In the U.S., many of us are in crisis when it comes to debt and finances. According to Debt.org, consumer debt was up to nearly $14 trillion at the end of last year. Consumers owe money on their mortgages, student loans, auto loans, and credit cards. Add legal fees into the mix, and it has the potential to spell disaster.
With a little financial savvy, however, U.S. men and women can navigate even the most complicated legal troubles without breaking the bank. Here are some of the most common legal quandaries and the best strategies to keep costs reasonable while working through them.
1. Filing Taxes Raises A Lot Of Questions
Unfortunately, filing taxes is not always a straightforward process. It is wise to take advantage of free tax filing software when possible, but it is also wise to know when to reach out for help.
If you worked for just one employer during the past tax year, receive a traditional W-2 form, have few deductions, and little to no additional untaxed income, free software is the way to go.
Otherwise, relying on free software can be frustrating, inadequate, and cause you a whole host of problems in the long run. Save money, time, and potential legal consequences by working with trusted accounting and tax planners.
An experienced professional can help you confidently file tricky tax returns. For example, if you own your own business, work as a freelancer or contractor, or have a significant side hustle, you can legally write off quite a few major deductions. Writing off the wrong ones or listing fraudulent deductions, however, is an easy way to set off red flags and get an audit from the Internal Revenue Service (IRS). Work with a professional to get the highest possible deduction, and to pick apart what is a legitimate write-off and what’s not.
Professionals can also help you save money and stay within legal bounds in other murky situations, like when you first purchase new rental properties or real estate.
2. It’s Time To Declare Bankruptcy
If your finances are in dire straits, you may be taking options like filing for bankruptcy into consideration. Of course, taking any legal action can be a daunting prospect when you are low on cash.
The first thing to remember is that the purpose of filing bankruptcy is to provide financial relief. Bankruptcy agencies understand that very few Americans apply for bankruptcy when they do not truly need it. As such, there are measures in place to help you. For example, like most lawyers, a bankruptcy lawyer will often meet with you for a free consultation. During that consultation, professionals can help you pin down your needs, what you’re hoping to accomplish by filing for bankruptcy, and help you set a realistic budget to do it.
Filing for bankruptcy eliminates most debts or wipes your slate clean, which can be a great option for those drowning in debt that they cannot possibly pay off in the next five years — or even longer. Filing bankruptcy also puts a “stay” into effect. Creditors can no longer turn you over to collection agencies where you will only amass more penalties and debt. They cannot file lawsuits in an effort to pressure you to pay.
While filing for bankruptcy may seem like a big step, it clears away current debts and stops debt from collections, penalties, and lawsuits in its tracks.
3. You’re Getting Divorced
In nearly all cases, keeping tabs on your finances and assets justifies divorce mediator costs. Divorce attorneys share their best tips for keeping divorce costs relatively low:
- If at all possible, opt for a non-contested divorce. A messy and drawn-out divorce inevitably entails more legal fees. Keep your finances in check by seeing if it is possible to speak amicably with your spouse and/or a mediator to arrive at a fair agreement reasonably quickly, without all the stress and exorbitant costs.
- Learn about money. If you or your spouse assumed the dominant role when taking care of finances during your marriage, it is time to learn how to manage your expenses as an individual, apart from them. Know how to knowledgeably speak about your finances to make the process smoother and less costly.
- Get your financial records in order. Divorce attorneys or mediators spend an undue amount of time helping clients organize their finances. Organize them yourself — preferably electronically for ease of access — and you will be one step ahead of the game.
Divorce is a complicated and — at times — expensive process. Take small steps to cut costs as you go.
4. You Have Children And You’re Getting Divorced
Getting divorced is one thing. Getting divorced when you have children is often something else altogether. When complicated family law comes into play (i.e., decisions about child custody, child support, etc.), expenses can be considerably higher.
Once again, you can help keep costs as reasonable as possible by taking some proactive steps. First, consider mediation if at all possible. As in a traditional divorce, divorce with children is least expensive when couples resolve their differences and divide up their finances and assets as smoothly as they can. Similarly, being disorganized or failing to provide appropriate documentation costs you money. If a divorce lawyer asks for any documents regarding your child or child’s care, have them at the ready and hand them over without delay.
Finally, use your discretion. There is only so much a mediator, attorney, and/or judge can do. Save their expertise for truly legal matters. Do what you can to make peace with your ex-spouse’s shortcomings. The court is not going to deny your partner the right to see your kids because they spend too much time on Instagram. Don’t waste your time and everyone else’s. Most importantly, don’t waste your money!
5. You Are Growing Old Or Fall Ill
While many of us try not to talk about it, it’s a fact of life: we all die, from old age or disease and sickness. With that inevitably facing literally everyone, it is wise to plan accordingly, and ideally, well-before it is a pressing issue. In other words, it is best to make these decisions while you are still healthy. If possible, plan a consultation with an estate planning lawyer when you reach middle-age or in your early 60s.
Save money while estate planning by going into the process with a clear head. What is most important to you? What are you trying to lay out in no uncertain terms? Identify your most important wishes for your estate, and go into consultations and meetings prepared to prioritize them.
In addition to your aims, know what documents you will need to see them through. For example, most people undertaking estate planning secure a will, power of attorney, and advanced health care directives at a minimum. Trusts are another popular estate planning option.
Once again, gather your paperwork and be organized. When meeting with any lawyer, having your paperwork together and staying organized speeds up the legal process, saving everyone valuable time. Plus, you will not waste money on legal fees literally paying your lawyer to get things sorted out for you.
6. You Are Injured In A Car Accident
When you are injured in a car accident, weighing the rewards from payouts and the costs of legal fees can be a delicate balance.
Meeting with personal injury attorneys can actually buoy your finances in the long run. Insurance carriers aim to pay as little as possible to settle claims and disputes. As such, their first offers and/or any settlements readily offered may be significantly less than you need to pay for medical bills, lost wages, and other related expenses.
Even the most experienced lawyers will hire a lawyer in a different area of law when the need arises. In other words, unless you are extremely familiar with personal injury law, going it alone will only invite the insurance company and other parties to take advantage of you. Personal injury lawyers can help you identify all damages, including punitive damages, economic damages, and non-economic damages. It is especially wise to work with an experienced attorney if you believe you are reasonably entitled to compensation for pain and suffering.
Another thing to think about when working with a personal injury lawyer and trying to carefully balance finances is contingency fees. In the majority of personal injury claims, lawyers receive money if you win your case or if you favorably settle out of court. That’s it. Many injury lawyers do not collect fees if you lose your case.
7. You Face Drunk Driving Charges
Unfortunately, drunk driving is all-too-common. According to NBC News, 4 million U.S. adults confess they drink and drive. While this number is far from ideal and it’s not a blessing to start, it makes one thing perfectly clear: we all make mistakes.
If you are arrested for drunk driving or driving while impaired, the legal fees can get costly. To navigate the situation in most financially savvy way possible, do your best to:
- Work with an experienced bail bond agent. When it comes to bail bonds, transparency and long-standing relationships with local officials are key. Ask bail bond services to clearly lay out their terms. Show preference to agencies with close relationships to local sheriff’s offices.
- Adhere to all bail conditions. Show up at court and adhere to all bail conditions in the meantime. If all goes well, your bail will be dissolved after court. You will owe only any legal fees related to your crime and the initial fee for a bail bonds agent.
- Hire an attorney. Criminal law is one area of law that you definitely do not want to tackle on your own. Criminal lawyers understand all of the nuances of relevant laws. If it is your first offense, they may be able to help mitigate fines and legal consequences in exchange for demonstrably good behavior or enrollment in DUI or safe driving courses.Plus, lawyers will help you avoid consequences that may result in more debt. For example, an experienced professional can help you keep your job and negotiate some driving privileges (i.e., a restricted license). Best case scenario, in some circumstances, it may be possible for the court to dismiss charges or agree to a plea bargain.
8. Your Legal Representation Is Negligent
When it comes to tricky legal situations, legal malpractice can certainly take the cake. In the event of legal malpractice, it is up to you to reasonably prove two claims: first, that your lawyer acted out of order and to the degree of negligence, and, second, the outcome of your case may have been very different with a competent lawyer.
While this is definitely a complex legal issue, it is not one to ignore. At this point, if you believe you have a strong case, it is best to work with a legal malpractice attorney and file a claim. Why? First, if the legal and financial consequences of the first case are weighty enough and those consequences are truly undeserved, it is important to do what you can to overturn them. Second, a successful case can help reverse financial consequences and grant you winnings for your trouble.
Meet with a lawyer for a free consultation. If your original lawyer missed critical deadlines or relevant statute of limitations, you may very well have a case. There are several other instances when it is possible to reasonably argue and prove negligence as well.
According to MarketWatch, Americans describe money as their top stressor. Money troubles make us depressed and anxious and ultimately impact our physical well-being, too. Debt has been linked to high blood pressure, heart problems, migraines, and digestive troubles.
Navigating finances in complex legal scenarios has the potential to add to or compound that stress. Thankfully, there are deliberate and proactive actions you can take to keep your finances in check while navigating tax problems, bankruptcy, divorce, child custody, personal injury lawsuits, and more.
Track your money, try to make big financial decisions or changes one at a time, and know what to do should the specific legal situations above arise.