Buried Dealing with IRS & Default Student Loan-Where to Start?

[morely]

I'm new here and found MMM through my sister.  I've read a few posts and I can see that this is the way to go.  This is a very difficult thing for me to write, but I know I've got to get out of avoidance mode and take care of it.  I appreciate any and all advice. 

I have no idea where to start with the mountain of IRS and student loan problems I need to deal with.  I'll try to be brief to give an idea of where I'm at currently.  I fancied myself a tax protester about 10 years ago and have not filed since 2002.  Of course they say I owe all these back taxes (I was at a job where I got a 1099 for many years during this tax protesting time) which I don't necessarily agree but I've decided to find a way to deal with this anyway.  I will say that the amount is somewhere between $20,000 and $40,000.  I currently do not have a job other than some cash work I do from home.  I'm stuck and unable to get work other than part time due to the possibility of wage garnishments.  I live in California and I've not filed state taxes either so there's that as well.   I've cut my expenses down to the bone (I'm sure MMM would say I could do more!).  I've also got a huge student loan in default.  I originally borrowed around $50,000 and now they say I owe more than double that.

If anyone has any experience with settling with the IRS or student loans, please share.   Thank you!

[FlorenceMcGillicutty]

No experience on either issue but I do think you should find an attorney. I wonder if you could talk to someone at a legal clinic perhaps? I know bankruptcy wont help with the student loans, but I wonder if it would with the IRS. I'm hoping others have ideas for you!

[Joel]

I'm sorry, you can't work because a portion of your wages will be garnished? If you don't work, how will it ever be paid off?

You can live as frugal as you want, but you need some type of income.

[Another Reader]

You need a competent tax attorney.  There could be criminal proceedings.  The first step is to get the returns filed.  The attorney can negotiate repayment once the returns are filed.  The student loans will need to be addressed, but get the tax returns filed ASAP.

People that "drop out of the system" can get back in, but it takes time. 

[kikichewie]

The first thing I'd do is take responsibility for what YOU owe, not what "they say" you owe.

The second thing I'd do is get a job. Or two.

The third thing I'd do is stop breaking the law with your under-the-table work.

Oh, and get an attorney.  Because I'm pretty sure if you end up in jail for being a deadbeat, you'll still have to pay what you owe at some point.  Better to do it without a conviction on your record.  And who knows, maybe the IRS will settle for a lesser amount.

[olivia]

The first thing I'd do is take responsibility for what YOU owe, not what "they say" you owe.

The second thing I'd do is get a job. Or two.

The third thing I'd do is stop breaking the law with your under-the-table work.

Oh, and get an attorney.  Because I'm pretty sure if you end up in jail for being a deadbeat, you'll still have to pay what you owe at some point.  Better to do it without a conviction on your record.  And who knows, maybe the IRS will settle for a lesser amount.

Yep, this sums it up. "They" don't say you owe it, you actually owe it.  Get a lawyer ASAP and deal with it head on.

[footenote]

Morely - First, congratulations for emerging from denial. Keep reinforcing yourself for taking that most difficult first step.

Second, bankruptcy won't discharge either your student loans or your IRS / CA tax obligations. I agree with others here: you need to find a lawyer. Avoid the many dishonest "discharge your IRS debt!" programs out there. Legal aid is probably your cheapest and safest route.

Finally: when I married my husband 28 years ago, he owed major back taxes due to a failed single proprietor business. I was amazed at how fair and reasonable the IRS person was. We each took on second jobs and paid back the taxes over time at a schedule we could afford.

Once you get a good legal aid attorney who has experience with situations like yours, don't walk, run to the IRS and start working with them. (My husband just commented from the kitchen: "Because if you don't, it's only going to keep getting worse... and worse... and worse.") The IRS person you work with will have seen hundreds of people in just your situation and can help you with realism. (I expect CA taxing authority needs to be your second stop.)

I don't have any experience with past due student loans and will let others who have navigated those waters comment.

You can do this - Best of luck and please keep us posted on your progress.