It is clear, however, that the costs of long term care are going to be a significant challenge that all of us will have to face eventually and in that context, our attempts to get out of debt should be addressed sooner rather than later. The Consumer Credit Counselling Service (CCCS) has suggested that even under the Dilnot proposals, older people may still be vulnerable to debt management problems, mainly due to the accommodation fees charged by residential or nursing homes that are not covered by the tax payer. CCCS external affairs director Delroy Corinaldi said: “The large debts that many people carry into old age must also be taken into account.”

Equity release

Homeowners with debt management issues might be putting off getting debt advice, believing they can achieve debt freedom through an equity release plan. But the issue of using equity from one’s home to fund long-term care remains a contentious one. For many it is an attractive option because it allows the homeowner to stay in their property whilst freeing up much-needed cash, especially if they are suffering from debt or low interest on their savings. Many are put off, however, because they would be significantly reducing the amount they can leave to their relatives after their death.

Other considerations are the fact that the scheme offers poor value for money and the concern that doing this may have an adverse effect on means-tested benefits. Nevertheless, according to insurance company Aviva, 43% of retirees are planning to use equity in their homes to pay for long term care.

Threat to universal benefits

The Dilnot Commission has estimated the initial cost of its proposals to be around £1.7 billion a year and for this money to be found there are some uncomfortable possibilities to be faced. One suggestion is for National Insurance contributions to be extended to retired people. Other possibilities include the scrapping of the winter fuel allowance, which is difficult to defend considering that it costs £3 billion a year and only one in eight recipients actually has severe difficulties in paying for fuel.

It’s the same case for other universal benefits like free bus travel and TV licences. So it’s clear that despite these recommendations, many are still going to be facing financial problems when it comes to long-term care in old age. This is why, if you’re facing debt problems, it makes sense to get debt advice now before the issue of care costs in old age make them even more difficult to deal with.

Debt Advice Group specialise in debt solutions such as Individual Voluntary Arrangements (IVA) and Debt consolidation.

Paying off federal debts

There are in general two main ways in which you can pay off the money that you owe to the federal government. These are like applying to IRS for forgiving a part of the debt and try to pay off the debt through installment agreements or debt settlement agreements.

Settlement agreements

1. Tax debt settlement: You can get the help of a third party professional, who can help you to analyze your finances and help you in determining the best tax settlement options.

2. Compromise offer: If the IRS finds out that you don’t have the ability to pay more than you offer, they may accept the compromise offer. As per the compromise offer, you will have to pay an amount which will be much less than the original amount owed to the IRS. You will also have to agree to file the taxes within time in the next 5 years

3. Penalty reprieve: If you are able to show valid reason for non-payment of the taxes, almost one-third of the penalty amount may get abated later by the IRS.

Installment agreements

1. Streamlined installment agreement – In case of streamlined installment agreement you won’t have to fill out Form 433-F. However, so as to pay back tax debt through this agreement, the owed amount should not be more than 25,000 USD and you will have to agree to pay it off within 60 months.

2. Guaranteed installment agreement – If you owe lower than 10,000 USD this may be the best tax debt solutions for you. You will be required to agree to both file and pay off the taxes within time for the upcoming years. You won’t be able to make payments through this if you had made payments through this in last 5 years.

3. Partial payment installment agreement – This is for those who cannot even make minimum payments. So, you are required to make the payments according to your affordability. The terms are re-evaluates every 2 years by the IRS.

So, you can try out the above IRS debt relief options to pay off your federal debts.