Collection Agencies versus IRS Collectors: Who can Kill Your Dreams Faster?

Are you drowning in debt? Do you have collection agencies calling you all the time? Are you considering bankruptcy? Now take all of that stress and add an IRS tax debt into the mix. When I was an IRS-Hitman, we expected you to pay your IRS debt first and any other creditors second. In fact, we didn't even consider credit card debt to be a necessary expense when we used to figure out your base income. So which debt should you be more worried about?

You're already up the creek... If you have debt collectors going after you, your credit is already shot, so that doesn't come into the equation. What you need to consider when you owe money to creditors and the IRS is which debt takes precedence. I won't advise you as to which is more important, but what I will do is break down how severe the collection actions of the IRS and collection agencies are.

Let's look at the collection agencies first.

Can I be sued? Here's the deal on legal action that can be taken against you with collection agencies: Collection agencies have to abide by the State laws that you live in. Only 19 States allow legal action, such as home levies or wage garnishment, on debtors. That means if you live in one of the other 31 states, all that collectors can do is call and harass you.

Repo men... Collection agencies can only repossess the property that you owe your creditors on. Collection agency repossession agents cannot walk into your home and take whatever they want.

States' rights... Even in states where collection agencies can garnish your wages or levy your home, they are limited in what they can do. They can only garnish W-2 wages. If you're an independent contractor or if your income comes from tips, they can't go after your wages.

Settled in Full... You can actually settle your debt with a collection agency with a single lump sum payment that can be anywhere from 80-40% of the original debt. Most collection agencies have the ability to negotiate a settlement right over the phone.

Now let's talk about the IRS collection branch.
Your lifestyle in jeopardy... Let's start with wage garnishments, home liens, and bank account seizures. The IRS is not bound by individual state laws concerning collection practices. That means regardless of where you live, the IRS can take collection action against you, and they don't even have to take you to court.

Nothing is safe... Not only that, they can seize any and all assets to pay off your debt. Everything, from your home to your grandmother's jewelry, is fair game.

They can take it all... The IRS collection machine can garnish any and all money that you make or have invested in accounts. If you're a contractor, they can demand their due from your clients before you get paid. It doesn't matter what you do; they can seize your money.

Not that easy... Settling your tax debt for a single lesser sum is almost impossible to do with the IRS. In fact only 2% of settlements for "pennies on the dollar" are ever even accepted. Plus, the process is long and difficult.

The lesser of two evils... That's what you will have to deal with when you owe the IRS. The IRS expects their debt to be paid first, and the collection actions they can take against you make regular collection agencies seem almost charitable.

Now you have the smoking gun... Use it!