There is a company out there claiming to be experts at working through the settlement process, specifically when it comes to Treasury. I had a prospective client call me, and when they told me how much they owe, I told them there was almost no chance to settle. Why? Because the Treasury doesn’t really negotiate. Sure, they will promise to consider your offer, but first you’ll need to give them all your financial info. That’s more of a convenient trick to get their hands on all your personal financial info. Apparently this company of “experts” claims they will review the file to ensure the paperwork was processed correctly. Or something. I told the prospective client to find out what percentage of clients end up getting out of the debt as a result of this company’s “expert review”. I’d venture to guess the majority of clients end up shelling out cash only to have this company tell them that they were not successful.
Anyway, back to the Treasury’s playbook. In most cases, you will submit your info, and they will completely disregard your offer and come back with a counteroffer that you will never in your wildest dreams be able to afford. Usually, they want somewhere in 50% to 80% range of what you owe (including the 28% penalty, so as compared to the amount you actually owed, it’s even a higher percentage). Alternatively, they will ask you to pay the entire amount via installment payment over 3 to 5 years. Once again, a joke.
The only settlements that have a prayer are usually those who owe less than $100K. In those cases people can often find a way to put together enough to settle. But the guy who owes $500,000 or $1,000,000. Forget about it. One would think it would make sense to actually tie the amount they would settle for to an amount that you could actually afford. The banks do that. The SBA does that. The Treasury doesn’t do that.
One of these days, I’m going to start firing off letters to people in the government to let them know that their Treasury is letting hundreds of thousands (if not millions) of dollars walk out the door every single day because of their completely short-sighted approach to collections. I have a client that owes $1 Million. He can offer $100,000. Rather than make an intelligent decision, the Treasury will reject this offer. My client will file for chapter 7 bankruptcy, and they will get nothing. That’s the financial equivalent of a really pretty girl asking you out for a date, and turning her down because you are holding out for Heidi Klum. So good luck Treasury, I hope you enjoy sitting by the phone waiting with baited breath for Heidi to call.