Credit consolidating with no credit

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You can figure out how long it will take to pay off your debt using a debt payoff calculator like this one from CNN Money.It’s a great tool to see just how many years it takes to pay off debt, especially high interest credit card debt on which you make a small minimum monthly payment.You get the money, pay off your accounts, and then make a single monthly payment to pay off the new debt.Debt consolidation makes sense for people who want to make one payment each month instead of several, and for those who can lower the amount of interest they pay by taking the new loan.

But the option we want to discuss here is paying off debt.The term “consolidation” is used to describe two very different credit-related services.The first type of consolidation is a debt consolidation loan.If you manage to work out a debt settlement agreement, the creditor is all but guaranteed to report your forgiven debt to the IRS. The amount of tax you owe on the forgiven debt depends on your adjusted gross income and your tax rate.Even if you fall in a low tax bracket, you could face a huge bill to the IRS.

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