DEAR MARY: I contacted TransUnion because there is a blatant error on my credit report. It states that I owe the federal government $80,000. A lien was filed in 1991, and the debt was discharged through bankruptcy in 1998. The TransUnion rep was not very nice on the phone. When I asked why something from 1991 is still on my report, he told me they can keep a lien on indefinitely. What do I do now? — Linda, New York
DEAR LINDA: I am not an attorney and cannot give legal advice. What I can do is urge you to contact an attorney right away. I am concerned that this lien never was discharged as you were led to believe. My understanding is you can’t discharge a federal tax lien. A Chapter 7 bankruptcy wipes out your personal obligation to pay the debt and prevents the Internal Revenue Service from going after your bank account or wages. But if the IRS records a tax lien on someone’s property before the person files for bankruptcy, the lien will remain on the property. In effect, that means the person has to pay off the tax lien in order to sell the property. For your sake, I hope I’m wrong.
DEAR MARY: My adult daughter was talking about getting a part-time job (in addition to her full-time teaching job) to earn some extra money. My husband reminded her that “not spending” is really the best way to earn more money. By not spending on extras and cutting back where she can, she could keep money in her pocket. She would have to earn at least $1.30 to make up for each dollar spent, by the time the government takes out taxes from her paycheck. I thought this was sensible advice. — Lin, Michigan
DEAR LIN: Wise advice, indeed. But more than that, your daughter needs to assess how much that second job would cost in terms of gas, parking, more restaurant and fast food because she’s pressed for time, and myriad other job-related expenses that will nibble away at the true value of that second job. Cutting expenses is an effective way to effectively “increase” one’s income for the very reason your husband states.
DEAR MARY: I work for a homebuilder and found an article in a recent industry magazine about a software program (with a hefty price tag of $1,600!) that is intended to help you pay off your 30-year mortgage in only 16 years. This seems too good to be true. I would love to know what you think. — Candy, Texas
DEAR CANDY: I know about that type of program, and quite frankly, I am not a fan. You can do the same thing without buying any software or exposing yourselves to undue risk. Here’s how: Each month when you make your mortgage payment, write out a second check for one-twelfth of one payment. (If your mortgage payment is $1,200, you’d make out that check and then another, for $100, which is one-twelfth of $1,200.) Write on that second check, “Principal Prepayment Only.” At the end of the year, you will have made 13 mortgage payments, with one of them going entirely to reduce the principal. Do this faithfully and you will lop many years and many thousands of dollars in interest from your mortgage payback.
I guarantee that your lender will accept the additional payment if you make it at the same time as a regular monthly payment; you will not have to pay a fee for some special payment program. And you can stop anytime without incurring any penalties if you find yourselves in a financial bind.
Mary invites questions at firstname.lastname@example.org or in care of Everyday Cheapskate, P.O. Box 2099, Cypress, CA 90630. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website, and the author of “7 Money Rules for Life,” released in 2012. To find out more about Mary and read her past columns, please visit the Creators Syndicate Web page at www.creators.com.