Credit Card Quick

Is it Advantageous to Pay Your Tax Debt with a Credit Card?

Introduction

The first few months of every year are one often filled with anticipation, as well as dread. Everyone knows that tax time is coming. Some people will get refunds. This, of course, makes many people happy. Who doesn’t love a little extra cash, after all? For others, tax time is anything but fun.  Having a tax liability, another debt to pay, can turn many a smile upside down. Luckily, most know it’s coming, but still, knowing in advance does not soften the blow of seeing the numbers at the end of a tax bill. Whether it is income, real estate, property or other taxes, those numbers can add up and add up fast. If you are not prepared each and every year, you could find yourself in a real financial mess.

Paying Your Tax Debt

Some people have the cash or utilize a checkbook and get pay the bill promptly. Others struggle to make payments and then there are those who pay their tax debt with their credit card. Is this really a good idea? For some people, it might be the best way to pay. For others, it is questionable. Before you whip out that 0plastic and tell the IRS to “just put it on my card,” you need to think carefully about what this could wind  up meaning to you.

Using Credit

There is no doubt that your tax debts have to be paid. Federal and State governments, as well as some local governments, want their share of the money. It may not always seem fair, but it is how this country works and how much of the government revenue is generated. If you can prepare in advance to pay a large tax debt either by cash, check or money order, you are probably better off. It’s not always a bad idea to pay by credit, but there is a lot to take into consideration before you do.

Small Debts

If you only owe the government a small amount of money, a credit card might be a good choice for payment. The government gets their money; you have simply transferred the debt, keeping the tax officials at bay.

If you know you have the income and the ability to continue paying the credit card bill, including the interest and fees you are going to wrack up with this new debt, then a credit card is a good way to go. However, paying by taxes by credit card can be very risky for those who do not have the money to pay the bill. Getting the government off your back could land you in even more debt, hurting your credit score and you pocketbook.

Alternatives

If you need time to pay, think about not using the credit card. Credit cards add on fess and interest, therefore, you wind up paying more over time. With the government, you can often make a payment plan that will not incur the rate of interest seen on a credit card bill. If you have high tax debt that you know you can not pay off in full, even over time, do yourself a favor and consult a tax attorney. many of these can often help you to settle your tax debts for much less than you owe, relieving the burden on your mind and your finances.

Debt Collectors and Intimidation Tactics

Credit Repair

There is probably nothing more frustrating then being in debt and having your telephone ring off the hook with debt collectors who just don’t know when to stop. Try telling these guys about your situation and you get nowhere. They couldn’t care less. Why? They are being paid to collect on the debt you owe. They have a job to do and listening to your financial woes isn’t it. To top it off, they try to blame you for circumstances you often had nothing to do with creating and demand payment immediately “How are you going to take care of this today?” they ask. Frankly, if you had the money to pay the debt right then and there, you would not be in so much debt because you would have taken care of this long ago, right?

Debt collectors are famous for their intimidation tactics. This borders on illegal and often crosses the line. They call repeatedly. They threaten you. They promise that only one person is handling the account and you will only ever hear from them. However, lo, and behold, you get a call a few days later from the same collection company and it is, indeed, a different agent. Just because you’re in debt does not mean you have to tolerate the added stress of debt collector intimidation.

Make Them Listen

Debt collection agents like to talk, trying to tell you how much debt you have and what you have to do to solve the problem. As if you were not already in the know, right? Cut them off. Tell them where you sit financially. Tell them you will pay the debt as soon as you are able. Make them listen. Even if they act like they do not care, be stern. You have the right to tell them your side of the story. Then, kindly ask them not to harass you as much or even at all. This might not stop it, but there will typically be a recording of your having asked, and often, it does reduce or eliminate the calls. If it doesn’t, there are other steps to take.

Bankruptcy

Planning to file? Make it clear to the collectors. They know there is little they can do to collect on this debt now. It will reduce or even eliminate the calls, at least for some time. Be sure to follow through on the bankruptcy filing, as after a while, they will resume collection attempts if you have not taken any action.

Assert Your Rights

Put a stop to the calls. Write a cease and desist letter to the collection agency. You can find out how to do this on the FTC website. Let them know that you know your rights and demand that they leave you alone. Keep a copy of the letter. The collection agency can contact you one last time, through the mail, to inform you of their intent, however, after this, if their harassment persists, they can wind up in big trouble.

Don’t take debt collector harassment lying down! It’s one thing for those who are irresponsible to be in the bad way financially, but for most of us, life happened, and we can do little about it at the moment. Life comes with enough stress. Don’t let these guys add to it.