Free Your Mind...and Your Debt Will Follow

Free Your Mind…and Your Debt Will Follow
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The struggle against debt can feel like an impossible fight; a fight against an invisible enemy. You might think you are at war with your Credit Card Company or your Mortgage Lender. Let me tell you something my friend, there is no enemy. The only thing you are struggling with, is your frame of thinking. You believe you are in debt and therefore you are.
“But,” you’re saying, “I don’t have any money”.
Well then, we will create the wealth in your mind first. It begins there. That is the starting point.
In your current situation, you’re looking at your problem saying, “I’m Broke! I’m Broke! I’m Broke!” And that keeps you stuck in a cycle of despair. As long as you’re facing the problem, that’s the direction you’re heading.
I’m telling you to Turn the Other Cheek. Look away from your problem and face the solution. The solution is the place you want to be.
Where is it that you really want to be? Is it a career? A location? A business you want to own? A talent you’ve ignored and want to develop? Whatever it is; whatever you love, is the solution. That’s where you’re supposed to be focused.
You say, “How can I do the things I want with all the bills piling up and the creditors calling for their money?”
Please listen. You cannot get to anyplace until you think of it first. It must be envisioned in your mind. Just like when you go on a trip. You decide where you are going and when you want to get there. That’s how you have to treat the roadmap of your life. Decide where you want to go and when you want to be there.
You don’t want to be trapped in poverty. So, get it out of your mind. That’s the only reason you’re stuck.
Believe me I know. I was stuck in the hamster wheel of life, going round and round in circles. Wondering why I wasn’t moving forward. You have to know where you’re going first, and then aim in that direction. Turn the Other Cheek. Never look at you’re problems unless they become part of your path to your goals. If they are on the path they will no longer look like mountains if you are focused on your goals. As you look and work toward your goals the obstacles will become smaller and smaller as you approach them; many will just disappear believe it or not.
At the time I was in debt, I owed over $100,000 and saw no end in sight. I had gotten sick and couldn’t work. I spent every asset I had; I was even selling my furniture just to have money for food. My car got repossessed. I really had nothing left…but a big pile of debt. I didn’t know what to do. My problems sure looked like mountains to me.
That’s when it all clicked. I Turned the Other Cheek. I stopped hanging onto my problems and focused completely on my goals. Avoid all negative thoughts and distractions. Turn off the TV. Don’t read the negative articles in the newspaper. Do not get angry at your kids or your spouse. Think of the things you will share with them in the new future that you are creating. When that car cuts you off in traffic…Turn the Other Cheek.
When I changed my life I decided to be completely committed to helping others who find themselves in my previous situation. The freedom you will feel when you free your mind from debt, will be the path that will lead you to the material relief from debt. Today all I do is help others advance in life through the mental and material overcoming of the obstacles of debt. I work with a couple of companies that have the primary goal of ridding people of debt. I only work with people that want to help people improve their lives. I have to tell you, it feels great.
Do you remember when you were a child and you used to think about all the silly things you wanted to have and to be. Remember all those crazy schemes you came up with to get the things you wanted. It was outrageous and fun and natural. It is your true nature. It is natural for you to look toward your wants and desires and move in that direction. What I want is for you to feel that way again. Because, that is the only way you will rid yourself of debt, and the senseless pain that comes with it.
If you’re serious about changing your thinking, I found a link with a good 30 day plan. It’s absolutely free. It’s one that was developed by a very incredible couple, Jerry and Esther Hicks. It’s called, “How to Change Your Life Around in 30 Days”.
I also have some debt reduction information on my Blog, “Free Your Mind…and Your Debt Will Follow”.

Good Luck my Friend.

Feed Shark

What is Debt Settlement?

Debt Settlement

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Debt settlement is a unique approach to debt consolidation. Debt settlement companies will work with you to plan a monthly payment schedule that will fit within your budget, and will develop a timeline of when they expect to eliminate your debt. Since the programs vary based on individual situations, the final outcome differs from person to person. Your 'hardship', or the reason you need to consolidate, will determine your settlement.

Most reputable settlement companies will base your payment on a 50% settlement plus any fees they may charge. If you make your payments consistently, it is reasonable to assume you will be debt free at the end of your individual program. Most debt settlement programs are 24 to 36 months in length, dependent upon the budget you and your advisor have decided upon.

If you choose debt settlement, all of your accounts will fall behind and eventually may charge off. Once your accounts are settled, creditors will report the debt as settled with a $0 balance, and you are no longer liable for any forgiven amounts. The agency you work with does not manage your money for you, so they do not have to report to the credit bureaus. No one will know that you are using debt settlement services except for the agency and the creditors it handles.

While debt settlement initially will have a negative impact on your credit, it also will save you the most money over time compared to other methods of consolidation. It is the quickest route to becoming debt free.

What If? Home forclosure or Debt Cancelation.

AAA Debt Free
Questions and Answers on Home Foreclosure and Debt Cancellation

Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief.

This provision applies to debt forgiven in 2007, 2008 or 2009. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

The amount excluded reduces the taxpayer’s cost basis in the home. More information on claiming this exclusion will be available soon.

The questions and answers, below, are based on the law prior to the passage of the Mortgage Forgiveness Debt Relief Act of 2007.

1. What is Cancellation of Debt?

If you borrow money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.


2. Is Cancellation of Debt income always taxable?

Not always. There are some exceptions. The most common situations when cancellation of debt income is not taxable involve:

Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you.You are insolvent when your total debts are more than the fair market value of your total assets.Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Certain farm debts:If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income.The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
Non-recourse loans:A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral.That is, the lender cannot pursue you personally in case of default.Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income.However, it may result in other tax consequences, as discussed in Question 3 below.


3. I lost my home through foreclosure. Are there tax consequences?

There are two possible consequences you must consider:

Taxable cancellation of debt income.(Note: As stated above, cancellation of debt income is not taxable in the case of non-recourse loans.)
A reportable gain from the disposition of the home (because foreclosures are treated like sales for tax purposes).(Note: Often some or all of the gain from the sale of a personal residence qualifies for exclusion from income.)
Use the following steps to compute the income to be reported from a foreclosure:

Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___________
2. Enter the fair market value of the property from Form 1099-C, box 7. ___________
3. Subtract line 2 from line 1.If less than zero, enter zero.___________


The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure ________
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ____________
6. Subtract line 5 from line 4. If less than zero, enter zero.

The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.



4. I lost money on the foreclosure of my home. Can I claim a loss on my tax return?

No. Losses from the sale or foreclosure of personal property are not deductible.


5. Can you provide examples?

A borrower bought a home in August 2005 and lived in it until it was taken through foreclosure in September 2007. The original purchase price was $170,000, the home is worth $200,000 at foreclosure, and the mortgage debt canceled at foreclosure is $220,000. At the time of the foreclosure, the borrower is insolvent, with liabilities (mortgage, credit cards, car loans and other debts) totaling $250,000 and assets totaling $230,000.

The borrower figures income from the foreclosure as follows:

Use the following steps to compute the income to be reported from a foreclosure:

Step 1 - Figuring Cancellation of Debt Income (Note: For non-recourse loans, skip this section. You have no income from cancellation of debt.)

1. Enter the total amount of the debt immediately prior to the foreclosure.___$220,000__
2. Enter the fair market value of the property from Form 1099-C, box 7. ___$200,000__
3. Subtract line 2 from line 1.If less than zero, enter zero.___$20,000__

The amount on line 3 will generally equal the amount shown in box 2 of Form 1099-C. This amount is taxable unless you meet one of the exceptions in question 2. Enter it on line 21, Other Income, of your Form 1040.

Step 2 – Figuring Gain from Foreclosure

4. Enter the fair market value of the property foreclosed.For non-recourse loans, enter the amount of the debt immediately prior to the foreclosure. __$200,000__
5. Enter your adjusted basis in the property.(Usually your purchase price plus the cost of any major improvements.) ___$170,000__
6. Subtract line 5 from line 4.If less than zero, enter zero.___$30,000__


The amount on line 6 is your gain from the foreclosure of your home. If you have owned and used the home as your principal residence for periods totaling at least two years during the five year period ending on the date of the foreclosure, you may exclude up to $250,000 (up to $500,000 for married couples filing a joint return) from income. If you do not qualify for this exclusion, or your gain exceeds $250,000 ($500,000 for married couples filing a joint return), report the taxable amount on Schedule D, Capital Gains and Losses.

In this situation, the borrower has a tax-free home-sale gain of $30,000 ($200,000 minus $170,000), because they owned and lived in their home as a principal residence for at least two years. Ordinarily, the borrower would also have taxable debt-forgiveness income of $20,000 ($220,000 minus $200,000). But since the borrower’s liabilities exceed assets by $20,000 ($250,000 minus $230,000) there is no tax on the canceled debt.

Other examples can be found in IRS Publication 544, Sales and Other Dispositions of Assets, under the section “Foreclosures and Repossessions”.



6. I don’t agree with the information on the Form 1099-C. What should I do?

Contact the lender. The lender should issue a corrected form if the information is determined to be incorrect. Retain all records related to the purchase of your home and all related debt.



7. I received a notice from the IRS on this. What should I do?

The IRS urges borrowers with questions to call the phone number shown on the notice. The IRS also urges borrowers who wind up owing additional tax and are unable to pay it in full to use the installment agreement form, normally included with the notice, to request a payment agreement with the agency.



8. Where else can I go to get tax help?

If you are having difficulty resolving a tax problem (such as one involving an IRS bill, letter or notice) through normal IRS channels, the Taxpayer Advocate Service may be able to help. For more information, you can also call the TAS toll-free case intake line at 1-877-777-4778, TTY/TDD 1-800-829-4059.

In some cases, you may qualify for free or low-cost assistance from a Low Income Taxpayer Clinic (LITC). LITCs are independent organizations that represent low income taxpayers in tax disputes with the IRS. Find information on an LITCs in your area.

Get Rid of Debt and Start Getting Rich

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You want to get rich, but you feel overwhelmed by so much debt.
Don’t worry. All you need to do is stop, take a deep breath, and decide that you're ready to move toward a life free from debt.
The very first thing you have to do is get that debt under control . . . or just get rid of it.
That’s right. I said get rid of it.
Some of us get to the point where a budget plan just isn’t enough. We’re in over our heads. And, let’s be realistic, it feels like a giant burden. At this point you’re better off getting rid of it.
There are a couple of good options.
1) File Bankruptcy:
It’s a legal process that you have to qualify for. It’s currently an undesirable choice unless you can claim Chapter 7, which is liquidation. If you can, go for it. A lot of people are under the false impression that it will destroy your life and your credit. That is completely untrue. Your credit will immediately boost because you will no longer have any debt. Within 3 months you can qualify for new car loans. Within one year you can qualify for home loans. Not to mention peace of mind.
Chapter 13 is usually not worth it. The current administration changed the rules, and it is really difficult to be relieved from debt. They may even require you to make payments for the next six years with about $100 left to spend after your bills and necessities are paid each month. I don’t recommend it.
You can check any of your local Bankruptcy Lawyers who offer a free consultation. They’ll let you know if you can qualify for a Chapter 7.
2) Debt Settlement:
This is different from debt consolidation. If you consolidate your debt you just put it all together and pay off the whole thing. Debt Settlement actually reduces your debt by 50% to 75% and sets up a repayment plan for you. You can save thousands. It’s based on your income and the amount of your debt. You make one payment to an account you set up with an independent escrow account, and that money goes to your creditors one at a time until it's all paid off.
I have a couple of Debt Settlement programs that I recommend, Ideal Debt Solutions and AAA Debt Free.
Once you become debt free the wealth building can begin. It’s amazing how simple it is to get rich. Once you've eliminated all your consumer debt there’s only three things you have to do.

3 Steps to Creating Wealth

Step One:
Earn interest instead of paying interest. This is the most basic principle of wealth. Invest it either the slow way, in an interest bearing bank account; or aggressively, through investment in the stock market. The main idea is to earn interest rather than pay interest through loans and consumer debt.
Step Two:
Spend less than you make. And I mean every paycheck. Never spend more than you're earning. This is a path to true and lasting wealth. You cannot help but getting wealthy by following this advice.
Step Three:
Buy Assets instead of Liabilities. To make this simple I’ll qualify each. An asset is anything that brings in income. A liability is anything you pay for and doesn’t create income. A car is not an asset. You pay tens of thousands of dollars in car payments, maintenance, insurance and gas. Your house is not an asset. When was the last time your house paid your mortgage payment? I’m not saying you shouldn't have a house or a car. These are necessities. What I’m saying is you have to change your view of assets.
Let’s take for example a vending machine. It’s a simple asset. You purchase it, and stock it and people put money in it. That money becomes yours. That’s the idea of an asset. It’s something you derive income from. Anything you buy and it puts money in your pocket is an asset. A hot dog stand. A mutual fund. A rental property. A franchise. Tool rentals. Assets, assets and more assets.

And that’s all it takes. If you follow these three steps you cannot help but become rich. You’ll be surprised how fast you become wealthy using these steps. You’ll wonder where all that money was during the lean times. So do yourself a favor. Eliminate debt and get rich. Start today.

You may have trouble handling your finances, if . . .

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Your creditors keep calling you for payment;
You don't have a budget set up;
You use your credit card to buy groceries because money is short;
You don't pay off the credit card balance in full each month;
You pay a fee to cash your checks;
You use your credit card for cash advances;
You have a history of bouncing checks;
You are thinking about filing bankruptcy;
You carry more credit cards than cash;
You carry a balance on department store cards;
You only pay the minimum monthly payment on your bills;
You can't afford even the minimum monthly payments;
You reduce entertainment, or utilities, because you can't afford it;
You owe more money on your home or car than it's worth;
You are afraid to see your credit report;
Your credit cards are approaching, the authorized limit;
When dining with friends, you collect the cash, but pay with credit;
You have been recently turned down for credit;
You haven't saved 4 months living expenses;
You don't have a savings account;
You are afraid to show your spouse the checkbook;
You avoid discussing finances with your spouse;
You are uncomfortable discussing money or credit, even in general terms;
You avoid people you owe money to, no matter how small an amount;
You put off reconciling your checkbook;
You put off updating your budget;
You are still paying for your purchases from 2 years ago;

Credit Protection Laws

Truth in Lending Act

• Requires disclosure of costs requirements for the APR (annual percentage rate) and the dollar amount of finance charges.
• Requires loan terms and conditions be disclosed.
• Regulates how credit terms are advertised.
• Prohibits sending non-requested credit card terms by card issuers.

Fair Credit Reporting Act

• Requires the disclosure of the name and address of any consumer-reporting agency that provides credit reports used to deny credit, insurance or employment.
• Provides the consumer with the right to know what's in his/her file. Have incorrect information investigated and removed and allows the consumer to include a 100-word statement in the file explaining the situation.
• Requires that a consumer's statement of disputed items be sent by the credit reporting agency to businesses or creditors. 1997 rules require more reporting requirements for stores, banks and credit agencies.
• Requires identification of consumers wishing to inspect their credit file.
• Requires when an investigation or information request is made of a credit file, the consumer be notified.
• Limits the length of time credit information may be maintained in a file.
• Establishes procedures debt collectors must use in contacting the debtor/creditor user.
• Limits contracts with a third party by debt collectors.
• Establishes how a payment on several debts is applied and that no monies are applied to a debt in dispute.

Fair Credit Billing Act

• Establishes procedures to be followed when billing errors occur on revolving credit statements.
• Requires creditors to send consumers a periodic statement, which outlines billing error procedures.
• Allows consumers to withold credit card payments for faulty goods or services when purchased with a credit card. You must have made the purchase within 100 miles of your home and the item cost more than $50.
• Requires creditors to credit the customer's account promptly and return overpayments if requested.

Equal Credit Opportunity Act

• Prohibits creditors from discrimination against credit applicants based on sex, race, marital status, national origin, religion age or the receipt of public assistance.
• Prohibits the re-application for credit upon change of marital status.
• Requires creditors to contact applicants within 30 days of receiving a completed application with notification of rejection or acceptance.
• Requires creditors to report credit card payment histories on both the name of the husband and the wife, if both use and are liable for the account.

Fair Debt Collection Practices

• Prohibits debt collectors from using abusive, deceptive, and unfair collection practices.
• Prohibits the advertisement for sale of any debt to coerce payment of the debt.
• Collection activities must cease if the consumer sends a letter to the collection agency instructing the agency to cease all contact. After receipt of such notice, further contact generally may not be made, except to acknowledge that contact will cease, or to notify of certain actions.
• Prohibits false representations or implication that the consumer committed and crime or other conduct in order to disgrace the consumer.