Debt Help Services

Posts Tagged ‘bad debt’

Question: IRS deduction question on bad debt from clients?

I own a small consulting/engineering business and was curious if bad debt from previous clients is deductible? Due to the bad economy, I’ve had a few clients that were unable to pay me for services rendered. I have turned this over to a collection agency but they can’t collect either. Can I claim these 2008 loses against my 2008 gains on my business IRS tax return?
thanks, Dennis

Answer: If you are an accrual basis tax payer and have already reported as revenue the money they should have paid you when the bill was sent, then you can deduct the bad debt when they don't pay the bill.

If you are a cash basis taxpayer (most taxpayers), then you cannot deduct the bad debt. Since you never received and reported the income from the sale of services to them, you cannot deduct the money they do not pay.

Richard K
Master Tax Advisor
HR Block

This advice was based upon my understanding of the law in effect at the time it was written as it applies to the facts provided by you. See my profile for more details.

Bailout can't hide it; the country is busted

Even leading Republicans in Congress, including presidential nominee John McCain, recoiled from Treasury Secretary Henry M. Paulson's proposal to take absolute power over $700 billion to be borrowed by the federal government and used to purchase every sort of bad debt without ever having to answer for it -- not to the courts, not to regulatory agencies, and only occasionally and incidentally to ...

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In the past, debt counseling used to be the first step toward debt reduction. Debt counseling services used to offer many debt reduction solutions that help many people. Debt counseling services used to provide free financial advice and help people with budgeting as well as negotiating with creditors for lower interest rates on behalf of the people. Through the debt consolidation and reduction process, debt counseling services were able to help people set up debt management plans or DMP for short. Most debt counseling in the past offered debt reduction solutions for free or for a very low fee. Nowadays debt counseling services do the opposite of what they used to do.

How did debt counseling services make money?

Debt counseling services used to make money off of creditors. That was why debt counseling services were able to offer debt reduction help to consumers for free. Creditors paid debt counseling services because they felt that debt counseling services helped them recover the loans which would have become bad debt otherwise. However, nowadays, most creditors don’t generally pay debt counseling service anymore.

As there are many more laws to protect consumers and debtors, creditors get more aggressive. Creditors are relentless when raising rates and collection money from debtors. They also often disregard the services of debt counseling agencies.

So, what do debt counseling agencies do?

In order for debt counseling businesses to stay in business, debt counseling services have opted to raise fees for consumers. While, debt counseling agencies no longer offer as valuable services and advice as they used to, they take advantage of unknowing consumers and debtors who are desperate enough to pay their hefty fees. Many debtors who enrolled for these debt counseling services have reported to be worse off than when they first signed up. Many debt counseling services companies have also been reported with the Better Business Bureau and the Ripoff Report.

If you are reading this, then you probably have some financial problems that you want to address. You may be drowning in debt or you may just owe more money than you are comfortable with. No matter how much debt you have, reading this blog is a step in the right direction to either solve your debt problems or at least avoid racking up more debt.

Why money management is important

Everyone loves money. Money may or may not buy happiness but it sure helps it significantly. The problem is that in our day and age, money and debt go hand in hand. When someone has a lot of money, they usually spend it – wisely at first but then soon their lifestyle changes so they find themselves spending as much as they make or even more than they  make. So, they get a loan or a credit card with a high credit limit and spend more, thinking they will pay it back soon. But a lot of the time something else comes up and they end up carrying that debt with them for a longer time than planned. Some people eventually pay their debt off, although not easily, while others end up having to do something drastic such as filing for bankruptcy protection.

Some debts are acceptable

While it seems like a bad idea to spend more than you make, not all debt is bad debt. So, if you need to borrow money, you might as well borrow in such a way that is not bad for you or your credit. We will discuss the concept of good debt and bad debt in detail throughout our Blog. If you already have a lot of debt and you are not paying them off, then do not worry, there are many ways you can clean up your credit while managing your debts. You will learn how to borrow, deal with bad debts and clean up your credit at the same time.

Bad Debts and Bad Credit

At some point in your life, you will need to borrow money, such as from a bank or financial institution. If you have a record of bad debt and your credit is poor then banks will be reluctant to lend you money. If they do lend you, then the chances are your loan interest rate will be unacceptably high. Some people have to put up with interest rates are high as 30% in order to get a loan. We hope that you will not have to. We will be posting lots of resources to help you improve your credit and manage your debts at the same time.

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Question: Has anyone dealt with Destination Debt Solutions before?

I have about 7 payday loans that are currently in default. My troubles started by borrowing from one to pay the other, and so on and so forth. After doing this I realized they were all due on the same date. Panic set in, then I had to try and figure out how to get out of this mess. So I did some searching on the web and came up with Destination Debt Solutions. Looked for any bad feedback on them on the ripp-off report & BBB websites but could find nothing.
Has anyone dealt with this company before? Need to know if they are on the up and up.

Answer: I'd be real careful before I sent them any money. Many of this type of place don't do a lot other than take your money. I don't know anything about this one though.

Good luck.

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Question: i’m looking for an unsecured loan of £15000 for debt consolidation with a fair to bad credit rating. reccomend

i’m looking for an unsecured loan of £15000 for debt consolidation with a fair to bad credit rating. it is to be taken out over a period of between 8 and 10 years. as many , if not all sites, give very little if not no information at all, i was wondering if anybody can reccomend a good loan company to call for a quote. i want to make sure i find a company that is not going to hike the %apr drastically over a period of time, few penaltys on over payments or early settlement, and any other benefits that can be reccomended by you. also if you have had a bad deal off a bd credit loan compay i would like to know about that and cross them off my list. any help at all would be much appreciated. thank you.

Answer: Go to Citizen's Advice before you get raped for every last penny you have.

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Automobile sales may be rebounding, but 2010 will be another tough year for American suppliers.

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