Relief from Credit Cards

Gregory J. Cook, EA, CPA+
Accredited Tax Advisor
Past President Alabama Society of Enrolled Agents
Past President Alabama Association of Accountants

Getting Credit Relief from Credit Cards is Possible

Having too much credit card debt is hard on a person; it can cause an undue amount of stress and anxiety. Instead of stewing in all of those negative juices there are things an individual can do to get credit relief from credit card companies. A person can choose the self-help approach for managing his or her debt, or he or she can work with companies that offer debt relief services or have debt management plans. A person that takes proactive steps to get his or her debt under control will love how much better he or she ends up feeling.

One option for getting credit relief is for an individual to take the matter into his or her own hands. This approach requires the debtor to do several things:

• Create a realistic financial budget. It should include things like:
    o how much money a person earns
    o how much money is spent – list fixed expenses (those that take place on a recurring basis.) and list expenses         that vary (like recreation, entertainment, and clothing
    o money to be set aside for emergencies
• Contact creditors – by speaking to creditors before an account is turned over to a collection agency, most people will be able to work out some sort of modified payment arrangement with their credit card company.
• Force debt collectors to deal with you in a lawful manner – debt collectors have certain laws they must obey when contacting individuals regarding an outstanding debt. Many have a habit of not following these laws. A person should become familiar with these laws in order to force a debt collector to deal with him or her legally, in order to cut down on his or her stress and anxiety,

Debt relief services are another option an individual has for getting credit relief from credit card companies. These services will offer credit counseling, help individuals develop budgets, and offer free educational seminars. The initial consultation should last at least an hour, and there should be an offer for follow-up sessions.

A more intense approach for a person to take, in order to get credit relief, is to engage the services of a company that can create a debt management plan. These plans are designed for the individual that may have some difficulty following through with any payment arrangements he or she has set up. Basically, a debt management plan requires individuals to deposit a certain amount of money, in a special account, every month, which then allows the credit counseling company to turn around and use that money towards a person’s credit card debt. During the time that a person is enrolled in this plan, he or she is not allowed to apply for or use any additional credit.

No one likes to think about getting into so much credit card debt that he or she needs to seek credit relief; however, that is the reality for many individuals. The good news is that getting credit relief is possible, and it can go a long way to help reducing a person’s level of stress and anxiety. Any level of stress reduction will help a person have a brighter outlook on life.

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Greg Cook on the Recovery Act ...

The Recovery Act was passed by Congress and signed into law by President Obama on February 17, 2009. The purpose of the $787 billion Recovery package is to jump-start the economy to create and save jobs. The Act specifies appropriations for a wide range of federal programs, and increases or extends certain benefits under Medicaid, unemployment compensation, and nutrition assistance programs. The legislation also reduces individual and corporate income tax collections (to an extent), and makes a variety of other changes to tax laws.

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This Act will have far reaching consequences and we will be dealing with it for years to come (at least until 2018). Twenty-eight different agencies – such as the Departments of Education; Health and Human Services; and Energy – have been allocated a portion of the $787 billion in Recovery funds. Each agency develops specific plans for how it will spend its Recovery Act funds. The agencies then award grants and contracts to state governments or, in some cases, directly to schools, hospitals, contractors, or other organizations. The agencies are required to file weekly financial reports on how they are spending the money and their specific activities related to Recovery funds.

Read more about The Recovery Act

While Our Government Rolls the Dice with Deficit Spending ...

We endeavor to bring information to you that will help you keep taxes and your personal finances in check.

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Have You Refinanced Your Home?
If you are one of thousands who locked into a lower home mortgage interest rate, then you've hit the savings jackpot! Besides getting one of the lowest rates in decades, you may be able to deduct some of the refinancing costs when you file your tax return. The “points” paid to get a home mortgage may be deductible as mortgage interest when you itemize on Form 1040's Schedule A. Points paid to get an original home mortgage may be fully deductible in the year paid. However, points paid solely to refinance a home mortgage usually must be deducted over the life of the loan.

For a refinanced mortgage, you figure the interest deduction by dividing the points paid by the number of payments you will make over the life of the loan. You may deduct points only for those payments made in the tax year. Say you paid $2,000 in points and you will make 360 payments on a 30-year mortgage. You could deduct $5.56 per monthly payment, or a total of $66.72 if you made 12 payments in one year. If you used part of the refinanced mortgage money to finance improvements to your home and if you meet certain other requirements, the points associated with the home improvements may be fully deductible in the year the points were paid.

Also, if you are refinancing a mortgage for a second time, the balance of points paid for the first refinanced mortgage may be fully deductible at pay off. Other closing costs – such as appraisal fees and other non-interest fees – generally are not deductible. And the amount of your adjusted gross income could affect the amount of deductions you can take. Any way you look at it, between the lower interest rates and the tax savings, that's money you can take to the bank. For more information on deductions related to refinancing, contact your Cook and Co. Advisor.