November 25, 2017

The “Do It Yourself Bailout” – Part Six of Jonathan’s Interview with Kenny Golde

Have you ever wondered what it takes to settle your debts for pennies on the dollar?  Recently I interviewed Kenny Golde, a self employed filmmaker who found himself almost a quarter of a million dollars in debt when when a business deal fell victim to the economic downturn.   Using negotiation techniques he developed (and has subsequently written about in a book), Kenny has managed to eliminate more than half of this debt through negotiation.  Here is part six of our conversation – it lasts about 4 minutes.  This is the last segment of this interview – parts 1 through 5 may be found in the five posts immediately preceding this one.  In this segment, Kenny and I talk about the tax consequences of debt forgiveness and the insolvency rule that eliminates tax liability for most people.

Link to IRS Form 982 – used to declare forgiven debt as non-taxable

Link to Kenny Golde’s book “The Do It Yourself Bailout.”

“Debt Settlement” vs. Bankruptcy

Although I am a bankruptcy lawyer, I tell everyone who visits my office for a consultation the same thing:  “bankruptcy is a last resort – do not file for bankruptcy unless you have no other choice.  It will damage your credit and negatively affect your financial future for months or years to come.”

What, then, are the alternatives to bankruptcy if you are struggling with out-of-control debt?

One of the best known but least understood solutions to debt is known as “debt settlement.”  In general terms, debt settlement refers to a process by which you or a representative negotiates with a creditor for:

  • a lower balance/forgiveness of debt
  • a reduced interest rate
  • a reduced monthly payment
  • some or all of the above

Unfortunately it is easy to speak of debt settlement in the abstract – as always “the devil is in the details.”   Here are my observations: [Read more…]

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