I connected up with my IRS Revenue agent on the phone yesterday. So, how screwed am I?

Not too bad actually.

I was really upfront with the agent, explained my business, explained my personal bankruptcy, etc. I have all my paperwork ready to file, I just need to get it in now to him before the end of the month.

He did say a few interesting quotes like, “We are the last creditor that you want to deal with” and “we can do things other creditors cannot”. Which is all very, very true. The thing I’ve found though, in my few dealings now with the IRS, is that if you are nice, and honest (I have nothing to hide, I know I owe them money) they aren’t like other collection agencies at all. This could be of course that they are under high scrutiny (being the government and all).

The good news is that after explaining my current revenue and expenses Mr. IRS man hinted that a payment plan could be an option. Yay! ‘Cause I don’t exactly have 18 G’s sitting around at the moment. If I did, I would totally hand them over.

Speaking with my Dad later in the day, he suggested something that I think I’m going to do. After I file the paperwork, I think I’m going to go down and meet with Mr. IRS agent man. Body language is such an important part of communication, I want to make sure he sees that I am genuinely serious about turning my business around and could make payments if they weren’t too high. Anyway, we’ll see how it goes.

It was a big relief to get this first conversation going.

I'm 300K in debt. Gulp. I'm 24 and day traded away a fortune. Now I'm trying to crawl back to zero. Why not subscribe to my RSS feed and join me on this journey. You can also subscribe via e-mail. I appreciate tips and feedback! ~ DebtKid

I get alot of mail. Between collection letters, post-bankruptcy spam letters, and actual mail, my mailbox is never empty.

How To Manage Collection Letters & Bills

I may not be able to pay all my bills, but gosh darn it if I’m not organized with them.

Step 1 - Label Your Folders

You’ll need three (two if you only have personal and no business debts) folders. Legal size is my preference, but use what works for you.

Label the folders “Current Collections - Personal”, “Current Collections - Business”, and “Reference Collections”.

Step 2 - File your collections letters

Once you have setup your folders, the system is easy. Keep your most current collection letters (offers of settlements, etc) in the appropriate folder. When I am sorting my mail, I like to open each collection letter, and use a paperclip to keep the return envelope attached to the letter.

When you receive an update statement or offer from a collection company (or, the collection company changes!), move the older letter into the “Reference Collection” file folder.

This system allows me to easily find my most recent statements when I need them. It also manages the massive amount of paper that you receive very simply.

A judgment is simply the official decision of a court at the completion of a lawsuit. It merely indicates that the court has resolved the issues brought before it in a lawsuit in favor of either the plaintiff or the defendant. It generally stipulates a monetary award to the winner. Where very-large awards are concerned, a judgment is frequently placed ‘on hold’ pending the outcome of an appeal to a higher court.

In civil lawsuits, enforcement of a judgment is not handled by the court that handed down the decision. Instead, enforcement is left in the hands of the parties in the lawsuit. While most people comply with the court’s order, there are exceptions that require the winning party to take further action to collect the funds that were awarded. In addition to resolving the issues themselves, a judgment in civil cases almost always pays both damages and court costs to the party that prevails.

Perfecting a Judgment

Once a court of law hands-down a judgment, the next step is for the winning party to ‘perfect’ it. While specifics for doing this vary somewhat from state-to-state, perfecting the judgment is always the initial step. To accomplish this, it is important to make certain that the court’s written decision of judgment has been signed by the judge and actually filed by the clerk of the court. Generally, the court will retain the original and supply what is called ‘a conformed copy’ to the judgment creditor (winner).

In many states, Notice of Entry of the judgment must be given to the judgment debtor (loser). The date that the order is issued often determines the time period which the debtor has if he wishes to file any appeal.

Escape Through Bankruptcy

It is possible to discharge the amounts owed under many judgments by filing bankruptcy. However, there are exceptions, including judgments for the payment of child support and delinquent income taxes. Judgments also show on your credit report as they are a matter of public record and are usually discovered by the three main credit bureaus. They are not necessarily considered any more heavily than any other debt you owe and will be added-in to calculate your total indebtedness.

Appealing a Judgment

While a judgment is a lawful order from a recognized court of law, it may be appealed to a higher court if there is sufficient reason to believe that the issuing court erred. Ordinarily, this is a decision that requires a skilled attorney who is thoroughly familiar with both your case and the rules of the appellate courts. In some instances, new evidence may be grounds for appeal and if the appeal is granted, the original court is usually ordered to re-hear the matter. In most cases, appeals are filed only where larger sums are involved because of the additional court fees and attorney’s fees involved in a further legal proceeding.

Collecting on a Judgment

Obtaining a legal judgment does not necessarily ensure that you will ever collect the amounts awarded to you by the court. It merely gives you the right to take any lawful steps available to do so. This may include seizing property or other assets, forcing a Sheriff’s sale or even garnishing monies due to the debtor. Many civil lawsuits are never even filed because an investigation fails to turn-up enough assets to make the additional costs worthwhile.

I have a few random bills that have gone into collections over the past few months. One was from one of those $80/mo data cards for your laptop. The total balance owed cingular was $460.94.

I just got a settlement offer from the debt collector on the account (er solutions, inc. out of renton, WA) for 80% of the original amount, thus, $368.75. It says I have 14 days to accept this offer.

I’m not sure what I’m going to do here. I have 1K I still owe the IRS by July. Of my lump payments (non-reoccurring) that is the most important one. As soon as I sell some more things, that will be the first payment I make. I wonder if these guys will give me a better offer down the line. It may be worth a call to see if they will accept say 50% of the original amount. I may have that in cash in the next few weeks, and if I do, I think I’ll give them a call and see if they will accept 50% right there. Should be fun.