Should you consolidate tax debt? What are the risks? As you probably know, the IRS may levy your bank account due to back taxes or property taxes that may be owed. With the aforementioned large amount of taxes that are owed, it is no wonder that people find themselves in debt. So here is an easy answer and tips for the question, ‘Can you consolidate tax debt?’
Disclosure: This post contains affiliate links and I will be compensated when you make a purchase after clicking on my links, there is no extra cost to you
Three Methods For Consolidation
Thankfully, with the use of a tax debt loan, you can get a fast solution to getting out of debt. There are two ways that you can consolidate your tax debt.
One way to do this is through a home loan. If you’re looking for the best deal, look for a reputable lender.
One source of information is a Real Estate Agent. Ask them for a list of lenders in your area.
Another option is to pull your personal credit report to see if there are any liens that are worth fighting. Some creditors have posted the amounts they are willing to forgive on the credit reporting agencies’ website.
You can also work with a counselor to consider how your previous issues with the IRS impact your ability to pay your taxes.
They will suggest options for a consolidation loan so that your total obligation is reduced. The interest rate is often reduced to help you make your payments.
Financial management experts will also be able to recommend another option for you.
Thirdly, a credit card debt consolidation plan can lower your monthly payment and help you consolidate your tax debt. However, we all know that credit cards come with interest that you must pay back.
Planning Tax Debt Payments
While these alternatives may seem better than taking out a tax debt loan, they will only get you so far. When you combine these plans with using the consolidation loan to pay off your debts, you will end up paying more money overall.
Once you use all of the tools mentioned above, it will be time to stop making payments on your debt.
Once you’ve paid off your debt, it will remain paid off until you continue on the same plan. If you go on to keep that same plan, you will be paying less in total each month and you will have less debt overall.
You will need to consider all of the options to ensure that you are making the most efficient use of your money when paying off your debt.
Consolidation loans can be beneficial for a short period of time, but they are not ideal when it comes to keeping your credit intact.
If you’re looking for a long-term solution, a home equity loan may be a good idea. This type of loan is not for those looking to consolidate their debt; it is to help individuals with bad credit to build up their credit.
When considering your options for consolidating your debt, there are many different ways to go about consolidating your debt using a tax debt loan or a home equity loan.
You just need to find the best method for you and consider the interest rates and bank costs you will need to pay back. This sums up the answers for, ‘Can you consolidate tax debt?’