You’ve heard the ads – they’re everywhere. “We will cut your credit card bills in half!” they claim. “You have a right to credit card relief” say others. “We will reduce your interest rates and your monthly payments,” boast some.
It all sounds so appealing, especially to people who are getting behind on their payments and don’t know where to turn. But there are some important things you should know about the companies who offer these services.
- These companies deal only with your credit card debt. Typically, they offer no help or relief when it comes to home mortgage and car loans, which is often a large part of your debt problem.
- The relief they offer involves you, the debtor, making monthly payments to the debt consolidation company. If you are in a position to make such monthly payments, chances are you don’t need the assistance of the debt consolidation company.
- The debt consolidation company will usually take their fee from your first payments, which means that you will spend hundreds or perhaps a thousand dollars or more in fees, and it will still be many more months before you get any help with your credit card debt.
- The success of most of these consolidation plans involves stopping all credit card payments. This means you will be seriously delinquent on all of your credit card payments. This will destroy what may be left of your credit rating, and will keep your credit rating low for a very long time.
- During the time when the debt consolidation company is accumulating your money, the credit card companies are under no obligation to stop or even delay collection activity – which means the companies will continue to call and harass you. They frequently will sue you (take you to court) so that they can garnish your wages and levy against your bank accounts. The debt consolidation company you are paying is powerless to stop these proceedings.
- After the debt consolidation company has paid themselves from the money you provide, they will make settlement offers to the credit card companies, ranging from 25 to 60 cents on the dollar of the total amount you owe. What you need to know is that for the most part these debt consolidation companies have no more influence or clout with the credit card companies than you would have if you make the settlement offer yourself. In other words, you are paying this company lots of money to make a phone call that you could make yourself and get the same result.
The pitfalls explained above apply to the reputable debt consolidation companies. There are many out there who are not reputable, and involve various scams which are designed to take your money without ever providing any significant debt relief.
Before you sign on with any debt consolidation or debt relief company, please give me a call. I offer a free half-hour consultation, during which I would be happy to review the debt consolidation agreement you are being asked to sign. I may be able to save you a lot of money, and keep you from making a mistake you will later regret. Depending on your individual situation, I may also be able to explain to you better options which will deliver meaningful debt relief in a much shorter period of time, and can keep you from being further harassed by creditors.
Whether you call me or not, I hope this information is helpful, and that you will share it with others who can benefit from knowing this.
Tagged as:
debt,
finance
(Originally published 3/1/2010.)
We’ve all heard it said that there are two things in life that are certain–Death and Taxes. But wait: In bankruptcy, there are some taxes that you can avoid.
Taxes first due within three years of the date a bankruptcy petition is filed and taxes assessed within 240 days of the bankruptcy filing, or which are unassessed but assessable when the case is filed, are considered priority claims which are not subject to discharge.
However, if you owe state or federal income taxes which were due more than three years before you filed your bankruptcy petition, those taxes can be discharged in a Chapter 7 or Chapter 13 bankruptcy case, just like any other unsecured debt. When a debt is discharged in bankruptcy, it means you will never have to pay it.
There is more good news. If you do owe income taxes that are less than three years old, those taxes must be paid in full as part of a Chapter 13 payment plan. However, the penalties associated with those taxes can be treated as a non-priority claim in a Chapter 13 plan, which means that only a fraction of those penalties have to be paid, and in a Chapter 13 plan, the priority tax does not continue to incur interest during the case. If all payments are made under the plan, that interest will never have to be repaid, meaning that the tax accrues NO INTEREST for the full five years of the plan.
Beware, however, that taxes for which no return has been filed are not dischargeable in bankruptcy. If a return was filed late, for a year outside of the three year priority tax period, the return must have been on file for two years for the tax to be discharged in bankruptcy.
If you owe delinquent taxes, and would like more information about how the bankruptcy laws will apply to your tax obligations, please contact us to set up a FREE half-hour consultation.
Tagged as:
bankruptcy,
taxes
It’s fair to say that most of us don’t want to pay any more tax than necessary. Did you know that it’s possible to owe taxes even after you die? This “estate tax” is determined based on the amount of assets you own at the time of death. This includes your home and other real estate; stocks, pension or retirement accounts, collectibles, and any liquid assets such as bonds or money in bank accounts. Once you include real estate, many people have assets over $1 million, and anything over $1 million in assets is subject to the estate tax.
There are some simple and inexpensive ways to minimize the amount of estate taxes that will be paid to the state and the federal government. For example, many couples hold the title to most (if not all) of their assets jointly, meaning that they each maintain ownership of one-half of the asset. However, if a couple divides their assets so that they each have sole title to approximately half each, this will enable each spouse to utilize his or her exemption from Minnesota (or federal as the case may be) estate taxes.
If all assets of a couple are held in joint tenancy with right of survivorship, it can be more difficult to use the estate tax exemption from the first spouse to die. If a husband and wife own $2.0 million in joint tenancy, then when the second person dies still having $2.0 million, only $1 million is excluded from Minnesota estate tax and $1 million is taxable, resulting in a tax of approximately $100,000.
However, if this same couple had divided the title to their assets equally during their lifetime, so that they individually owned $1.0 million each, the estate tax could be avoided since they would each qualify for the $1 million exclusion.
If you’d like to see more of your assets go to your family and less to the government when you die, contact us to make an appointment with me. I have years of experience drafting wills and estate plans. I will carefully review your situation with you and help you make planning decisions that will save you money and help you accomplish your long-term goals.
Tagged as:
taxes,
wills
Question: How are student loans and herpes alike?
Answer: You can’t get rid of either one of them.
When I first began practicing law (more years ago than I care to remember) it was common for students to incur substantial debt by means of student loans, and then to discharge those loans in bankruptcy shortly after graduation, thus providing the student with a debt free start in his or her new life after school.
Several years ago, however, Congress determined that the discharge of these loans by students who received an education – and thus more earning power – by virtue of these school loans was an abuse of the bankruptcy process. Accordingly Congress enacted bankruptcy code provisions that specified that nearly all student loans would be non-dischargeable – meaning that these debts would survive the bankruptcy and could not be eliminated by the Debtor.
The lone exception provided in the Bankruptcy Code says that student loans can be discharged if these loans would impose an “undue hardship” on the Debtor and the Debtor’s dependents. The courts have interpreted this exception very strictly and narrowly. To sustain a showing of undue hardship, the debtor must show that he or she cannot now and in the foreseeable future, maintain a reasonable, minimal standard of living for debtor and debtor’s dependents and still afford to make payments on debtor’s student loans. In other words, the debtor must be able to show that not only can he not make the loan payments now, but that it is unlikely he or she will be able to make those loan payments in the future.
Needless to say, this is a standard that is very difficult to meet. It requires a debtor in most cases to establish as a practical matter that he or she is permanently disabled to the degree that it would be impossible for the debtor to earn anything beyond what is required for a minimal, subsistence living. Therefore, for the great majority of those who file bankruptcy petitions, their student loans will not be affected by the bankruptcy, and they will have to be paid.
If you have questions about how your student loans would impact your ability to file a bankruptcy petition, please call me at (507) 663-1211 or email me to schedule a free confidential appointment.
Tagged as:
bankruptcy,
finance
Most people know that DUI laws have gotten a lot tougher in recent years. A fourth DUI can result in felony charges that will land the guilty driver in prison. Further, drivers suspected of driving under the influence of alcohol are required to take a chemical test, and can be charged with a crime if they fail to do so.
Perhaps the change with the most repercussions for the average person is the one in which the Minnesota legislature reduced the legal limit for blood alcohol concentration from .10 to .08 while driving or within two hours of driving. This means that some people who have consumed as few as two drinks may be over the legal limit and subject to a DUI charge. A person does not have to be drunk or even feel “tipsy” in order to be over the limit.
We wish you all a joyous New Year, and we hope everyone can celebrate this season with family and friends. But if your celebration involves driving, please monitor your alcohol consumption carefully. Consider volunteering to abstain from use of alcohol and be a designated driver for your friends. Don’t let your evening of celebration turn into an evening of tragedy.
If you or a friend or loved one has questions about our DUI laws, or needs experienced, effective representation, please contact us.
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dui
Don’t believe all the lawyer jokes. I am proud that most lawyers are caring human beings who are concerned about their clients as people and not just about making a living. And I am proud that the law sometimes does offer people a real remedy for injustice.
Two of my proudest and happiest professional accomplishments were avoiding litigation entirely in one case, and winning another case that was based on false allegations of child abuse:
- Early in my career, I told a young wife who couldn’t deal with her husband’s alcoholism any longer, though she loved him, about a process called “intervention” which might be used to get him into treatment. I was delighted to hear from her a year later that she had organized an intervention, her husband had completed treatment, and their marriage was back on track.
- Later, I represented a young father in a successful battle to win custody of his 3-year-old daughter after he was falsely accused of child abuse by the mother, as a tactic to get the child back after the mother had abandoned the child for over a year.
A few years ago I started practicing collaborative family law, an approach based on a commitment not to go to court, to be respectful and honest in settlement negotiations, and to cooperate in resolving issues to achieve the best possible result for both parties and their children.
These are just a few examples of the good that attorneys can do for their clients. I would be happy to speak with you about your legal needs. Contact us today to schedule a free half-hour consultation.
Tagged as:
collaborativelaw,
familylaw
For many people, going to see a lawyer about bankruptcy is a bit like going to see a dentist about a root canal. They put it off until the pain is almost unbearable. Almost half of my clients cancel their first appointments.
Because I understand this apprehension, my primary goal in that first conference is to provide a relaxed atmosphere, and to take all the time necessary to listen to your concerns, gain a thorough understanding of the financial problems you’re facing, and carefully explain the options available to get you relief from the pain of financial distress.
And there is no charge for that first conference, no matter how long it takes.
One of the deepest satisfactions of my work is seeing the relief on my client’s faces once they acquire the knowledge that speedy and effective relief from financial hardship is available. After that first conference, many clients tell me they wish they had come in sooner. Please contact us and make that first appointment. You’ll be glad you did.
Tagged as:
bankruptcy
As helpful as the law can sometimes be to solve problems, I have come to believe that litigation and court-imposed solutions are rarely the best choice for divorcing couples.
At a recent gathering of family lawyers, we were asked to throw out words we associate with the litigation process in family law cases. The words included: war, conflict, anxiety, fear, risk, distrust, dissatisfaction. There was not one positive or reassuring word suggested, even though we were not asked to focus on the negative. As another option, I now offer my divorce clients a collaborative family law process.
In collaborative law, both parties:
- commit to not going to court
- work together with their collaborative attorneys—usually in 4-way conferences—until they reach a settlement that is truly acceptable to both of them
- treat each other respectfully
- establish and work toward mutual goals such as financial security for both parties and the healthiest possible outcome for children
[read more…]
Tagged as:
collaborativelaw,
divorce,
familylaw
It is important to note that if you are divorced, and your divorce decree requires you to pay credit card debt incurred by your former spouse during the marriage (including cards on which you are jointly liable with your former spouse), you likely will not be able to discharge the obligation to your former spouse to make those payments on his or her behalf.
In other words, if your former spouse is required make a payment on a credit card that your divorce decree required you to pay, you will be liable to reimburse your former spouse for any payments he or she made on credit cards you were required to pay, even if you have listed that credit card debt in your bankruptcy petition.
If you have questions about how a divorce decree might impact your liability to pay credit card or other obligations, call me at (507) 663-1211 or email me to schedule a free confidential appointment.
Tagged as:
bankruptcy,
divorce,
finance
For the last year and a half, the pedestal outside our office has displayed a work by St. Olaf College Professor Emeritus, sculptor, and art historian 