CHAPTER 14
APPEARANCE OF
WEALTH
This
section is in no way to be
construed as an endorsement by
The Solutions Network of the
actions we are now going to
discuss. Rather, it is to make
you aware of certain facts that
many have used in order to
achieve their financial
objectives.
We have all
heard stories of the "mob" and
their two separate sets of
financial books; one for
themselves, and one for anyone
that they may want to mislead.
Some people do the same thing
for their personal finances. By
applying the following facts,
they are able to create two
separate sets of tax forms. One
set that shows their actual
income and expenses, which goes
to the IRS and one that
indicates a much higher income
that is then used to show extra
financial strength to a lender.
The purpose, of course, is to
convince the lender to go along
with the business venture. What
are the principles that make
this possible?
1) Due
to confidentiality statutes, a
lender cannot divulge, to
anyone, any personal information
that is given them.
Unless, by your written
authorization or court order,
they won't divulge it, even to
the IRS. This means that a
person could claim a $50,000
income to the lender, but
actually earn only $25,000 and
not have to worry that the IRS
thinks he is cheating on taxes.
2)
Without written authorization
from the taxpayer, the IRS will
not divulge the contents of the
tax return. This
means that, at least,
as to
self employment income,
other than the tax return
received from the borrower, the
lender has no way to verify what
the borrower's taxable income
actually is.
The
situation is such that the IRS
does not know what is told to
lenders and lenders do not know
what is told to the IRS. Here's
one way that this information
has been used...
Recently, there has been
Form
4506 which
Mortgage Lenders often have you
sign and send to the IRS for
verification that your income
statements match what the IRS
has on file.
This,
however, is rarely if ever used
for any other type of loan such
as auto or personal loans or
credit cards.
"Joe" had
a job that paid him $25,000 per
year. But to get the financing
for a certain endeavor, he
needed to show the bank an
income of $50,000. Here's what
he did
Joe went to
an accountant and told him that
he had not filed taxes for the
last two years. And since he
was afraid of what the IRS might
do, he wanted to get it taken
care of.
He gave
the accountant his W-2s from his
job and said that he also had a
mail order business that netted
him an additional $25,000 for
those years. He gave a gross
income of about $35,000 with
expenses of about $10,000. The
accountant used the information
to create new tax returns. Joe
then went to the lender with
photocopies of two years of tax
returns that "proved" he had the
ability to repay. Since Joe had
good credit and "excellent
income", he got the loan.
What
happened when the bank verified
his employment?--
Since Joe did, in fact, have a
job that paid him $25,000 a
year, when the bank called his
job, that portion of his stated
income was verified. But what
about the other $25,000 of
income he claimed? For that
income, his mail order business
put him in the status of "self
employed". If you are your own
boss, who does the bank contact
to get information regarding
your income? You and your
financials. The bank had no
other choice but to make their
determination on making the loan
based upon the documentation Joe
provided. Namely, tax returns
and bank statements.
Didn't his
bank statements fail to support
a $50,000 a year income?
Since, Joe knew in advance
that there may come a time that
he needed to show extra
financial strength, he began
creating the illusion of
opulence well in advance of the
need. He already had one
checking account, but about six
months before applying for the
loan, he opened a second account
with a different bank.
Two to
three times each month, Joe
would make a deposits of about
$500 from bank A to bank B and
then from B back to A. What
this accomplished was that at
the end of each month when he
received his bank statements,
each of the two accounts would
show about $1,500 in deposits
over and above those he would
normally have made. This
created the appearance of about
$3,000 extra per month in
income, thus, backing up his
claim of "self employment"
income.
Although,
Joe got what he was after, It's
better to give accurate
information to the lenders. Not
only, is that the thing to do
from a strictly moral
standpoint, but
giving
false information on a loan
application could be construed
as an attempt to defraud the
lender. If you
make the payments, it is highly
unlikely that there would ever
be a problem, but one would have
to decide if it were worth
taking the chance.
RAISE YOUR
CREDIT SCORE-- WITHOUT CREDIT
REPAIR
CREDIT
CARDS
In today's
credit conscious society, credit
cards are almost a badge of
honor. They make check writing
easier; they help to eliminate
barriers to the establishment of
new credit and they
substantially enhance your
financial prestige. However,
those that give you the most
benefit, such as VISA or
MASTERCARD, are often the ones
that are the most difficult for
which to qualify. What we are
going to discuss in this section
is, not only, how to obtain the
cards,
but how to parlay them into a
substantial amount of cash
whenever needed. If
you have applied but been turned
down, in almost every case the
reason is either one, or a
combination of these three
things:
1) Insufficient
income.
2) No
established credit.
3) Bad credit.
If the
problem is insufficient income,
you simply need to show more
income. If the problem is
either of the credit situations,
the cards are still obtainable,
but first, a few words about
credit...
There are
few people, who at one time or
another, haven't had some type
of credit problems. Whether it
was a matter of being late on
the payments a few times or
maybe even the discontinuance of
any payments, at all. I know,
from personal experience that it
is easy to have that happen; and
from there, it's even easier to
fall into the mental frame of
mind that says,
"Well, my
credit's already shot, so why
make it tough on myself? I'll
just pay 'em later.". If
you, or anyone you know has
fallen into that trap, it's
important to turn it around.
Right now!
Even
though, the application of the
many principles disclosed on the
Solutions Network website, allow
for many things to be
accomplished even with the worst
of credit,
the fact of the matter is
that
bad credit always costs
money! Whatever
loan a person may be able to
obtain, the interest rates and
consequently, the payments are
always higher for someone with
bad credit than for someone with
good.
But no matter how bad the credit
situation is, a person can start
right now to turn it around. It
may be a matter of eating out
less or going to fewer shows,
but there is usually a way to
begin to make those payments.
It may hurt. But it is
essential to start immediately.
If the situation is, in fact,
impossible; if there is simply
no money, call the creditors and
let them know the situation, and
if possible start making partial
payments. But, at least try to
do something to get moving in
the right direction. Are you
too far behind? Too buried?
Click Here.
.
