Is There A Catch With Debt Forgiveness
Although there are some available options with debt forgiveness, they can, however, bring about unexpected tax bills, rules that are hard to follow and even cause credit score damage. The Obama Student Loan Relief program and the Credit Card Debt Forgiveness Act do not actually seem to exist as it is hard for the IRS to just delete your tax debt because you cannot pay it off. In a nutshell, some of these debt forgiveness options can be somewhat illusive.
There is need to get acquainted with all these facts because the industry is thriving with a lot of scam artists who are out to get unsuspecting individuals through enticing ads and email come-ons. They try as much as possible to convince people who are faced with debt that there are alternative escape routes that are less incriminating.
Of course, some debts can be actually forgiven, however, there is always a hook somewhere. To this end, it is imperative to know what and what is involved so as to be able to decide on the necessity of absolution.
Mortgage Debt Forgiveness
According to the Federal Reserve, more than $1 trillion of home loans were charged off by mortgage lenders between 2007 and 2014. Although charging off is a common accounting term that denotes lenders inability to collect what they were owed, it does not mean the same as forgiving. After foreclosures and short sales failed to cover what borrowers owed, some lenders tried collecting from displaced homeowners.
So to avoid paying taxes and recognizing this income, the Mortgage Debt Forgiveness Tax Relief Act was set up in 2007 to assist taxpayers with debt forgiveness in relation to their primary residence. Nevertheless, the road to getting this forgiveness is not an easy one as homeowners typically have to pass through hell to lose their home and suffer credit score damages. However, it is recommended to consider using any of the two government programs which are the Home Affordable Modification Program (HAMP) and Home Affordable Refinance Program (HARP).
Student Loan Forgiveness
The extension of forgiveness to struggling borrowers irrespective of their profession is believed to have instigated speculations on “Obama Student Loan Relief” program. Student Loan Forgiveness is aimed at reducing payments to reflect the low income of a borrower while after about 20 to 25 years of payments, the remaining balances will be forgiven.
Debt erasures that are connected with certain careers or jobs do not set off taxes. Yet, there is need to pay attention to every rule and detail with forgiveness. Despite huge student loan debt, you can still pursue the career of your choice with Student Loan Forgiveness but if you fail to follow or adhere to the rules, you will not get it. To fully understand all the nitty-gritty details involved with the program, do a regular check with your student loan servicer so as to ensure that you are on the right track.