Offer in Compromise versus Home Equity Loan for Tax Debt

By Franklin Rhodes • May 23rd, 2012

The IRS Announces more flexibility with settling tax debts. Their new Fresh Start program promotes the “offer in compromise” as a second chance opportunity for American tax payers. People have the ability to significantly reduce their total past due tax bill.

Unfortunately man homeowners are finding out the hard way that taxes are a lot easier to consolidate in an equity loan or home refinance. Qualifying for the fresh start may not be as easy as you think. It is very difficult to qualify for if you have much disposable income, savings or equity in your home. It may be easier to tap the equity in your home and get cash out with a home mortgage. We understand that qualifying for a loan for people with bad credit to pay off tax liens can be challenging, but it may certainly be a viable financial option worth considering. Homeowners with low credit scores typically have run into walls when applying for a low rate home equity loan when they are late on their bills and tax debt.

Fresh Start versus Home Refinancing

Yes the IRS does allow a few exemptions but you should discuss your situation with a tax lawyer that has experience settling taxes in 2012. According to California tax attorney, William Hartsock, when the IRS is not backed up, “the Offer in Compromise process takes between nine months to one year.”

None the less, the IRS has made changes to settling tax debt, so read more about the Fresh Start Program from the IRS.

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