From: Ohio
Dear TaxMama,
I have over $15,000 in back taxes from not filing previous tax returns on
time – and my husband not withholding enough.
We are current with our tax filing, but my husband has been unemployed for
the last two years.
The IRS has a tax lien on my house, which they have put in hardship status.
I have tried to get refianced but get turned downed everytime.
My credit is poor and I am in consumer credit counseling service to repay
my creditors. I have a total of $17,000 in personal debt, a $48,000 mortgage
with 11/25% interest, and $12,000 in outstanding tax liens.
I’m at my wits end because I’m coming up short because a creditor
(an attorney) will not accept the CCCS plan and is garanishing my wages of
$600 a month.
I don’t want to file bankruptcy but I feel I have not other recourse.
Please advise.
Thank you for your time.
Tina
Dear Tina,
Ouch. Clearly, you’re having a hard time sleeping at night.
Pity about the bankruptcy. Today, the new law comes into play, where you have
to go through the longer-term bankruptcy. You’ve just missed the quick
option.
OK, so, you’re overwhelmed. But your house has equity – you just
can’t refinance it with all the problems.
Here’s what I would do to avoid filing bankruptcy.
Find a friend or family member with good credit. Sell them your house.
Draw up a lease on your home, with option to buy the house back within 5-10
years at today’s prices, plus all the buying and selling costs incurred
by your friend + something for their time and inconvenience.
Make sure your lease if for a rent payment that’s enough to cover the
new mortgage, the taxes and the insurance. Be sure that the new insurance policy
naming your friend (the new owner) also names your family as the additional
insureds.
Selling it with the lease will give you protection in case your friend suddenly
decides to own your home. And selling it to them, instead of having them co-sign
for you,
gives your friend protection against you ruining their credit.
That way, you’ll get enough money out to pay all your debts. You’ll
get a lower interest rate mortgage. And you’ll buy yourself enough time
to get back on your feet.
You already know how much easier it all can be when you’re not beaten
down by creditors constantly callingor embarrassing you at work with garnishments.
Good luck. You need a fresh start!
Best wishes,
Eva Rosenberg, MBA, EA
