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Hope’s Debt Update – June, 2018

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I didn’t realize it had been so long since I published a debt update. You can see my last one published in February here.

June, 2018 Debt Update

Here are my debt numbers as of yesterday. Despite limited income over the last few months, and primarily living off savings, I have stayed on track with paying off debt.

Creditor
Balance

(as of 10/14/17)
Interest
Min. Payment
Student Loans$34,3752.88%$0 (income based deferment)
Car$6,8647.00%$308
Credit Card$4,98217.00%$36
Collections 3 (Ex-husband)$4,9536.25%$246
Collections 2 (Apartment)$499$0
Self Lender$29110.57%$97
Summer Camp (2018)$00.00%$0
Taxes (State)$00.00%settled with refund for 2017
Total$52,150$687

I removed the debts that were previously settled. Since the February update, the kids’ summer camp was paid off and my VA state tax debt was settled with my 2017 refund.(Received word of this, this week – yeah!)

State and Federal Taxes

I had both VA and GA earnings so had to file in both states. I am still waiting on the GA results, but I anticipate a refund. Because I am a first time filer in GA, I had to file via paper and their website says it can take up to 9 weeks to hear anything.

I am also anticipating a federal tax refund. More on that once I hear from the IRS. (Because of the final year of the adoption tax credit, W2 job where I had more than required withheld and my estimated tax payments from my consulting business, I was well covered.)

Looking toward the Future

As I put in the comments yesterday, I have now contracted out full time hours with my consulting business. While some hours I only earn $17 per hour, the bulk of the hours are contracted at $40 per hour.

After I get a month under my belt, I will publish an anticipated budget. For now, as many BAD readers advised when I wrote about the unemployment benefits I was to receive, I am only spending the minimum on the monthly bills and saving the rest.

Once I get back on stable ground with all the new clients, I will begin with a new debt pay off plan. My first goal…pay off my single credit card!

Your advice has been invaluable these last four years, but most importantly the last few months. Doing at this debt update gave me a lot of hope that being debt free is not too far off.

 


IRS Update: Payment Plan Default!!!

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Well isn’t the IRS just a bucket of sunshine to deal with? (Said dripping with sarcasm)

I wrote (here) about how the IRS was one of my top 3 organizations/entities that I hated dealing with (the other two, Navient and Social Security Administration are still at the top of my S-list, too!)

How it all started…

We owed a lot of money for our 2016 taxes and it took us a LOOOOOOONG time to set up a payment plan. I explained the whole back-story and why it was taking so long in this old post from back in October 2017. Basically, to initiate a payment plan we had to sign an agreement that said we agreed with the tax debt owed. Under advice of our CPA, we were trying to contest a portion of the amount due so we couldn’t arrange a payment plan for the remaining balance since we wouldn’t sign to agree to the full debt. It took a long time and a lot of back-and-forth to come to an agreement. We finally did that in October of 2017 (again – this is for taxes that were due for tax year 2016). That’s a reallllllly long time to come to an agreement!

So here we are, faithfully making our monthly payments. I have never missed a month and never been late with a payment.

Things unraveled quickly…

Imagine my surprise, then, when I opened an incredibly thick envelope from the IRS to receive a notice:

“Send us $XX,XXX [full amount of taxes owed] or we may seize (levy) your property on or after July 18, 2018.”

WTF??? What are they talking about? We’ve been making our agreed monthly payments faithfully! Why would they demand full payment within one month??? Or else they’ll seize our property???? Holy crap!!!

That was sufficient to scare the crap out of me. The IRS means business.

I logged into my online account where I always make payments. All of my payments have been recorded as normal. I tried to click to view our payment plan information, but it says the system is not available and provides a phone number to call. It literally took me 3 days of nearly constant calling to connect with an individual. I kept getting a message that “due to high call volume, we cannot accept your call at this time.” Finally today I made it into the cue to wait to speak with a real person. Per usual, it took over a half hour before I was even able to get someone on the phone.

When I finally got a person on the line, I explained the situation. It took her a little bit of digging into the account but then she discovered, we’ve been considered defaulted on our payment agreement since November 2017 (it was just established in October 2017, so November was our very first scheduled payment!!!)

I’ve always done direct payments on the IRS website. When I do so, I have entered my social security number to identify the tax debt. But when we filed our 2016 taxes, we filed as married filing jointly and used my husband’s social as the primary. Because I had made our payments with my social security number instead of my husbands’, they didn’t register as normal monthly payments. Someone had to manually change the payments every month from my social to the joint filing account (which is why I did, indeed, receive credit for the payments). But because of the way the system works, if it’s not filed under hubs’ social security number, the system considers the payment to have NOT been made. And it immediately considered us to be in default.

Our payment plan is no longer even in place!

Even though I’ve been making every single payment on time every single month. Even though I never received any notification of default. Even though I had no idea I had to make the payments under hubs’ social or else it wouldn’t “count” in the system.

I have to start all over. We have to re-do the whole payment plan. The real pain with this (in addition to the waste of time and stress, etc), is that there’s a $225 fee to set up a new payment plan. There’s apparently no way to waive this fee given the circumstances (the representative even said she felt bad for us and that she personally thought it was unfair, but her hands are tied). There are cheaper ways to set up the plan: I could do it online or I could schedule auto-debit (instead of paying direct-pay as I had been doing). When I explained that I’d tried to see the payment plans in the IRS’s online system and it wouldn’t let me and told me I had to call to speak to a representative, she said “oh sorry, I guess that’s not an option for you.” She said there’s a new online system and that some people simply are not eligible to set up payments through the online system. She didn’t explain whether there was rhyme or reason for this (e.g., Is it because we owe over $10,000?? Is it because the system says we’ve defaulted on a previous payment plan??? No one knows).

Establishing a new payment plan

I will receive a new payment plan agreement in the mail and I’ll be charged a lesser amount if I agree to the auto-debit (which is what I’ll do), but it’s still a fee of $149 to establish the payment plan. The same payment plan that I already thought we had in place. That I was already paying toward every month. Or so I thought. UGH.

Thankfully, the representative said she does not believe we will be at risk of having our property seized as the IRS notice indicated. If we set up an auto-draft where the IRS has direct access to debit from our bank account, we should be fine. They will only debit the agreed-upon monthly payment and the auto-debit will also eliminate the possibility of incorrect payment. Since I will no longer be doing direct-pay, I won’t be entering a social security number one way or the other – the payment will just be taken and applied appropriately.

A huge pain in the butt and a costly lesson to have to re-establish a payment plan. But hopefully (fingers crossed????) this should resolve the issue. And we’ll continue making the same payment we’ve been making all along so nothing changes in terms of our monthly budget.

Have you ever experienced something similar when dealing with the IRS? I’m still shocked I never received any notice of default. Until this notice that the IRS was going to seize our property, I had no indication whatsoever of a problem! Scary stuff!

 


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