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Archive for the 'Personal Finance' Category
Foreclosure Scams
December 1st, 2008
By The XBanker
The increase in foreclosures has resulted, predictably, in a surge in the number of scamsters pretending to want to help homeowners in need. Here are some of the scams to be aware of:
- The Bailout: The homeowner is led to believe that by signing over title to the house he or she can remain as a renter and buy the house back over time. The terms of the buyback are impossible to meet and the homeowner loses possession. The scam artist ends up with the property.
- Equity Skimming: A “buyer” approaches you with an offer of help. He will pay off your mortgage but you must move out and deed the property to him. The buyer puts a tenant in the property and collects the rents. But he does not make any mortgage payments and allows the lender to foreclose.
- The Bait and Switch: Homeowners are led to believe that they are signing documents to bring the mortgage current. Instead, they are actually turning over their ownership of the property to the scam artist.
- High Powered Help: Companies promoted as heroes to homeowners charge large and excessive fees to save the property. They perform very little work and the home is lost anyway.
How do you avoid one of these scams?
First, never be pressured to sign a contract. Take your time. If it is such a good service they will offer it tomorrow, despite their pressure to sign today. Suggest that you must have your lawyer review it (even if you don’t have a lawyer). If the person says a lawyer wouldn’t understand this or wouldn’t approve of it – you know you are dealing with a scam artist.
Second, never sign away your ownership to the property. People who put you in this position are only maneuvering to take away your home.
Third, never make a mortgage payment to anyone but the lender. If the scam artist suggests that they will pay the mortgage be assured that they will not.
Fourth, do not sign any document with blanks or lines that are not filled in. Scamsters will later add language to your detriment.
Finally, always seek the counsel of a good, local lawyer. Their job is to protect you from ever being scammed in these ways. And in this current environment there are plenty of scams to know about and avoid.
The New Identity Theft Law: Will It Work?
November 20th, 2008
By The XBanker
Identity theft is now a pandemic, and a scourge for its victims. Is the federal government finally ready to fight back?
The Identity Theft and Restitution Act of 2008 was recently signed into law by President Bush. The new law is supposed to make it easier for the government to convict those charged with pursuing computerized identity theft. Supporters tout this legislation as allowing federal prosecutors to be more aggressive in cracking down on identity theft cyber crime. But will it work to protect millions of future victims?
The new law provides for the following:
- Discarding the requirement that damage to a victim’s computer exceed $5,000 over a one year period before charges can be asserted for unauthorized access to a computer.
2. Eliminating the interstate jurisdictional requirement, thus allowing prosecution of those who steal personal information from a computer, even when the victim’s computer is located in the same state as the thief’s computer.
3. Allowing victims of identity theft to seek restitution for an amount equal to the value of the time reasonably spent to fix their problems.
4. Adding the charge of a conspiracy to commit cyber crimes. (The prior law only allowed for charges related to the actual crime, and made no provisions for conspiracy to commit the underlying charge.)
5. Adding the remedies of civil and criminal forfeiture to better allow federal prosecutors to combat cyber crime. Individuals found guilty of violating the act can be forced to forfeit both property used in commission of the cyber crime, as well as property obtained from any proceeds gained from the cyber crime.
6. Making it a felony to electronically damage ten or more computers no matter the value of the damage caused.
7. Making it a crime to threaten to steal or release information from an individual’s computer. (Prior law only permitted the prosecution of those who seek to extort companies or government agencies by explicitly threatening to shut down or damage a computer.)
It is intended that the new law will allow federal prosecutors to be much more aggressive in prosecuting identity theft criminals. Elimination of both the $5,000 damage requirement and the interstate jurisdictional requirement should make it easier for prosecutors to bring charges.
But will it really help?
The federal government has tried to keep up with identity theft for years with few results. If the feds are truly interested in stamping out the pandemic, it is with the enforcement of the laws, and not just new laws, that will turn the tide.
Still, there are encouraging signs that a wide ranging effort is being made. The IRS is helping out by allowing in this next year all but the last four digits of taxpayer ID numbers to be blocked out on 1099’s, W-2s, and other informational returns. There is privacy in that move.
But it is not over. Stay tuned for more on this battle.
Garrett Sutton, Esq.
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Using Quality Financial Professionals
February 13th, 2008
By The XBanker
With all due respect to the many excellent accounting professionals out there, I am constantly amazed at the number of CPAs who willfully ignore the litigation explosion and the need for asset protection. These CPAs provide useless legal advice to their clients by suggesting that they are too small to incorporate.
Their advice is to operate as a sole proprietor, or worse, as a general partnership with others because it is easy and does not involve annual filing fees to the state. The problem, of course, is that you are never too small to get sued. And when you operate as a sole proprietor or general partnership the liability exposure is against all of your personal assets for many years to come. So the question isn’t are you too small to incorporate.
The accurate question is do you and your family have any sort of financial future to protect?
And given that that answer will always be yes, then the need to incorporate and utilize asset protection strategies is a given. You need to start protecting yourself as soon as you start your first business and buy that first rental property. You need to implement asset protection strategies at the start and then throughout your wealth building career. Remember, it is too late to protect your assets after a problem comes up. You need to act at the beginning so that there is no gap in your protection, no chink in your armor, as you move forward.
Another problem I have against lesser accounting professionals is that they argue that an extra corporate or LLC tax return is too cumbersome and/or expensive for their client. To this my first reaction is: Have you ever filed a corporate or LLC tax return? They are not difficult and should not be expensive. In my mind this particular ‘tax pro’ is giving the bad legal advice not to incorporate to cover up the fact that they do not know how to file anything other than a personal return. If you are dealing with such a person it may be that you have outgrown their services.
You need to work with professionals who understand the importance of asset protection, and will work with you to accomplish your important financial and protection objectives. It is important to know that the right team can make all the difference towards your future success.
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