The good news is that you have options available. You may even be eligible to get a “fresh start” through a relatively recent IRS initiative. At Resnick Law, P.C., we are here to help and make sure that you have the information, tools, and resources you need to protect your rights and interests. 

What is the IRS Fresh Start Program?

In 2011, the IRS created the “Fresh Start” Program to help individuals and small businesses struggling with tax debt. The primary purpose of the program is to give the agency additional flexibility when dealing with struggling taxpayers, and to help them get back into good standing with the federal government. The program provides the IRS with significantly more authority to settle outstanding tax debt for less than the remaining balance. 

A Taxpayer May Qualify for an Offer in Compromise (OIC)

Most notably, the Fresh Start program grants the IRS greater authority to enter into an Offer in Compromise (OIC) with a taxpayer. Simply put, an OIC is an agreement between the IRS and an individual taxpayer or small business that settles tax debt for less (often, this can be much less). 

The IRS has the ability to narrowly tailor a tax debt settlement agreement to meet an individual or company’s unique circumstances and ability to pay.  Oftentimes, this allows a federal tax debt to be settled for pennies on the dollar. 

Key Factor: Reasonable Collection Potential 

While the IRS Fresh Start program certainly makes it easier for people and small businesses to resolve tax debt, the IRS can still be challenging to deal with (as you probably already know). The IRS is not in the business of simply writing off tax obligations without good cause. So, in part of reaching an Offer in Compromise (or settlement agreement) with the taxpayer, the IRS will look at and determine an applicant’s “reasonable collection potential.” 

Put another way, the IRS tries to calculate how much a taxpayer can pay without putting a serious financial burden on themselves or their family. If you are seeking an OIC through the Fresh Start program, it is crucial that you submit a strong, well-documented case. An experienced Michigan tax relief lawyer can help you get a favorable settlement with the IRS. 

Call Our Detroit, MI Tax Debt Relief Lawyers Today 

At Resnick Law, P.C., our Michigan debt relief attorneys have the skills and experience to help clients resolve and deal with tax debt issues. If you have any questions about the IRS Fresh Start program, we are here to help you find the best solution and provide the best resources. Contact our firm today for a free, fully confidential consultation. With a main office in Bloomfield Hills, we represent clients throughout the region, including in Oakland County, Wayne County, Macomb County, Livingston County, and Washtenaw County. 

You and your partner(s) may need to secure financing to obtain capital for the launch of your business. Or, if you have already started your business with partners, it may make sense to be sure you are legally protected (personally) from any business debt.  If you create a general partnership and end up leaving the business, you could still be liable for any business debt the partnership takes on and fails to pay. The following are some tips for protecting yourself from business debt in a partnership.

• Protect Yourself in a General Partnership

Your business structure will influence whether or not you are on the hook for business debts that go unpaid. Most business partnerships fall into two categories — general partnerships and limited partnerships. General partnerships are when two or more people start a business together. You do not need to create a legal entity to form a general business partnership. Suppose you and one of your good friends shake hands and decide to start a t-shirt printing company together; you started a general partnership.

In many general partnerships, there is no formal, written agreement between the partners. Unless all partners have signed a written partnership agreement, each partner will be equally liable for business debt and any outstanding business payments that go unpaid. Many people opt for a general partnership because it is less formal, but this business structure does not protect an individual’s (or a partner’s) personal assets from business liabilities (i.e. debts, lawsuits, etc.). 

In other words, if a patron or customer brings a lawsuit against the business and is awarded a large verdict, or sum of money, the plaintiff could seek to collect from you personally (which also means s/he may collect against your personal property or other personal assets).  A better option is to have all the partners sign an agreement which limits each one’s personal liability for partnership obligations, debts and/or liabilities.  This agreement should also include a limit of liability should one partner leave the partnership for any reason, or under certain circumstances. 

In a general partnership, every partner is 100% liable for the partnership/business debts and liabilities, including debts from loans, capital or financing, and damages awards from lawsuits. At Resnick Law, we can review your partnership and advise on whether you should become a limited partnership or require all partners to sign a contract limiting liability. In the alternative, there may even be a better business structure for your endeavor. An experienced attorney can help you determine the best structure.

• Protect Yourself in a Limited Partnership

A limited partnership is an agreement between a general partnership and a limited partner.  Limited partnerships must be registered and have formal documentation of the agreements between any general and limited partners. The limited partner often acts as an investor or as a less active member of the business. In limited partnerships, the general partner is typically the person who is exposed to the greatest share of potential liability for business debts. The limited partner is often only accountable for their business interest in the company. 

• You May Need to Set Up an LLC or Corporation

If you are concerned about being liable for your business debts, you may want to create an LLC or corporation. When you do so, you will separate your personal assets (i.e. your home, retirement savings, or other property) from your business assets.  Personal liability in an LLC or corporation would generally only come about if you signed a personal guaranty for a business debt, or in some other special circumstances.  Generally speaking, however, an LLC or corporation protects the individual partners, members, shareholders, etc. from personal liability of the business debts.  

• Contact an Experienced Business Lawyer in Michigan

Speaking to an experienced business attorney is one of the most important things you can do to protect yourself from business debts and set up your business and personal life for success. At Resnick Law, our experienced business lawyers are ready to help.  Contact us today to schedule your initial consultation.

If a debt goes unpaid for a long period of time, it can be sent to collections. This usually means that the debt owed is written off by the original creditor and sold to a collection agency. At the time the original creditor sells the debt, the debtor’s credit is negatively affected because the unpaid debt has already been reported to the credit bureaus. The collection agency buys the debt at a fraction of the original debt owed, and then tries to collect the debt using various methods.

Once a person’s unpaid debt is reported to the credit bureaus as unpaid, the person is unlikely to be approved for new lines of credit or loans. In some situations, having debts in collections can also affect a person’s ability to get a job or rent an apartment. An unpaid debt can also keep increasing through the addition of interest charges.

In addition to the negative impact on a person’s credit, when a debt is sent to collections, the person may begin to be harassed by debt collectors trying to collect on the debt they purchased. The Fair Debt Collection Practices Act protects consumers from unfair and abusive collections practices. In addition, the law provides a way for the consumer to sue the debt collector if the debt collector has harassed the consumer in attempting to collect on the debt.

If a debt is sent to collections, the consumer can pay the underlying debt and any applicable interest charges in order to start rehabilitating his or her credit score. However, there may be instances in which the debt itself is not properly attributed to the consumer. If there is a mistake and the consumer does not owe the debt, the consumer may challenge the debt in court.

A person whose debt is in collections can also arrange to make payments to a debt collector in installments. This can be a good way for the person to clear an old debt without it being too much of a financial burden. However, arranging to make payments does not guarantee that a debt will not be sold again to another collection agency. If the debt is sold, the debtor may find him or herself in new negotiations for the repayment terms, unless the original repayment terms were arranged with the help of an experienced attorney who ensured some rights for the debtor.

Sometimes, a consumer who owes a lot in unpaid bills may decide that the best way to handle the situation is to file for bankruptcy. If the debts qualify for discharge in bankruptcy, then filing for bankruptcy can help the filer reset the button and begin to rebuild his or her credit. However, bankruptcy also negatively affects a person’s credit, and before a person files for bankruptcy, he or she should consider whether filing will leave him or her at more of a disadvantage than allowing the debt to go into collections.

Contact an Experienced Attorney

If you are experiencing financial troubles and  bankruptcy seems like the way out, you need to speak with an experienced attorney. Our attorneys can discuss the legal issues that will arise with bankruptcy and how they will affect you, in addition to debt settlement and other ways you can manage your debt. Call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan to schedule a consultation.

When a person dies, his or her debt does not always die, too. This can be a major concern for a person with a large amount of debt and who does not want his or her heirs to inherit this debt upon his or her death. The person may own few assets and not want those assets to be reached by creditors, preferring instead to leave them to deserving heirs.

Even when a debt is owned by a spouse, it does not mean that the surviving spouse will automatically be responsible for paying off the debt. A spouse would be responsible for the debt if the debt is jointly owned by both spouses, such as if the spouses jointly took out a mortgage loan. Additionally, if a person co-signs on a loan, the co-signer acts as a guarantor and would likely be required to pay off the debt if the person who took out the loan dies.

If the surviving spouse was only an authorized user on a credit card or a line of credit, the surviving spouse would not be held responsible for that debt upon the death of the spouse who was the primary account holder. There is a difference between being an authorized user and a joint owner on a debt. Therefore, the surviving spouse should ensure that he or she reads all the paperwork related to the debt in order to figure out whether he or she will be responsible for the debt after a spouse’s death.

In most cases, a person’s estate is responsible for paying off debts with any assets left within the estate before the assets can be transferred to heirs. The executor or administrator of the deceased’s estate usually has to locate and inventory all the debts owed by the deceased, and then apply all the assets remaining in the deceased’s estate to pay the debts. There are some situations in which the estate administrator may be able to use non-probate assets in order to pay the debts of the estate.

If a debt is secured by an asset, such as a house or a car, the creditor can repossess the asset after the death of the debtor in order to pay off the balance of the debt. Therefore, even if the family members of a deceased debtor do not have to be responsible for paying the debt, they may not have the benefit of inheriting the asset either. Some creditors may work with heirs who wish to pay off the balance of a loan in order keep the assets that would otherwise be repossessed.

If you are no longer able to pay your debts and have no options for additional income, it may be time to consider filing for bankruptcy. However, depending on the nature of your debt and what assets you own, there may be other ways to avoid filing for bankruptcy and still take care of your debts.

Contact Our Experienced Attorneys

If you have significant debt and are worried about how this debt will affect your family members after your death, you should contact an experienced estate planning attorney for more information. Call us to speak to our experienced estate planning attorneys, or our experienced bankruptcy attorneys at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan for a consultation to discuss your specific situation.

(image courtesy of Benedicto de Jesus)