ask for debt validation.  

 

What I'm saying is that no one knows if they can get it for sure. And if the debt is valid and the consumer has the willingness and desire to pay why potentially arm the collectors with what they need in order to get nasty if the intention is to pay anyway? It potentially leads to a more aggressive and more expensive resolution for the consumer if the agency or JDB is able to generate the backup. It's generally not a risk that is worth taking if the intention is to resolve it. 

 

You misunderstood that statement. What I said was "They normally order less than 10% of the backup on any given portfolio. In other words, there is a low probability that they will bother to get the documents they need in order to successfully sue you if you don't invite them to get them."

 

In most cases when a collection agency or JDB receives a placement of accounts they don't get any of the backup. They must make a request to get it as they need it. 

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Jared...Although I find it extremely hard to beleive that the "collector of the year for 1999" got that award by ALWAYS playing by the rules and being polite and honest with the debtors he callled, on the off chance that you did work for a reputable colection agency (cough, cough), let me point out that the vast majority of CAs do not operate as polite and reasonable companies.

 

I agree.  

 

Most CAs run roughshod over consumers who do not know their rights and use verbal abuse and intimidation to entice the 'least sophisticated consumer" into doing things they may not otherwise do.

 

I agree. Which is why I say to mingle with the herd.

 

Calling the OC to verify that you owe them money 99% of the time gets you auto-transfered to the CA.  Nothing good comes from that.

 

But it does confirm that agencies involvement. And if a consumer wanted to verify additional information such as a balance, they could call the customer service department for the original creditor and explain their needs.

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@jared_strauss

 

Well, we keep going round and round with this discussion.  I maintain it's a good idea to do debt validation becuase: 

 

We're not going round and round. I think we're having a polite and professional conversation. This is good. 

 

  • The collection is on your credit report and the only way to remove is debt validation or dispute with credit bureaus

This is true for having them deleted previous to the 7.5 year rule. However, let's dig in on this: Do you know that most lenders only look back 24 months from the time the last delinquency was resolved? Removal isn't even necessary. Resolution is necessary. Call any mortgage company in the country and they'll tell you that if you have paid or settled all of your delinquent accounts more than 24 months ago that you'll generally qualify credit-wise to buy or refinance conventionally. And generally consumers will qualify credit-wise after resolving their final delinquency after 12 months for FHA mortgages. And if the consumer is hell-bent on getting the delinquencies deleted, they should wait to do so until they're resolved or until statute of limitations has expired. This way they can invoke these possible remedies without exposing themselves to the possible dangers.    

  • You don't know if all of the fees and charges are legit. 

I agree. If a consumer disagrees with the balance they should request an itemization of the charges. But, it's more safe to make this request verbally. I would personally only recommend a written request for an itemization if they're not cooperating with the verbal request. 

  • You don't know if a collector has the legal right to collect.  

This is easily verified with a phone call to the original creditor. And if its been sold multiple times, via additional phone calls to the previous owners of the debt.  

 

Most of the people here have been advised that you can't settle with a collection agency, something I strongly disagree with.  You are saying that it makes debt settlement harder? But debt settlement with the collection agency is possible.  Is it your experience that a written agreement is given?  How did that work in CACH? 

 

I strongly disagree with that too. In fact, my lowest average settlement is with collection agencies. I'm saying that if you arm the collector with the backup that it definitely makes settling for a lucrative amount more difficult. You give them leverage and a position of strength. If they want to get paid a settlement letter is given. I would never advise anyone to pay a settlement without one. At the corporate franchise for CACH we would cut a deal, create a letter, forward it to the consumer, and then facilitate payment. 

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So if you are on that 20% that wants to pay, then you are basically screw, BS I rather be on the low percentage that fights back, I ALWAYS DV, and then follow up if they respond with a Cease and desist, and I'm on the side if you ain't suing me, don't mess with me cause I gonna sue you, so far I collected from JDB and not the other way round, I got no credit plan, and no aim on one, so I just do it for my own self respect, and encourage others to exercise their rights.

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So if you are on that 20% that wants to pay, then you are basically screw, BS I rather be on the low percentage that fights back, I ALWAYS DV, and then follow up if they respond with a Cease and desist, and I'm on the side if you ain't suing me, don't mess with me cause I gonna sue you, so far I collected from JDB and not the other way round, I got no credit plan, and no aim on one, so I just do it for my own self respect, and encourage others to exercise their rights.

 

You appear to be an assertive individual who is comfortable with the risks. For anyone reading this: if you're comfortable with the risks too; go for it. My general point is that it's important to make these potential risks known so people have the ability to make an informed decision that is aligned with their level of comfort and goals. 

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I know that most Germans where not Nazis in 1933, but the Nazi party took power in 1933, we all know how the story ends, so I rather exercise my rights when I should have. There are risk of course, but at least you know you did what you could when you should, and not just let it be. I mean the Beatles song sounds good, Let it be, but is not practical, and for sure it ain't gonna work as a social thing. My 2 cents if you got rights for God Sake exercise them, you don't wanna be like the germans of 1933 trust me, you might just do a little, like making a JDB pay a few thousands every now and then, you might get them to pay 2.5 millions like one on these board did, but hey every thing counts, the more you fight them the less likely they will violate the law, you are not just doing it for yourself but for other consumers too.

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@jared_strauss - what about this: 

 

Most of the people here have been advised that you can't settle with a collection agency, something I strongly disagree with.  You are saying that it makes debt settlement harder? But debt settlement with the collection agency is possible.  Is it your experience that a written agreement is given?  How did that work in CACH? 

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@jared_strauss - what about this: 

 

Most of the people here have been advised that you can't settle with a collection agency, something I strongly disagree with.  You are saying that it makes debt settlement harder? But debt settlement with the collection agency is possible.  Is it your experience that a written agreement is given?  How did that work in CACH? 

 

I posted this in my previous reply: I strongly disagree with that too. In fact, my lowest average settlement is with collection agencies. I'm saying that if you arm the collector with the backup that it definitely makes settling for a lucrative amount more difficult. You give them leverage and a position of strength. If they want to get paid a settlement letter is given. I would never advise anyone to pay a settlement without one. At the corporate franchise for CACH we would cut a deal, create a letter, forward it to the consumer, and then facilitate payment.

 

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I know that most Germans where not Nazis in 1933, but the Nazi party took power in 1933, we all know how the story ends, so I rather exercise my rights when I should have. There are risk of course, but at least you know you did what you could when you should, and not just let it be. I mean the Beatles song sounds good, Let it be, but is not practical, and for sure it ain't gonna work as a social thing. My 2 cents if you got rights for God Sake exercise them, you don't wanna be like the germans of 1933 trust me, you might just do a little, like making a JDB pay a few thousands every now and then, you might get them to pay 2.5 millions like one on these board did, but hey every thing counts, the more you fight them the less likely they will violate the law, you are not just doing it for yourself but for other consumers too.

 

If you wanted to take a stand and make sure that abusive collectors are being held accountable, you're better off in the "herd." 

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Somehow, I think you're mixing up the players here.  I don't know if its deliberate or not, but just to make sure newbies reading this thread understand:

 

1.  The original creditor (OC) is probably the only one you can trust to make a binding deal.  I say "probably" because, in general, if it isn't in writing, it didn't happen.  We've had many posts from members who thought they had a verbal settlement with an OC only to find out the OC reports it as a payment, and still wants the balance.

 

2.  A collection agency (CA) is "assigned" a debt by an OC or JDB (next paragraph) as in "go collect this  for me".  They seldom have any more information than the debtors name, address, phone, and an approximate amount.  They never have any authority to speak legally on behalf of the OC, but must take any deal they broker back to the OC for approval.  While there have been several court cases where an OC has been held liable for dirty tricks a CA has pulled on their behalf, a CA is not trustworthy.  As a general rule, any deal may thru a CA should be in writing and signed by an employee of the OC (see item 1).

 

3.  A junk debt buyer (JDB) buys "uncollectable" debts from an OC or another JDB.  They buy in bulk and pay pennies on the dollar.  (CAs do not buy debts).  Usually, to protect the shareholders of the JDB from any personal liability, JDBs assign CAs to try to collect.  JDBs almost never have any legitimate documentation that the alleged debt is valid. 

 

So...in my opinion...if you have money to "settle"...deal only with the OC.  Get any deal in writing before you send money, and be prepared for the tax consequences.  Never trust a CA.  And, never send money to a CA or JDB unless ordered to by a court.

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@willingtocope

 

Exactly unless they can prove in a court of law you owe them any money, no one owes them a penny, I never got a credit card with Midland Funding or Cash or any of those, so I do not owe them a penny unless they can prove it, same for the rest.

 

As for OC I do encourage for people to settle with them, if they got the money, also if it ain't in written it never happened. I myself settled with an OC in court, all the documents where filed with the court, payment was made and their attorney dismissed the case with prejudice. OC reported the payments but as of today never reported the settlement, I disputed with 1 CRA got back verified as accurate, I just send all the docs, with attorney signatures, judge signature, etc. hopefully they will correct it, but if they don't I can sue. So whatever you do do it in written.

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In fact, my lowest average settlement is with collection agencies. I'm saying that if you arm the collector with the backup that it definitely makes settling for a lucrative amount more difficult. You give them leverage and a position of strength. If they want to get paid a settlement letter is given. I would never advise anyone to pay a settlement without one. At the corporate franchise for CACH we would cut a deal, create a letter, forward it to the consumer, and then facilitate payment.

 

 

It's good to know they get a written letter.  

 

And also that you're a debt settlement guy.  :)  That taints your answers somewhat.

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@jared_strauss

 

You're right. It does serve that purpose. But that's why I say to call the original creditor and confirm the agencies involvement. There is no reason to arm your creditors with what is needed to sue in this situation. A more safe alternative would be to call.

 

 

If one is being dunned by a JDB who has purchased a debt, calling the original creditor will not always serve the purpose of confirming the JDB's purchase of the account.  This can depend upon the OC's records and/or what they're willing to tell you over the phone.  Creditors have been know to state that they no longer own the account but have no other information.

In my opinion, it appears you're making at least 3 assumptions.

1.  Original creditors keep records for more than a few years.

Depending upon the SOL of a particular state and unless it it stipulated in the purchase and sale agreement that records will be kept indefinitely,  there's no guarantee that an OC will keep records more than a few years.

2.  No records are included in a sale of an account.

This is dependent upon the terms in the purchase and sale agreement. 

3.  All JDBs are willing to obtain more records than might be required for validation.

Again, I disagree with your assertion that a validation request "arms" the creditor with what is needed to sue.  In the vast majority of cases, the information/documentation needed to validate is not enough to prevail in a lawsuit.

While courts have conflicting opinions about the documentation required to validate a debt, they all agree on one thing:

Verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999).

In Thomas v. Trott & Trott, PC, a debt collector's response to a validation request included no documentation.  The Michigan U.S. District Court ruled that the debt collector's inclusion of information in the letter was sufficient to validate the debt.  So, in that case, documentation was not required by the court in order to validate the debt.

Some courts may require some sort of documentation such as a credit card statement, while other courts may only require information as long as the information provided in a response is specific enough to ensure that the correct person is being dunned, the amount is correct, and the debt is valid.  Depending upon the court and precedent, a JDB could very well provide the necessary information without documentation.

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Somehow, I think you're mixing up the players here.  I don't know if its deliberate or not, but just to make sure newbies reading this thread understand:

 

I'm not mixing up anything. And I hate to continue to disagree with your statements, but a couple things you stated are not factual. 

 

1.  The original creditor (OC) is probably the only one you can trust to make a binding deal.  I say "probably" because, in general, if it isn't in writing, it didn't happen.  We've had many posts from members who thought they had a verbal settlement with an OC only to find out the OC reports it as a payment, and still wants the balance.

 

Regardless of trust ALWAYS get the letter in writing previous to paying the settlement. ALWAYS!  

 

2.  A collection agency (CA) is "assigned" a debt by an OC or JDB (next paragraph) as in "go collect this  for me".  They seldom have any more information than the debtors name, address, phone, and an approximate amount.  They never have any authority to speak legally on behalf of the OC, but must take any deal they broker back to the OC for approval.  While there have been several court cases where an OC has been held liable for dirty tricks a CA has pulled on their behalf, a CA is not trustworthy.  As a general rule, any deal may thru a CA should be in writing and signed by an employee of the OC (see item 1).

 

Some collection agencies are assigned an aggregate. Meaning that they have the authority to settle for whatever they want providing that their overall average settlement percentage is X. And settlement letters from collection agencies are NEVER signed by an agent of the creditor or the debt buyer. As it is definitely not necessary to have them do so. 

 

3.  A junk debt buyer (JDB) buys "uncollectable" debts from an OC or another JDB.  They buy in bulk and pay pennies on the dollar.  (CAs do not buy debts).  Usually, to protect the shareholders of the JDB from any personal liability, JDBs assign CAs to try to collect.  JDBs almost never have any legitimate documentation that the alleged debt is valid. 

 

Those separations usually exist for the purpose you mentioned. However, the line of separation is generally just entity based. A lot of times, the JDB and the CA are one in the same in regard to personnel.  They also successfully get the validation on a lot more accounts than what you apparently think. The basic rule of thumb that I use for determining the probability of a JDB or a CA acquiring the backup is the age of the specific account and the amount of times the account has changed hands. The older it is and the more times it has changed hands, the less likely they'll get it.    

 

What would be somewhat factual in respect to your comment about JDB's rarely acquiring the documentation would be in the situation of a lawsuit. Collection attorneys and debt buyers thrive off of default judgments, since 90% of people that are served never do anything about it. When consumers don't do anything the attorney wins automatically: regardless of documentation. So since that default percentage is so high they feel it's profitable for them to sue without documentation since they'll only end up needing it about 10% of the time.

 

Which is why I say it's best for people to wait to request validation on valid debts until they're actually contacted by someone that they should really be concerned about: a local collection attorney. Because if they have the collector get it before hand they will have it (if they can get it) when they send the account out for suit when they may otherwise wouldn't. Thus, potentially minimizing that consumers defense. 

 

So...in my opinion...if you have money to "settle"...deal only with the OC.  Get any deal in writing before you send money, and be prepared for the tax consequences.  Never trust a CA.  And, never send money to a CA or JDB unless ordered to by a court.

 

I appreciate your opinion on this. IMO, people should review their tax exposure before settling. The last thing anyone wants to do is shift their debt problem from a credit card to the IRS. Also, for a lot of people, they won't have to pay any tax since the IRS has an insolvency exemption that releases them from the tax liability. It's a very basic qualification. If you have a positive net worth you'll have to pay tax on the amount that you save, up to your solvent point. Meaning if you save $30,000 but you have a net worth of $10,000 that you would have to pay $10,000 worth of income tax. Normally brackets range from 15 - 25%. So anywhere from $1,500 - $2,500. 

 

Wheres if you save $30,000 and you have a net worth of $50,000, you would have to pay the full 30k worth of income tax. So, $4,500 - $7,500 for the 15 and 25% brackets. It is also important to note that the savings could also push you into a new bracket. You may normally be in a 15% bracket, but because of the additional income (assuming that you're not insolvent) your bracket could be potentially higher. 

 

If the net worth is negative then you'll be exempt from the tax and you won't have to pay any taxes. It's really important to make these calculations before settling, and I highly recommend that people meet with an accountant unless it's very obvious that they have a negative net worth

 

In respect to not paying CA's and JDB's, that's a very dangerous perspective. Paying them is no different than paying a different mortgage company when your bank sells your mortgage. In either instance they bought the rights to your debt. And in either instance if a consumer desires to pay those debts they should do so. Just be careful about it and get everything in writing before you do.  

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Also, for a lot of people, they won't have to pay any tax since the IRS has an insolvency exemption that releases them from the tax liability. It's a very basic qualification. If you have a positive net worth you'll have to pay tax on the amount that you save, up to your solvent point. Meaning if you save $30,000 but you have a net worth of $10,000 that you would have to pay $10,000 worth of income tax. Normally brackets range from 15 - 25%. So anywhere from $1,500 - $2,500.

 

Typical debt fixer mantra, and not entirely true.  Get IRS Pub 9682 which talks about "insolvency".  Basically, it is not as simple as you would lead people to beleive.  In fact, its more like you have to be able to qualify for a BK 7 without using any state or federal exemptions.  You must include ALL assets...equity in your house, net worth of your cars, pensions, 401k, insurance proceeds, etc.

 

So...if a debtor owes $100,000..."settles" thru you for $50,000...then pays you 15% of the "savings" ($7500?)...they still owe taxes on the $50,000 found income because your fee is not tax deductible.  Therefore, their 50% settlement winds up costing them more like 70-85% of the total.

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@jared_strauss

 

 

 

If one is being dunned by a JDB who has purchased a debt, calling the original creditor will not always serve the purpose of confirming the JDB's purchase of the account.  This can depend upon the OC's records and/or what they're willing to tell you over the phone.  Creditors have been know to state that they no longer own the account but have no other information.

 

I personally have never encountered that situation before. Whenever I have called an original creditor they're always aware of who they placed or sold the account with. If anyone ever experiences something different than that they should call back and speak with someone else. 

In my opinion, it appears you're making at least 3 assumptions.

1.  Original creditors keep records for more than a few years.

 

They're required to. See http://www.ffiec.gov/bsa_aml_infobase/pages_manual/OLM_116.htm

Depending upon the SOL of a particular state and unless it it stipulated in the purchase and sale agreement that records will be kept indefinitely,  there's no guarantee that an OC will keep records more than a few years.

 

I agree that there is no guarantee that they'll get it. But my argument is that there isn't a guarantee that they won't and that it isn't a risk that is worth taking until they actually sue. 

2.  No records are included in a sale of an account.

This is dependent upon the terms in the purchase and sale agreement. 

 

Almost never. Sometimes they are. This also varies by type of debt: medical, apartment leases, commercial, credit union, and bad check debt often have the backup readily available.

 

3.  All JDBs are willing to obtain more records than might be required for validation.

Again, I disagree with your assertion that a validation request "arms" the creditor with what is needed to sue.  In the vast majority of cases, the information/documentation needed to validate is not enough to prevail in a lawsuit.

 

That is a possible outcome. And it's the same point I alluded to in my recent reply to Willing. A lot of collection lawsuits are filed without the proper paperwork by design. Simply because 90% of the time they win by default anyway. When you request validation before hand then you are potentially "arming" them with the documentation that they need when they may otherwise proceed without it. 

While courts have conflicting opinions about the documentation required to validate a debt, they all agree on one thing:

Verification of a debt involves nothing more than the debt collector confirming in writing that the amount being demanded is what the creditor is claiming is owed; the debt collector is not required to keep detailed files of the alleged debt. Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir. 1999).

In Thomas v. Trott & Trott, PC, a debt collector's response to a validation request included no documentation.  The Michigan U.S. District Court ruled that the debt collector's inclusion of information in the letter was sufficient to validate the debt.  So, in that case, documentation was not required by the court in order to validate the debt.

Some courts may require some sort of documentation such as a credit card statement, while other courts may only require information as long as the information provided in a response is specific enough to ensure that the correct person is being dunned, the amount is correct, and the debt is valid.  Depending upon the court and precedent, a JDB could very well provide the necessary information without documentation.

 

As you mentioned, individual courts have varying opinions. So it's really hard to quantify this risk in a broad manner. If a consumer is sued they should seek legal advice from a local attorney. 

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Typical debt fixer mantra, and not entirely true.  Get IRS Pub 9682 which talks about "insolvency".  Basically, it is not as simple as you would lead people to beleive.  In fact, its more like you have to be able to qualify for a BK 7 without using any state or federal exemptions.  You must include ALL assets...equity in your house, net worth of your cars, pensions, 401k, insurance proceeds, etc.

 

So...if a debtor owes $100,000..."settles" thru you for $50,000...then pays you 15% of the "savings" ($7500?)...they still owe taxes on the $50,000 found income because your fee is not tax deductible.  Therefore, their 50% settlement winds up costing them more like 70-85% of the total.

 

What isn't true? 

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What isn't true?  Read what I saiid....

 

How does that differ from what I said? And it's form 982. See - http://www.irs.gov/pub/irs-pdf/f982.pdf

 

That worksheet looks simple to me. Not to you? 

 

Edited: That worksheet will probably be a bit complicated in terms of understanding it without this: please see - http://www.irs.gov/pub/irs-pdf/p4681.pdf

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Those forms are very complicated and the process is a nightmare to go through.  

 

 

The process is not a nightmare. Although, people should have a tax professional assist them.

 

If you look at the second link (specifically page 8) it demonstrates how basic the qualification process is.

 

It's as simple as adding all of the assets in one column and all of the liabilities in another. And then subtracting the two totals.  

 

In any event. I'm of the mind that people should make this inquiry before they commit to settling. 

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