Finding a Bankruptcy Lawyer
Many lawyers specialize in certain areas, and some have a better reputation than others.
Consolidating your credit cards requires good credit
Finding the right type of interest rate is just as crucial as the rate's actual percentage.
Unsecured Versus Secured Credit Cards
Despite the collateral, secured cards carry high fees. Still, they are easier to obtain than unsecured cards.
One Monthly Payment or Bills, Bills, Bills
Bill consolidation programs are essentially loans that are provided to help pay off existing bills.
Lowering Your Monthly Mortgage Payment
How to do so temporarily.
Mortgages rates at an all time low
Now may be a good time to get a new mortgage or refinance an existing one.
Low fee payday loans still have sky high rates
They still have a much higher rate than typical loans.
What Your Credit Score Really Means
Although your credit score is not what defines you as a person, it can most likely be what defines you as a borrower. Lenders use credit scores to predict repayment rates based on past performance.
Applying for New Credit
Applying for an account can hurt you in the short term and help in the long term.
Federal Help with Credit Card Debt
If you are in debt or struggling financially, the federal government does have some programs that may assist you, though not in the form you might think.

Call us now

1-800-838-0861

The rules for personal bad debt write-offs
By David Pilley on October 19, 2011

863059_22068889-(1).jpgFor a bad debt to be deductible or written off, it must be a result of either actual money loaned or a loss on previously reported income. As a regular person, you will most likely be on the side of the debtor, or the person who accepted the loan and cannot pay it back. However, it is possible for you to write off a personal bad debt if you lent money to a friend or relative. It all depends on the paper trail and proper documentation.
To write off a bad debt, you need to prove the funds in question are actually a debt and not a gift. If you gave money to one of your children who is a minor (under the age of 18), this is a gift and not able to be written off. To be a debt, the funds cannot be something you have been expecting to receive. They must be funds you have parted with, so something like child support cannot be written off as a bad debt. The debt has to have come out of your pocket, and you need to have already taken steps to collect it. Just as a credit card company can charge-off a delinquent debt after six months, you can write off a personal debt owed to you if it has not been paid back six months after it was due.

There should also be ample paperwork to show the money is a debt and not a gift. A check is a legal document, so you’re off to a good start if the money you lent was offered via check or money order, and you also have a receipt to prove the loan amount. You’re just an average Joe, so it’s likely you didn’t kill a few trees to draw up a lengthy contract with microscopic print. However, by having your friend, family member, or other adult you lent the money sign a promissory note (saying he/she will pay the money back at the stated date), you have made a legal document that will prove beyond a doubt that the money is a debt and not a gift.

When writing off this personal debt, it is considered a short-term capital loss, and you will file it on Schedule D of your 1040 form. The capital loss maximum for each year is $3,000 ($1,500 if you are married and filing separately), and it is crucial to file in the year the debt became bad. You may also have to attach a statement which includes a description of the debt (amount and date it was due), the name of the debtor and any relationship with him/her, efforts made to collect the debt, and why the debt is now worthless (meaning the debtor is bankrupt or has recently lost a source of income or some other instance in which he/she is unable to pay). This is where your paperwork proving the debt comes in handy, as you can show how late the debt is and how many times you tried to collect on it. If successful, the write-off may result in a tax deduction. Don’t let this situation stop you from ever lending money to a friend. Just make sure you have documentation, and be familiar with the steps to take if you need another write-off.
Current Rating: 0 (0 ratings)
Share:   Add to Twitter   Add to Facebook   Add to Terchnorati   Add to Google Bookmarks   Add to Digg   Add to Reddit   Add to Delicious
Defeat Your Credit Card Debt Today!
 

() -


*Please input the following code to safely submit your information.
 Security code