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Originally posted by whiteraven
How can they live this large on 60k????
They have to be in debt big time or are they crack dealers?!
Originally posted by Aggie Man
Lord, I hope so! I would love the opportunity to pay back my credit card debt at pennies on the dollar...
You see, because the lender took a $90,000 loss, they want to write it off on their taxes. And in order for them to do this, they have to hit you with a form that says you got away with $90,000 from them. This is taxable income!. So the IRS comes after you for the tax on the $90,000. IRS liens are one of the things that is not discharged by bankruptcy, and it stays with you forever. Ten years absolute minimum for any purpose. Sometimes your lawyer, CPA or Enrolled Agent will get you an "offer and compromise" that cuts your liability, but that's technically taxable income also and may be subject to another round of this crud. It it seems like to you the system is rigged so you can't win, you're right. The loan was an obligation you agreed to, and took the money for, and taxes are on obligation of anyone who is a citizen or resident.
Originally posted by Illusionsaregrander
After all, the people who defaulted on their mortgage debt did not get to pay off their bad debt at pennies on the dollar. They just lost the homes and now are carrying the default on their credit history.
Originally posted by Aggie Man
EDIT: to add one point here though is this--> When you default on a mortgage, there is real property that they can take and resell. When you default on your credit cards, they have nothing they can take from you, thus the pennies on the dollar statement. They take pennies on the dollar ALL THE TIME in bankruptcy court!
Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.
Originally posted by sir_chancealot
Here's the real kicker. Whenever you use a Visa or Mastercard, the RETAILOR must pay between 2%-3% of the transaction to the credit card company.
Think about that. Even if you spend $100 a month on a credit card, and pay it off before it gathers interest, they've earned 2% for the month (at least). In other words, they are making 24% (minimum) per YEAR on that $100.00 a month that you pay off every month so there is no interest charge.
Originally posted by Crakeur
I was talking to a relative about this a couple of weeks ago. He used to work at American Express and still has plenty of contacts inside the company. They're seeing a frighteningly large number of delinquencies from their platinum and black card holders. I'm not sure of the numbers but he said that he was given the impression that the issue was rather large. and growing.
Big banks have formed an unusual alliance with consumer advocates to urge the government to allow huge portions of credit card debt to be forgiven, a turnabout from recent years when the banking industry lobbied strenuously to make it harder for consumers to erase their credit card debts in bankruptcy.
The new pilot program -- which the banks hope will become permanent -- could involve as many as 50,000 people struggling with credit card debt. On an individual basis, the amount of debt to be forgiven would rise according to the severity of the borrower's financial situation, up to a maximum of 40 percent.
And there would be a tax benefit. Borrowers would be able to defer payment of income taxes they owe on the forgiven part of the debt until after the remainder was paid off. The lenders could wait until then to book their loss on the forgiven debt.