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Possible risks of using personal loans to address tax debts

On Behalf of | Jul 5, 2023 | Tax Debt

Those who struggle to keep up with tax obligations may choose to explore a variety of options in the pursuit of financial relief. In some cases, individuals in Georgia might wonder if taking out a personal loan to cover tax debts could be a viable solution. Evaluating some of the risks involved with such a path could help those who face similar hardships prepare to seek guidance in addressing their situations and options.

Potential risks

While taking out a personal loan to address debt concerns might seem a viable path, studies indicate that there may be numerous risks involved with such a decision. One of these risks may involve the fees associated with similar lending options, as these can be costly in nature and may only add to the overall amount owed. Some personal loans may also carry high interest rates and those who are only able to make the minimum payments due on similar outlets of credit may see their balances continue to rise.

In some cases, taking out a personal loan could also have a detrimental impact on one’s credit score, especially if similar pursuits cause one’s debt-to-income ratio to increase. Missing payments on similar obligations could also trigger costly fees and penalties and may even cause interest rates to soar. Those who have concerns about such risks could benefit from exploring all their options for tax debt relief, as paths such as IRS payment plans and Offers in Compromise might be a better fit in one’s situation.

Options for tax debt relief

There could be various available options to help one pursue much needed tax debt relief and the best path available may vary depending on the situation. Individuals in Georgia who face high levels of tax debts and wish to better understand their available options might consider speaking with an attorney for assistance in evaluating the circumstances at hand. An attorney can work with a client in preparing to make informed decisions while creating a strategy with which to seek relief via the outlet that best meets his or her needs and interests.