ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, May 20, 1996 TAG: 9605210030
SECTION: BUSINESS PAGE: 6 EDITION: METRO
COLUMN: money matters
SOURCE: MAG POFF
Q: I had a heart attack and bypass surgery in late 1993. Before I could get Social Security disability started, Signet Bank garnisheed my wages, attached my bank account (with $5 in it) and filed a judgment against me with interest accumulating. At the time, I was getting $92 weekly and Signet would agree only to a $700 payment.
I thought when the sheriff served these papers the worst had happened, but now they have a collection agency calling with threats to take my home and car. The disability insurance is making the car payments. They are trying to get me to take an equity loan on my house, but several companies have turned me down. The collection agency said they have just started harassing me and I haven't seen anything yet.
I tried Legal Aid for help, but now I am on regular Social Security and receiving $860 a month. They said I was disqualified by my income from receiving help.
I didn't have money to make the requested payment of $700, so how can I pay the entire balance? Other creditors understood and were patient with the situation. They are being paid.
I am afraid these calls are going to upset me too much and I'll either die on the phone or in bed worrying.
A: The collection agency keeps a large percentage of anything it can get from you, or it may already have purchased the debt at a deep discount. But you still owe the full amount of the bill unless you can negotiate a lesser payoff.
The agency can call you at reasonable hours during the day and early evening, but it it illegal to harass you with calls at night. Also, the agency cannot call another person to report your delinquency and a collection agency cannot call a person at work, for example.
The agency does not have to accept installments, and the creditor (not the agency) can sue you at any time for the amount you owe. The agency probably has the power to take your car if it has a judgment against you.
You need legal advice, but you have already struck out at Legal Aid and your letter suggests you probably cannot afford a private lawyer.
Virginia Garretson of Consumer Credit Counseling said her organization will try to help you. Consumer Credit Counseling is supported by local merchants, so the service is free to the people it assists. The service helps people draw up budgets and deal with their creditors. If necessary, the agency can take your payments and distribute the money to your creditors.
The office is on Peters Creek Road in Roanoke. You should arrange for an appointment by calling 366-2227.
Guidelines for
gift taxes
Q: My father gave his property to my sister and me eight years prior to his death with the understanding that it would be divided equally among our siblings upon his death. After he died, prior to the sale of the property, my sister and I gave the property out, into equal shares, to all the siblings, including my sister and me.
How do we go about establishing a basis for capital gains for tax purposes? Do we use our father's basis, or the year he gave it to my sister and me, or when it was divided among all his children? We have received conflicting answers from various sources.
A: You and your brothers and sisters are not going to like the answer.
If your father made such a convoluted disposition of his property in an attempt to somehow escape estate taxes, he wound up doing all of his children a disservice when it comes to capital gains taxes.
Harry Schwarz, a certified public accountant with H. Schwarz & Co. in Roanoke, said a gift tax form should have been filed when your father gave the property to you and your sister if the value exceeded $20,000. Any person can give only $10,000 a year to any other one person without tax consequences. He was limited to $10,000 to you and $10,000 to your sister, although this could be doubled if the gift also included your spouses.
Your father was responsible for filing the gift tax return for any excess over that amount. If he did not do so, that task should be performed by the executor under his will, or the administrator of the estate if he had no will.
The executor must also file estate tax forms if the value of the estate plus the excess gifts exceeded $600,000.
Schwarz said you and your sister had the responsibility for filling out a gift tax form if the division of the property to your siblings exceeded the tax limit of $10,000 a person.
The rule is that the recipient of a gift assumes the tax basis of the giver. Thus, Schwarz said, you and your sister took over your father's tax basis with the gift. With the second giving, your siblings adopted your tax basis, which in this case was the same as your father's.
For example, if your father bought the property for $100 an acre and the land is now worth $10,000 an acre, Schwarz said, you and your siblings must declare a capital gain on the difference.
But if your father had willed the property to you and your siblings at his death, you would have taken as your tax basis its value on the date of his death. The years of appreciation of the property since he purchased the land would have escaped taxation.
LENGTH: Medium: 99 linesby CNB