January 17, 2016

10231574_sAre you dealing with a combination of hospital and medical bills, credit card bills, student loans, car loans and insurance, utility bills, and IRS debts? Legally speaking, you have an obligation to pay all of your bills. However, what happens if you cannot pay all of them? Owing money to several creditors at the same time can be a very difficult position to be in, and it can be particularly challenging if one of these creditors is the IRS.

While it is important to try to repay all your debts at the earliest possible time, you may want to consider the order in which to repay them and then devote most of your money and attention to that order.

In most instances, the IRS should always be at the top of any debtor’s priority list. While credit card debts are classified as lower unsecured general debts, IRS taxes are classified as priority debts. The government, after all, has privileges that other institutions do not have when it comes to collecting debts.

The IRS is the only creditor that is capable of imposing hefty fines or taking other forms of action against you. Regardless of how many other creditors you owe money to, the government may possibly impose tax liens to automatically be first in line to collect any assets that may satisfy its claims. The IRS can garnish your wages or levy fines and interest on the full amount of taxes owed. Keep in mind the only restriction the IRS has in taking your bank accounts or wages is to simply issue a notice of intent to levy you first.

If one of your outstanding debts is to the IRS, it would be wise to call a tax attorney who can examine your current state and help you negotiate with the IRS for a long-term payment plan, offer in compromise, or some other arrangement. In most instances, it is possible to work with the IRS to find a manageable solution that works for you and your particular financial situation.

When it comes to prioritizing your debts, the most important thing to remember is that having any strategy is better than having none at all. Be proactive about paying your debts off by consulting with a tax attorney, contacting your creditors, and constantly finding ways to motivate yourself to pay off your debts. Your consistency will pay off in the long run, and you’ll eventually be able to enjoy life debt-free.

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