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When a client trusts us with their critical legal decisions, we take our time to get to know them as more than just a client. We've created blogs posts as creative outlet to express some of our legal and personal interests, and give our current and future clients a chance to know their attorneys better.
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Debt & the IRS
You have seen the ads. Most of them start something like “Do you owe the IRS?” or “Are you trapped in debt?” There are two or three people who report that they did, indeed, owe tens of thousands of dollars and that – almost miraculously – the debt was forgiven. It sounds like a dream come true, an offer that’s too good to be true.
That’s because it is. You may be tempted to call the 800 number and, for a fee, put your financial future in the hands of a company that promises to solve all your debt problems.
Before you reach for your phone, there are a few things that you should know.
When you contact a debt settlement company, the first thing they will do – after they ask enough questions to determine how big a financial hole you are standing in – is get a retainer. It’s generally $1,000, although it could be more. They advise you to sit back, relax, and let them do their work.
What they do is . . . nothing. They do not contact your creditors immediately, and they do not make any of your payments. Instead, they let the debt pile up even more so that, eventually, your creditor is willing to make a deal that forgives much of the interest. In some cases, the creditor may forgive some of the original debt.
The debt settlement company doesn’t tell you two important things: first, your credit score will go down. A lower credit score will mean that, when you make a big purchase such as a car, the interest rate you will be charged will be higher. A lower credit score and a higher interest rate will mean higher payments.
Second, you will get a 1099 form for debt and interest amounts that were forgiven. The IRS will treat that total as income, and you will have to pay tax on it. Depending on your financial situation, the total on the 1099 could move you up to a higher tax bracket, meaning that you will pay even more in taxes.
You do have options.
Contact Brzustowicz and Marotta, the attorneys who provide the legal help you need. With more than 55 years of combined experience, we have the perspective to show you a better set of options than just digging a bigger financial hole.
Preparing for the Future
Once you become an adult – whatever that means to you – there are three questions that you must ask yourself.
First, do you have a will? Before you say “I really don’t have an estate” think about this. You probably have personal possessions that you’d like to pass along to someone. Maybe it’s your baseball-card collection, or jewelry that was passed down to you by your mother. You probably have some definite ideas about who should get what from your possessions.
But, once you’re gone, it’s too late. You can’t come back from the great beyond to tell people what to do. If you don’t want the government to be making decisions for you, you should have a will – one drawn up with the guidance of an attorney who can ask the right questions and draft a document that meets your unique requirements.
Second, do you have a Power of Attorney document? Simply put, that’s a legal document that outlines your wishes and assigns another individual to make decisions for you when you cannot make them yourself. One of the most common applications is by an elderly person who, because they are ill or otherwise incapacitated, needs to have someone handle their affairs during the time that the help is needed.
Older people are not the only ones who should have a Power of Attorney document. Imagine that you are injured in an accident and you can’t make your wishes known. Who would make decisions for you? Would you prefer someone that you have designated – or someone arbitrarily picked by the courts? You cannot automatically assume it would be your parents, spouse or significant other.
Third, do you have life insurance? When you are young, it doesn’t seem important. But, that’s precisely when your rates would be lowest. There are scores of life insurance companies and many kinds of policies available. What you eventually select will depend on your goals, and your budget. The most important thing is to begin the process of getting life insurance coverage. That’s when an attorney can show you, in plain English, the conditions and limits of a policy you may be considering.
For wills, power-of-attorney documents or help demystifying the language of insurance, contact Brzustowicz and Marotta, the attorneys who provide the legal help you need.
The Importance of Legal Help
Is there such a thing as “do-it-yourself law?”
The internet puts a wealth of information at our fingertips. Some information is helpful, some is inaccurate, and most of it is just plain wrong. And, when it comes to the law, it’s the “just plain wrong” things that creates problems.
The ads for “legal services” make it seem very enticing. A person who wanted to start a business, for example, looks at the camera and says, “I went to (you can fill in the blank here) and used the forms on the internet to set up my business. I avoided costly attorney fees.”
No, they probably didn’t. The forms they found on the internet are generic and, to a degree, provide the framework and information needed. But, did they consider the laws of the state where the business is being set up? Did the forms counsel the businessperson as to the most advantageous type of organization or incorporation? Did the forms explain how the person can protect their personal assets in case the business fails? (The sad fact is that a majority of new businesses – especially among restaurants – do fail.)
There is a great deal of helpful information on the internet. Need to know how and where to get a driver’s license that is TSA-compliant? Looking for a new car? Need information on where to pay your taxes? Information like that is readily available.
On the other hand, when you have questions about your rights under the law, searching the internet for the answer ranks alongside asking your neighbor what you should do – unless your neighbor happens to be an attorney – as a terrible option.
Here’s a much better one: contact Brzustowicz and Marotta, the attorneys who provide the legal help you need. With more than 75 years of combined experience, we have the perspective to help in ways that a form printed off the internet can’t.
Getting Financial Help When You Need It
“I have money that will come to me sometime in the future, but I need it now!”
These are challenging times, with unemployment totals not seen since the Great Depression. Thanks to layoffs, both temporary and permanent, too many people are finding it impossible to pay their bills or feed their families, let alone think about the future.
If you find yourself in that situation, now is the time to think very carefully about what you do today – and how it will affect you in the future.
Perhaps the clearest example involves a structured settlement. If you were injured in an accident, for example, you may have a significant amount of money coming your way – but not immediately. Typically, a large settlement will be paid out over several years.
The temptation, after hearing the ads flooding television, radio, and the internet, is to contact a company that promises to get you the money you need – and to get it now!
What you need to know is that companies like that are buying your settlement. The amount they pay you – the cash that you are getting now – will be 25 or 30 percent of the total. If you have a structured settlement of $100,000, you will get $25,000. You may find that you to pay some fees in the process, so the total might be less.
The rest of the settlement, in this case $75,000, is gone. You don’t get that money, now nor later. The asset might be held by the company you dealt with, or it might be sold to another company. Regardless, you will never see that money.
Think of it this way: you will have a short-term gain, followed by a long-term loss. Looking to the future, that doesn’t sound like an appealing option.
But, you may have other options. Here’s one: contact Brzustowicz and Marotta, the attorneys who provide the legal help you need. With more than 75 years of combined experience, we have the real-world perspective to help you identify possibilities and determine the pluses and minuses of each one. That’s the kind of help that you really need now.