At the Law Offices of John A. Sterbick, we occasionally meet clients whose financial circumstances have deteriorated past the point of inability to stay current on their bill payments. Sometimes, clients have assumed long term debt for assets that have depreciated below the remaining balance of the loan that the client owes the lender.
Similarly, clients may incur years of federal tax debt that the IRS will demand to be paid once the IRS becomes aware that that client has delinquent tax debt. The combination of personal and IRS debt owed is often overwhelming.
The Sterbick firm is proud to specialize in complex, difficult financial circumstances that involve IRS tax debt and assets that are “upside down”.
Upside Down and Cramdown Defined
An asset is considered upside down when the asset’s current market value is lower than the remaining loan amount owed on the asset.
Generally, a cramdown provision is applied to certain secured debts, such as a car loan. The cramdown describes changes to the loan terms for the secured item that makes the loan more favorable to the debtor. An example of a loan cramdown is a reduction of the loan’s secured portion to match the current market value of the asset. The remaining loan balance will be added to the debtor’s other unsecured debt, like credit cards.
How the Sterbick Firm Helped a Client Under These Circumstances
Our client is a working single mom. Her car loan had years remaining before it would be repaid and had a high interest rate and a larger balance owed than the car was worth. She also owed the IRS years of unpaid federal tax debt.
The Sterbick team made two recommendations to address these issues. First, we advised our client that we would include a request to cramdown the auto loan to reduce the interest rate and align the balance owed with the value of the car. Next, we included her delinquent IRS tax debt into the plan so that she could repay the IRS at a zero-interest rate and discharge the previous years of federal tax debt.
Our client accepted the Sterbick team’s proposal, and we successfully implemented the plan through her bankruptcy proceeding. The Sterbick team enjoyed working with our client throughout the case. She has been very appreciative of our work on her behalf.
Here is the review that our client left on the Sterbick firm’s Google listing about our team’s work for her:
“John and his team helped me in a major financial way. They set me up with a plan that was right for me. So far, its working out great! Anytime I have questions, I can email it and response time is always same day.”
“I really appreciate Lorelei and the team.”
If All This Seems Confusing or Too Complicated,
Please Call Us for Help
IRS tax problems or long neglected debts can be complex and overwhelming. The team at the Law Offices of John A. Sterbick may be able to help you understand your situation. We can certainly help you by discussing certain trade-offs and options concerning your situation with your debts, the IRS, and bankruptcy.
The Sterbick team does our best to give each client the best, unbiased advice that we can provide in every case. We do not automatically recommend bankruptcy; we tailor our advice to each person’s circumstances. We would never advise a client to take actions that would worsen their circumstances and increase their debts. Our goal is always to design a plan and carefully explain the plan to our client in order to help our clients work towards rebuilding a sound financial future.
Financial stress is not a healthy state, and it does not cost you anything to check out your options. Please contact my office to make an appointment for a free, confidential, personal consultation to review your circumstances together.