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September 12th, 2009:

Cancellation of Debt and the Insolvency Exclusion

The general rule regarding cancellation of debt is that it is a taxable event. But there are some exceptions. The most common exceptions involve bankruptcy, the Mortgage Forgiveness Debt Relief Act (the “Act”), the insolvency provision, and certain farm and other business indebtedness.
If the cancellation of debt pertains to your primary residence and you don’t qualify under the Act, you may be able to exclude the income under the insolvency exclusion. You are insolvent when, and to the extent, the amount of your liabilities exceed the fair value of your assets.
To determine if you are insolvent (and the amount by which you are insolvent), you should analyze your liabilities and the fair value of your assets immediately before the debt cancellation event. Accordingly, the definition of insolvency would be when your liabilities exceed your assets at a given point in time.
Remember that the insolvency calculation should be done just before the cancellation of debt occurred. This can be difficult because often the cancellation of debt occurred several months back. Just realize how difficult the process is to go back six months to a year in the past and try to determine the balance in your bank account and the value of any furniture, vehicles, etc.
Your assets would include the value of everything that you own, including assets that serve as collateral for your debt and assets that would ordinarily be beyond the reach of creditors under the law, such as your 401k, pension plans and retirement accounts.
Liabilities would include your debt including the entire amount of recourse debt and the amount of nonrecourse debt that is not in excess of the value of the property that is held as security by the debt.
Assets you have may include (but are not limited to) the following:
• Cash and bank account balances
• All real property (including land)
• Cars and other vehicles
• Boats and other watercraft
• Household goods and furnishings
• Appliances, computers, electronics, etc
• Jewelry
• Clothing & books
• Stocks, bonds and mutual funds
• Investments in coins, stamps, paintings, or other collectibles
• Firearms, tools, sports, photographic, and other hobby equipment
• Interests in retirement accounts (IRA accounts, 401(k) accounts, etc.)
• Interests in education accounts and cash value of life insurance
• Security deposits with landlords, utilities, etc.
• Value of investment in a business (including interests in partnerships)
• Other investments (for example, annuity contracts, guaranteed investment contracts, and commodity accounts).
Liabilities you have may include (but are not limited to) the following:
• Credit card debt
• Mortgage(s) on all real property including 1st and 2nd mortgages
• Car and other vehicle loans
• Medical bills
• Student loans
• Accrued or past due mortgage interest and/or real estate taxes
• Accrued or past due utilities (water, gas, electric, etc.)
• Federal or states income taxes remaining due (for prior tax years)
• Loans from 401k accounts, other retirement plans and life insurance policies
• Judgements
• Business debts (including those owed as a sole proprietor or partner)
• Margin debt on stocks and other debt to purchase or secured by investment assets other than real property
• Other liabilities (debts) not included above
The insolvency exclusion is complex and you should use a CPA or other tax or legal professional to assist you with the calculation. You must use proper diligence in determining the amounts on the solvency calculation. This includes proper support for the fair market valuations of assets and liabilities, which may include (but is not limited to) appraisals, independent valuations, market studies, account statements, etc. You must retain any and all supporting documentation relating to the insolvency calculation.
This article is written for informational purposes only and is not intended to be tax or legal advice. Each situation is different and you must discuss your situation with a qualified tax or legal professional. We inform you that any federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Credit Card Cancellation a Necessary Step for Financial Freedom

Canceling your credit cards can be a positive boost for your pockets. Many people do not realize the option of canceling credit card accounts and therefore continue to destroy their credit to the point of no return or worse, skip this option and go straight to bankruptcy. Bankruptcy should be the very last option for anyone struggling with debt. You should first try everything imaginable before filing for bankruptcy. If you haven’t already canceled your credit cards then bankruptcy should not be in your thoughts just yet.In most cases, it can negatively affect your credit rating to cancel a credit card. A percentage of your credit score is based on the history that has been established with your credit accounts. However, there are times when canceling your credit cards can be an effective decision. Use these guidelines to know when you should cancel your credit cards:Cancel Your Credit Cards with Zero Balance. Canceling a credit card with zero balance has the least effect on your credit score. When you cancel a credit card with a zero balance, it does not affect the portion of your credit score that is determined through your debt to balance ratio. Your credit score may see an impact from the canceling of the credit card, but this can be increased over a period of time.Cancel Your Credit Cards if you are Unable to Stop Spending. Credit cards with zero balances and increasing credit limits can be tempting to those consumers that are living on a tight budget and have faced debt problems in the past. If you are one of these consumers then canceling the credit card may be your best option, rather than live with the tempting credit line. This is a sure way to avoid future debt and is worth the small drop that may occur in the credit score.Cancel Your Credit Cards if You Have Multiple Accounts. Canceling your credit card if you have multiple accounts can reduce the risk of identity theft. When you request a copy of your credit report, you may even be surprised at the amount of accounts which are shown open! Some of these accounts may never have been used after being activated, often; if these accounts are not closed then they can remain open for years, thus increasing the risk of identity theft or fraudulent activity.Cancel Your Credit Cards if You Have Established Negative Credit History. There are some instances that consumers have established negative credit history from their credit card account. If you have missed payments or have had numerous late payments then you may benefit from canceling the credit card. It is important to avoid these behaviors and ensure that positive credit history is created from the first month that the credit card has been opened. Note, canceling your credit card does not free you from the debt, you will still be responsible for paying off the current debt but by canceling your credit card accounts you will not incur any more credit card debt.Canceling your credit cards can be as easy as contacting the credit card company to request the cancellation. The credit card company may resist your request, but it is important to be direct and not waive the decision to cancel the credit card.If you intend to open a new loan account in the next year, then the credit card account should remain open. This is an important factor in the credit rating and therefore it is important to take measures to increase and maintain the credit score – rather than closing accounts which may prove negative to the credit score.

Michael David is an expert writer who has years of experience writing and producing quality content. For anyone who is having financial troubles and wish to live a debt free lifestyle then I’d recommend reading Dave Ramsey’s Total Money Make Over: A Plan for Financial Fitness. It is a financial guide and strategy for living a debt free. Dave Ramsey is a world renowned financial guru, with a track record for helping families get out of debt.

Cancel Debts Lawfully! Help Others Become Solvent

How would you like to have a Business that allowed you to help people with Debts. Do you think you would be busy? Would this be recession proof?
Here is the background:
When a Credit Card Company, Bank or Financial Institution extend a loan to you, they take money from their own Reserves or the Depositors money held in Trust and make this available to you on the condition that you pay it back with interest, Right? NOT AT ALL!!!!
In truth, what happens is that when you apply for a loan, this application is then converted to an IOU (I Owe You) / Negotiable Instrument, which in the eyes of all parties involved (except you – you ignorant fool) has the value of the sum written on it. So the bank takes your application and enter it into its accounting ledgers as a deposit, or sells it for the stated value and enters the value received into it’s accounting as a deposit.
Now the Bank actually owes you money.
To balance it’s books the Bank or Card Company now releases credit (that came out of thin air) into your account, to the stated value. Now the books of the bank are balanced. No one owes anyone anything. But they do not inform us about this, if this became public knowledge the whole scam would fold – who would like to repay money they actually created themselves??
Why should we work hard for years to pay the banks money they have already gotten and for which they are just doing some computerized book keeping? Where is the Banks risk? Nowhere! They have already been paid. Where is your risk? In years of labour, in possibly loosing your possessions and your good name. Is there a balance here?
This probably explains how the Banks can make these extreme profits and have all these fantastic buildings. How would you like to have a business where you can print money at no cost and get paid twice for it as well as collecting interest on top?
So you have to pay the whole sum again plus interest! You can see what an fantastically profitable scam this is. If you or I did create money out of nothing, we would soon be in jail for counterfeiting. But the Banks have bought the Politicians and control the Justice System, so they have made this kind of legal.
But there is a weakness in their system. They did not reveal this to you when you signed for the “loan” so the Contract is not valid. Contract Law is very clear on what has to be in a valid contract. There are a few more things that they normally omit, which makes it possible take them on and eventually have the debt canceled.
Also, did you know that the Debt Collection Agencies have no legal leg to stand on. One can just refuse to engage with them – as long as one makes this known in writing and stands ones ground they will eventually back off. Do not talk to them. Ask them to prove their case and admit to nothing. Do not ever agree that they have any rights to collect or that you owe anything. If you do, you have agreed that they can extort money from you.
They will have that on tape and make a transcript of it. They might use this against you in court.
If you want to learn more about this and get in contact with a Group that can help you to legally challenge Debts or Introduce others in need to the Group, follow the link.
If you follow this link and join my mailing list you will get two Books that explains in full how them money system works and a lot more. This will be the actual story of how this society actually works, not the false image we are fed daily trough media, news and the Education System. Reality is very different from appearance, but do not take my word for it – investigate yourself!
You will also receive a template for dealing with Fixed Penalty Charges, like parking tickets, late payment fees etc. You do not have to part with your money for things like that. Once you understand how the Government is holding you to ransom, you will also see ways out of the trap.
Let this be your first step on a road that will lead to a great Business and much greater freedom than you thought possible, while earning a good or great living. You will even learn how to deal with the Tax man, the Law, etc.
Kent Bengtsson

Debt Reduction to Canceled is the Best Kind of Debt Elimination

Are there ways to eliminate credit card debt or obtain debt reduction from the high balances and payments? Is it possible to just get your entire debt canceled? Do you really think that there are positive uses of a credit card? Like rebates and airline miles? Let me give you the gospel on this: responsible use of a credit card does not exist. Credit card debt is a major problem in America. We have a need to eliminate debt of any kind! There is NO positive side to credit card use. You will spend more if you use credit cards. Even by paying the bills on time, you are not beating the system! But most families don’t pay on time. The average family today carries $8,000 in credit card debt according to the American Bankers’ Association.

Now let’s talk about the rebates. If you were using a credit card at 5%, you would have had to spend $80,000 to get $4,000 rebates on new cars that lost $6,000 of value when you drove them off the lot. That is not a good deal!Dealing with the enticing of Credit Card Companies that take advantage of consumers by luring them in with low interest, no fees and a high credit line. These banks encourage consumers to charge much saying that they will receive back a small percentage of interest as a savings when the banks receive from the consumers twenty percent interest or more on the purchases made.Think about Cash vs. Credit Cards when purchasing!When you pay cash, you can “feel” the money leaving you. This is not true with credit cards. Flipping a credit card up on a counter registers nothing emotionally. If you use credit cards instead of cash you will spend 12-18% more. This is money you could have saved.If you “have to” use plastic, I suggest a debit card. I use them for travel and the occasional convenience of ordering something over the Internet or phone. Other than that, I use cash. Personal finance is 80% behavior. You need to cut out habits that make you spend more.You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the credit card companies.The Banks and credit card companies are making millions of dollars off of our purchases and then give us back pennies as an incentive to charge more. How can you eliminate debt using their program?I believe that there are many people who are struggling with credit card debt and see no way out except bankruptcy or debt consolidation. I believe that there is a way to get your debt canceled or reduced to pennies on the dollar. There has to be a new alternative out of debt for the one who does not have the resources to pay their debt.

Credit Card Debt information, debt counseling, debt management, debt consolidation, debt solutions, debt reduction, financial Counseling, debt negotiation, debt relief and being debt free are the many terms we use for saying that we just want our debt canceled.

Bill Naugle Th. M. Financial counselor with two Information Technology Certifications. Microsoft (MCDST) and CIW Server Administrator Certification. Expert by self-study in SEO with proven success. Theology Instructor of the Bible. Qualified Home Internet Business Entrepreneur with marketing achievement. Writer of many articles, books and ebooks.
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