By Sarah E. Crest,
Special to the AFRO
It’s easy to dig yourself into a financial hole by neglecting your finances or making even one wrong decision with your money. When dealing with credit and taxes, information may seem to be confusing. But this article will show you how to improve and even erase poor decisions from your past.
Read below to learn how you can begin correcting some of the most common money mistakes.
What to do if you are behind on taxes
If you are behind in your federal tax payments, you must inform the Internal Revenue Service -IRS that you are unable to pay. You may consider making an offer-in-compromise on the IRS website after exhausting all avenues to meet your debt.
An offer-in-compromise is designed to help taxpayers settle their tax liability for less than the full amount owed. The IRS will screen you for – ability to pay, income, expenses, and future earnings potential. Please be aware that there are multiple forms to complete. Start with the April 2022 version of IRS Form 656. There is a $205 application fee that can be waived for low-income taxpayers.
If you need to remove an eviction from your credit record
If the eviction on your record is justified– meaning, you really were evicted because you did not pay your rent, damaged rental property, or violated your lease– the eviction will stay on your record for seven years unless you try to remove it.
To do this you must negotiate a settlement with the property owner. Be sure that you obtain a written arrangement including the property owner’s agreement to contact the credit bureaus and rental history reporting agencies to inform them that your debt is clear. You will need to pay what you owe.
Sixty days after the debt is paid, check the credit bureaus and the rental history reporting agencies to be sure your records are clear.
You will need legal help to clear evictions resulting from rent court issues, landlord/tenant litigation or rental debt owed by civil judgment.
If you need to clear a repossession
If your property (automobile, furniture, appliances) is seized due to delinquent payments this involuntary repossession will be reported to the credit bureaus and will impact your credit score.
To clear your record, try negotiating with the lender to recover the item by paying all or part of the delinquent amount. The lender may negotiate because the property has depreciated, and it is in their best interest to collect the remainder from you. If your property is returned, making on time payments will help recover your credit score. Be aware that the lender may no longer wish to deal with you because you are deemed a poor credit risk.
There is a myth that if you choose to surrender the property, voluntary repossession, there will be less of an impact on your credit score. Voluntary and involuntary repossessions have the same negative impact on your credit score.
If you need to have your record expunged
Expungement is the process of “removing information about a case from court and law enforcement records,” according to the Maryland State Archives. Having your record expunged will increase your job opportunities.
The list of charges that are eligible for expungement differs by state.
In Maryland the misdemeanors – drug possession, prostitution, theft and assault in the second degree may be expunged after a certain amount of time. The felonies of possession with intent to distribute or dispense a controlled dangerous substance, burglary in the first, second or third degree and felony theft may also be expunged after a period of time.
Additionally, if you were convicted of a crime and the law has now changed, you may be eligible for expungement. Contact Maryland Courts Help Center for help with filing. The website includes links to fillable forms. Be sure that you have all of the case details including – case numbers, law enforcement agency (who served the warrant or arrested you), specific charges, and disposition of the case. There is a $30 non-refundable fee when filing for expungement of charges for which you were found guilty. You may request a fee waiver if you are unable to pay.
If you have several outstanding bills to pay
There are multiple ways to pay down debt. According to information released by Wells Fargo, “the ‘snowball method,’ simply put, means paying off the smallest of all your loans as quickly as possible.” Another method, ‘the avalanche’ begins by paying off the bill with the highest interest rate first. The avalanche method saves more money because you get rid of compounding high interest.
