Bankruptcy

[PsychNut12]

So- my husband and I just paid the IRS down from $2,005 to right at $350. And then we get ANOTHER letter in the mail saying he now owe's an additional $4k after the re-audited the same year (2011). Long story short he and his now ex were divorcing and she agreed to file Joint... so they did and then she went and filed separate... so who knows what this mess is about. Either way the IRS took taxes out from the joint filing, so what the hell is the additional $6000+ for?! That year he made around $28k and she made at the most $15k. He is calling on his off day to the IRS and to the tax payers advocate because something doesn't seem right. That and their figures did NOT add up and of course, they never tell you why you owe the additional $4k.

ANYWAYS... just when we were almost done with them, here we go again.

We still cannot get his car payment of $423/mo refinanced (upside down, he owes about $14,500 and it's worth like 9k) and his credit score is not budging.

Is it a horrible idea to use a $1,500 check I have coming at me for school to find a reliable little car for him and call GM financial and tell them to come get this stupid vehicle?

We would then save for a few months and file bankruptcy (him ONLY)... which for one would knock the interest off of the IRS crap and do away with the THOUSANDS of past medical bills, a voluntary repo he had in 06 and the eviction the same year (he was hospitalized for pneumonia and fired due to it).

After that was filed and done with we would use that extra money from the car payment plus his second job earnings to save up and by a more decent vehicle later on down the road and pay off my credit card debt.

I guess my question is: Is the whole buying a cheap vehicle, letting this current one go, and filing bankruptcy a stupid idea?

We are just under so much pressure with this stupid car payment and now throw a huge IRS bill on top of it.... I am at a total loss.

He is going to try once more of getting our bank to possibly refinance on Wednesday.

Opinions? Other options/ideas?

EDIT: our rent is $500/month and he brings home $986.30 every 2 weeks... so the rent and car payment is almost half of our income, so you kind of get an idea of how tight things are with this car payment.
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[bjl584]

Getting rid of the car and buying something cheaper is an excellent idea. But, letting it get repossessed to do so is not. Try selling it or try trading down to something cheaper.

Can you find a cheaper place to live?

Can you and/or him work more hours, get better jobs, or pick up part time work?

As far as the IRS goes; you need to find a qualified CPA and have them look into your situation. I had my CPA look into an audit that I received from the IRS. They wanted me to pay them $1200. At the end of the day I owed them nothing. It was an error on their end. It only cost me $30 in fees to my CPA.

I wouldn't file bankruptcy. Boost income and cut costs and you won't need to.

[hamchan]

You can usually consult with a bankruptcy attorney for free. They can look over your numbers and explain all the potential drawbacks and benefits. I filed almost three years ago and have never felt any regret. Bankruptcy law is complicated and varies from state to state, so regardless of what you decide to do, talk to an atty first.

[PsychNut12]

Getting rid of the car and buying something cheaper is an excellent idea. But, letting it get repossessed to do so is not. Try selling it or try trading down to something cheaper.

Can you find a cheaper place to live?

Can you and/or him work more hours, get better jobs, or pick up part time work?

As far as the IRS goes; you need to find a qualified CPA and have them look into your situation. I had my CPA look into an audit that I received from the IRS. They wanted me to pay them $1200. At the end of the day I owed them nothing. It was an error on their end. It only cost me $30 in fees to my CPA.

I wouldn't file bankruptcy. Boost income and cut costs and you won't need to.

He has a 2nd job and there is no way I can work and go to nursing school full time. No, we downgraded our apartment already so that is not an option. And we are not able to sell it for what we owe on it and have tried trading down and refinancing and have been denied SEVERAL times over.

[bjl584]

He has a 2nd job and there is no way I can work and go to nursing school full time. No, we downgraded our apartment already so that is not an option. And we are not able to sell it for what we owe on it and have tried trading down and refinancing and have been denied SEVERAL times over.

You may want to consider putting school on hold for now so that you can help boost household income.

What steps have you taken to sell/refinance the car? How have you tried advertising it? What price are you trying to sell it for? How many lending institutions have you reached out to? How many times is "several"?

[PsychNut12]

You may want to consider putting school on hold for now so that you can help boost household income.

What steps have you taken to sell/refinance the car? How have you tried advertising it? What price are you trying to sell it for? How many lending institutions have you reached out to? How many times is "several"?

Um, no... you cannot stop and start an RN program, sorry. Halfway through now! And we have advertised it and we are asking what we owe, which is right under $14,500. He has done 3 lenders and we have attempted to refinance/trade down about 7 times now!

[bjl584]

Um, no... you cannot stop and start an RN program, sorry. Halfway through now! And we have advertised it and we are asking what we owe, which is right under $14,500. He has done 3 lenders and we have attempted to refinance/trade down about 7 times now!

If you can sell the car for around $10,000, can you scrap together the extra $4500 to make up the difference? I'd rather pay a loan on $4500 than on $14,500.

What does your husband do for a living? What are his prospects for a career change and/or a promotion.

[PsychNut12]

No because saving up $4500 would take us forever with the amount of wiggle room we have... and he is a Correctional Officer... he may go to school when I am out.

[Permanent Temp]

I agree don't quit school. Can you get an on campus job something light 5-10 hours a week? Or are you really good at any subjects can could offer your services as a tutor either on campus or at a community resource like an after school program for school children. Do you get summers off? Can you temp during that time? How about your home situation? Are you able to move in with a friend or family member or go into a house and rent a room or a basement? There are usually listings on campus for apartments meant just for college students and college students and their families that are reasonably priced.

Can you negotiate work in the apartment you are in now for a lower rent or get another roommate to help off set costs? Do you have anything you can sell like old textbooks you no longer need?

The first thing I'd do aside from considering if I can lower costs anymore is to contact a CPA and sort out the IRS situation. The next thing I'd do is to tame the car loan so that it is no longer upside down and then sell it. Do you absolutely need a car or public transportation or carpooling even remotely an option?

I would also do whatever I could to hold on to the 1.5 K in an emergency fund to help weather any future issues. And if your not already doing so get any textbooks that you get for a cheaply as possible and resell any you don't need at the end of the semester unless you have some other program in place that covers book costs. Even then I'd sell them at the end of the semester if possible.

[bjl584]

Can you post your budget? Let's see where all the money goes every month. I guarantee that you can make some cuts in several areas and save some money.

Also, do you have any unwanted or unneeded items that you can sell to help raise some money?

It sounds like you both need to change the way that you think about and approach finances. Credit card debts, car loans that you can't afford, and a past bankruptcy indicate to me that financial irresponsibility was and perhaps still is the order of the day. If you change how you approach financial management and learn to live on less than what you make, then you will be set. Sometimes it's as easy as cutting back on things like cell phones, eating out, vacations, and buying things that you don't need. Other times it's a bit more difficult and requires you to get creative, think outside the box, and make sacrifices. Either way, it isn't impossible. You've shot down every suggestion I've offered as impossible. Trust me, financial responsibility is not impossible. It's not even hard. It just takes some diligence, some effort, and some forethought. Post up your budget and let's have a look.

[youshallliveinoverflow]

Sell the car to get your expenses down. Talk with the IRS and see if you can do an offer in compromise. I know someone who had over 20k in debt to the IRS and made in offer in compromise and paid only $1000. She simply did not have the money and the IRS accepted $1000. It was a long process that took over a year to resolve. Best of Luck with that.

[GrimJack]

Sell the car to get your expenses down. Talk with the IRS and see if you can do an offer in compromise. I know someone who had over 20k in debt to the IRS and made in offer in compromise and paid only $1000. She simply did not have the money and the IRS accepted $1000. It was a long process that took over a year to resolve. Best of Luck with that.

An offer in compromise has a fee of $150 that is not refundable; if the OIC is accepted you will have to meet certain, very strict rules (for 5 yrs IIRC - not trained in this area) and if you screw up any of the rules, the entire debt comes back with interest and penalties as if the OIC had never happened.

Call the IRS and talk with someone; find out what happened. If someone files MFJ and their partner files MFS then one or the other has to set things straight; filing an amended return would fix the situation (who files it depends on what the 'truth' is MFJ and MFS have specific definitions).