When the economy stumbles, thieves and scam artists seem to wake from their slumber and devote all their energy into ripping people off. The really heartless prey on people down on their luck who often can get by with just a little direction and common sense thrown their way.
Some scams are small, den of thieves, type operations while others are full-blown commercial scams.
Take credit reports, for example. You can ask for one free report a year from each of the three credit rating agencies. Deal directly with the agencies – Experion, Equifax, etc. – not with some free credit report clearinghouse with a big ad budget and a catchy jingle. Usually your best bet is to examine your free report once every four months, working your way through the three agencies. No fees, no program to join and no money changes hands.
Naturally, when times are tough people sometimes like to pretend the IRS is a friendly agency you can just ignore when you don’t have the money. Never do that. The IRS will work with you if you file on time and level with them about your financial situation. Ignore them or fail to file and their faith in your good intentions is gone.
You don’t need one of those “so and so saved me a $1 million” law firms you see on TV. You can do the same without them and without cutting them in for a piece of the action.
Be aware that the IRS hardly ever reduces an actual tax obligation. What they will do is work with you on forgiving penalties and interest if you can present reasonable cause for not discharging the debt in a timely manner, or believable reasons that you felt the charge was in error when in fact it was correct. They will examine reasonable cause and often forgive the penalty and interest, IF you filed on time and answered all corresponding inquiries in a timely manner. Exchanging letters with the IRS can be maddening because a response you can turn around in two days may take 4-6 months for them to get back to you. That’s OK. Just make sure you have copies of all your correspondence and notes of the dates you responded.
Actual taxes owed are another matter altogether. Most years, the IRS will never forgive those obligations, no matter what. Today, in light of the liberal’s destruction of a large part of the functioning economy, they are willing to entertain an “offer in compromise” if you document and justify why they should give you a break. This is a rare event and don’t think for a minute that it’s a great time to ask for a break. If you can prove you deserve a break you just might get one this year … but don’t count on it.
So-called credit repair agencies are another industry full of scam artists as are mortgage repair companies. You’re better off dealing directly with your lender or credit card company. They are more than happy to hear from you. Ignoring them is another mistake you don’t want to make.
If you have a lot of credit cards that you don’t trust yourself with, lock them up but don’t cancel them. Canceling more than two cards per year or at a time will lower your credit score. Examine your outstanding balance(s) and make sure your charge to debt limit ratio is less than one-third. Do not max out a card and then start using another. Its best to have no credit card debt but if you must have it, keep it below one-third of the limit. If you’re over that threshold on one or two cards and you still have the option of balance transfers at a decent interest rates, move that debt around to get below that one-third threshold.
Never give out information over the phone and never, never wire anybody money that sends you a check in the mail to cash for whatever kind of job/personal expenses. Never wire money to someone you don’t know.