With some simple precautions, you can avoid the pitfalls of online buying for tax evaders.
Online Learning How To Buy Tax Delinquent
By Lindsay Friedman / Digital Journal
Do you know the one thing you should really do before you can get on with your life and stop worrying about paying off that tax lien? Being able to understand your debt.
It sounds cheesy, but it’s true. How much money you owe shouldn’t be the only factor to weigh in your decision about whether to pay off that tax lien, but not knowing that can contribute to a lifestyle of stress and financial uncertainty.
Luckily, there’s a way to learn about all that behind-the-scenes financial stuff and then use that knowledge to make better, financially responsible decisions: debt coaching.
Debt coaching is a popular, effective financial management strategy, and many people use it to combat financial-related stress. Not every tax lien that lands on your credit report is a result of a collection agency reaching out to you about unpaid debts, and the fact that you’re unable to pay those debts doesn’t mean you’re broke or have no hope.
But there are several types of tax liens that have the potential to keep you up at night. You’ll want to keep an eye out for debt service loans, such as credit card debt or car loans. Those types of debts are owed to the government, and they’re owed for specific reasons, such as for someone who no longer lives in the U.S. or who has died.
The government can use collections agents who try to collect debts against dead people and dead-beat parents or spouses, as well as for overdue medical bills that have gone unpaid for years, but none of those cases typically results in a collection agency coming knocking at your door.
Then there are default judgments, which are debts that are levied by courts against people who haven’t paid. Sometimes that means unpaid parking tickets or traffic tickets, and sometimes that means unpaid student loans. Both of those types of defaults might seem more onerous than one-time collections for failing to pay taxes, but that’s not always the case. Because federal student loans typically aren’t processed by credit bureaus, they can get on your credit report without your knowledge and can stay there for years.
Defaults and collections agencies that act on behalf of a federal agency can result in tax liens, but federal law limits the number of such liens one person can have. And if you’re surprised that you owe a tax lien, it’s probably because it’s listed as one of the personal property liens, where you were listed as a guarantor for someone else’s loans. You should see a list of personal property liens in your credit report, but you might not be able to see them unless you go into your credit bureau and ask for them, because they are essentially put on your report to prove to creditors that you’re not a good borrower.
The last group of situations that can contribute to debt is debt yourself, which you might be subject to if you’re unable to pay off a debt that you think you can’t repay. Many times, that debt is caused by an unforeseen medical expense or another emergency, or because you were charging credit cards and trying to cover a lifestyle that wasn’t paying off.
But there are different kinds of debt that can lead to collections. The last one is that you’re no longer paying the debt, which can also result in a tax lien. If you feel your bill is not worth what you’re spending on it, having a tax lien for it might make it more difficult to pay off.
There are several ways that consumers can get out of the collections cycle, including filing for bankruptcy, making monthly payments on time, and requesting it to be removed from their credit reports. Not paying that debt doesn’t show up on your credit report, though.
Debt also doesn’t affect someone’s credit just because they’re a homeowner or car owner. They may never encounter those collections agencies and liens, but they can have a major effect on a consumer’s credit if they’re delinquent or late on their mortgage payments.
Having a tax lien does impact how debt collectors deal with you, because liens are not easily removed, and after long enough, they can have a significant impact on your credit and access to lending options. That’s why hiring a debt coach can make it easier to avoid debt while still making sure you follow through with paying off a tax lien. That’s one solution to debt that you really should know.