The IRS breathing down your neck is never a fun thing, but it can happen to the best of us. If you’ve found yourself in hot water, don’t panic. There are ways to stop the trouble with the IRS right in its tracks and to prevent it from reoccurring in the future. Unfortunately, simply ignoring your problem will not make it go away, and will only intensify the pressure from the IRS. Read on to learn how to stop wage garnishment and get back to financial freedom.
Attempt to Negotiate
Did you know that it’s possible to negotiate with the IRS? Try approaching them to see if they’ll settle for less than what you owe. They might reject your offer, but as they say, “It’s worth a shot.” If it is accepted, then you’ve handled the situation in one transaction and essentially nipped it in the bud. To be effective with this technique, however, you’ll likely need to hire a good tax attorney who has dealt with this in the past. You’ll have to pay the attorney up front, but you will reap the rewards when he or she is able to help you avoid wage garnishment.
Arrange Payment Installment
This is a more proactive repayment option than garnished wages, so don’t be afraid to approach the IRS and arrange an installment agreement. Depending on your plan’s structure, you could have three years to pay off your debt. You might be surprised to hear that the IRS will sometimes even grant this option to people with bad credit if they haven’t balked on debts in the past.
File for Bankruptcy
Ideally, this would be your last resort. As you likely know, filing for bankruptcy will have several other negative financial effects on your life and credit. However, it is possible to emerge more financially secure on the other end. The main thing to know when considering this option is that this would only defer the wage garnishment—however, it could be enough time for you to get your ducks in a row.
Pay Them Off
Okay, okay, we realize this might sound counterintuitive, as you’re likely thinking that you wouldn’t be in this spot in the first place if you had that kind of money. But because being in hot water with the IRS is a stressful experience and wage garnishment only lengthens the period of stress, it would be worth your while to find a way to pay off the IRS. Whether you borrow the money from a friend or family member or sell a large asset to do so, it would certainly lessen your stress level in the long run. And if you take strides not to have this happen again in the future, it’s a good way to stop this kind of trouble in its tracks.
Claim Financial Hardship
Wage garnishment might be doable for some people but it could be financially devastating for others. If you can persuade them into believing that you fall into the latter camp, you might have some luck. As this WealthPilgrim.com article notes, “If you can convince the IRS that the wage garnishment causes financial hardship, they might let up—at least until your financial situation improves. If you can’t pay for basic living expenses as a result of wage garnishment, you’ll probably get them to agree to wait.” As the article’s author, Neal Frankle, CFP, points out, this is another scenario in which hiring a tax professional could be crucial. This person will be aware of the formulas the IRS uses to determine if your hardship would qualify you for this option.
If you’ve found yourself in hot water with the IRS, you’re not alone. Don’t panic but do react, as this won’t go away. Follow these tips to avoid wage garnishment and you’ll avoid getting yourself into deeper financial trouble. Even better, you’ll become adept at knowing how to avoid this in the future.