Blogs
If you are considering filing a Chapter 7 or Chapter 13 bankruptcy it is important to be able to classify your debts as secured and unsecured. These debts are treated very differently in both Chapter 7 bankruptcies and Chapter 13 bankruptcies. If you file a Chapter 7 the unsecured debts will be discharged in the [...]
What the FDCPA is and to Whom It Applies
Are you being contacted by a debt collector? Whether you are behind on payments, or a creditor wrongly thinks you are, you have rights under the Fair Debt Collection Practices Act (FDCPA). Enforced by the Federal Trade Commission, the FDCPA prohibits third-party debt collectors from using particular kinds of collection practices, such as abusive, unfair, or deceptive collection conduct. The Texas Debt Collection Act is similar in many ways to the FDCPA and applies to anyone trying to collect a consumer debt.
Debt collectors may be contacting you about a credit card debt, a car loan, medical bill, mortgage, or any other debt you may have. The FDCPA covers all personal or household debts, but it does not apply to business debts.
Who Are Debt Collectors?
Under the FDCPA, a debt collector is someone, other than the original creditor, who regularly collects unpaid debts. A debt collector could be a lawyer, collection agency, or a company that buys debts and tries to collect them. The FDCPA does not apply to original creditors seeking to collect on their own accounts. But, as mentioned above, many of the protections provided by the FDCPA are also provided by the Texas Debt Collection Act, which does apply to original creditors.
Some examples of debt collectors include:
- Advantage Assets
- Arrow Financial Services, LLC
- Asta Funding Inc.
- B-Line, LLC
- Bluebonnet Financial Assets
- Bureaus Investment Group
- CACH, LLC
- Dan Young
- Ecast Settlement Corp.
- Encore Capital Group
- Equable Ascent Financial
- Global Acceptance Credit Company
- Midland Funding
- NCO Portfolio Management Inc.
- Portfolio Recovery Associates, LLC
- Sherman Financial Group, LLC
- Unifund CCR Partners
A few examples of original creditors are:
- Ally Financial
- American Express
- Bank of America
- Capital One Bank
- Citibank
- Discover Bank
- FIA Card Services
- Ford Motor Credit
- HSBC
- JPMorgan Chase
- Target National Bank
Enforcement of the FDCPA
FDCPA violations are fairly widespread and largely go unreported. If you know your rights, you can fight back when debt collectors violate them. You can sue violators in state or federal court, individually or as part of a class action. You may also file a complaint with the Federal Trade Commission (FTC).
As of February, the FTC brought or resolved seven large debt collection cases within the last year. Four of those involved companies who allegedly used deceptive or abusive collection practices to bully consumers into paying their debts. Three of the seven cases involved collectors who allegedly tried to collect on non-existent debts or debts consumers did not owe to them.
The companies involved in the four cases mentioned include Forensic Case Management Services, Inc./Rumson, Bolling & Associates; Luebke Baker; Goldman Schwartz; and AMG Services, Inc. The alleged activities of these operations are deplorable but unfortunately not uncommon. Just some of the claims include:
- Threatening bodily harm
- Threatening desecration of deceased family members
- Threatening death to pets
- Falsely threatening to garnish wages
- Falsely threatening imprisonment
- Falsely claiming affiliation with law firms
- Using insults
- Charging unauthorized fees
- Masking collector agency identity
Some of these cases continue in litigation, but the FTC has won a $1.1 million dollar judgment and an order banning one collection agency from future debt collection activity.
The other three cases involved American Credit Crunchers, Pro Credit Group, LLC, and Broadway Global Master. In these cases, the defendants allegedly defrauded consumers and collected money that was either not owed or not applied to actual debts. Litigation continues in two of the cases, and the FTC has won a $170,000 judgment in the other.
Additionally, the FTC closed an investigation of RJM Acquisitions, which was collecting on legally unenforceable debt. RJM continues to attempt to collect on the debt, but now the collector discloses to consumers that they cannot be sued on the debt.
See Related Blog Posts:
Be Aware of Common Debt Collection Scams
FTC Releases Report on Debt Buyer Practices
The post The Basics – Fair Debt Collection Practices Act: Who and What appeared first on AKB.
Bringing you the most up-to-date news, tips and blogs throughout the web. Here’s your Bankruptcy Update for March 26, 2013 Dionne Warwick files for bankruptcy: Singer owes over $10 million, has just $25K in assets ‘Upscale’ Revel N.J. casino files bankruptcy Otelco files for bankruptcy after losing key contract
In short, if you file for bankruptcy before getting married your future spouse will not be affected. This is a common concern for a debtor to bring up during their consultation with an attorney. For some reason, many people are under the impression that a couple shares a credit score or there is a “joint [...]
As many of our clients filing personal bankruptcy get older, we often see clients who have taken reverse mortgages on their homes. Either because they needed income to live on or to deal with a spouse’s end-of-life care, I meet with a growing number of bankruptcy clients who have turned to these types of loans in order to get by. And no wonder, the banks have been pushing reverse mortgages aggressively for several years now. Daytime television is now inundated with commercials for reverse mortgages. I’m not going to get into the financial wisdom of these loans in this post, but I do want to focus on how reverse mortgages are treated in bankruptcy, particularly in Chapter 7 bankruptcy.
Reverse mortgages generally fall into different categories. There are those where the homeowner takes a lump sum from her home equity, and those where she might receive monthly payments that accrue as a loan against her home equity. Typically, the reverse mortgage loan becomes due and payable within a specified time after the homeowner’s death. At which point, either the decedent’s estate representative must either sell the property in order to pay off the reverse mortgage loan, or if the estate is unable to sell the property after a given period of time, then the lender will generally have a right to foreclose on the property in order to recover the balance of the loan.
So, what if the homeowner needs to file bankruptcy? In bankruptcy a reverse mortgage loan is treated no differently than any other mortgage or home equity loan, to the extent that the bankruptcy attorney together with his client must provide a current fair market value for the property that is subject to the reverse mortgage and determine the current total payoff balance of the reverse mortgage loan. After determining these values, the bankruptcy attorney must analyze how much equity the bankruptcy client has in the property. The amount of the bankruptcy debtor’s equity is critically important to exemption planning for a Chapter 7 bankruptcy, and is likewise central to a liquidation analysis in Chapter 13 bankruptcy.
Say we have an elderly widow who needs to file bankruptcy in San Jose, California, because she has incurred some large unsecured debts, including credit cards and substantial medical debts uncovered by insurance. She now lives only on social security income. Several years before she and her late husband took out a reverse mortgage on their home in San Jose, which at the time had been paid off and had a value of $450,000. They took a lump sum from their equity of $150,000 to pay for in home nursing care for him and to pay off other debts. Since then it has depreciated significantly and has a current value of $375,000. The reverse mortgage payoff balance has risen steadily over the years as interest has accrued on the loan, and now stands at $210,000. Hence, the bankruptcy debtor now has only $165,000 of equity in the home.
Assuming that our bankruptcy debtor in the example above is over the age of 65, then for purposes of her Chapter 7 bankruptcy in California, the homestead exemption will protect up to $175,000 of equity in her home. She would, therefore, be able to entirely protect her home from the Chapter 7 trustee.
Before filing such a case, however, it is imperative that the bankruptcy attorney communicate with the lender and review the original reverse mortgage contract language to ensure that the mere filing of a bankruptcy case by the borrower will not be treated as an even of default. In my experience, most reverse mortgage lenders will not call their note due solely because of a bankruptcy filing, but again, it is imperative that debtor’s counsel confirm this with the lender prior to filing. Just another reason why if you are contemplating filing bankruptcy in the Bay Area, that you contact one of our experienced San Jose bankruptcy attorneys.
Whether an illegal or undocumented immigrant in the United States may file for Bankruptcy apparently hinges on whether or not the immigrant has an Individual Taxpayer Identification Number (ITIN) according to attorney Drake Shunneson.
Shunneson provides that a Social Security number or ITIN must be present inorder to proceed with the bankruptcy. Obviously, many immigrants are unable to obtain a SSN because of their illegal status. Thus, obtaining an ITIN is typically the only other way to obtain a discharge of debt through bankruptcy.
Roughly more than half of the 11 million undocumented immigrants in this country have ITIN’s. Many of these ITIN holders file their income taxes each year despite their potential illegal status. The road to citizenship often rests on proof of paying taxes and an ITIN would provide the only identification number to do so. Thus, it may be presumed that only some undocumented immigrants in this country may file for bankruptcy depending on whether they file taxes or at least have an ITIN.
Shunneson also cautions against filing for bankruptcy even if the immigrant has an ITIN if there is a pending lawsuit against them. Pending lawsuits, depending on the nature of the suit, may prevent continuation of the bankruptcy process and may open up potential issues with Immigration authorities. It is advised to speak to an attorney if this is the case.
Regardless, there are many reasons why an undocumented immigrant should obtain an ITIN. For tax purposes, you may receive your federal withholding back. You may be required to show proof of paying taxes for purposes of the Naturalization process in a N-400 Citizenship application, and, if in dire financial straights, an ITIN may qualify you, even if illegal, to receive a discharge of your debts.
Obtaining an ITIN number is free and easy. You should caution against paying someone to receive an ITIN because the process is so simple and free.
You may find out more about how to receive an ITIN on the IRS website here:
Whether an illegal or undocumented immigrant in the United States may file for Bankruptcy apparently hinges on whether or not the immigrant has an Individual Taxpayer Identification Number (ITIN) according to attorney Drake Shunneson.
Shunneson provides that a Social Security number or ITIN must be present inorder to proceed with the bankruptcy. Obviously, many immigrants are unable to obtain a SSN because of their illegal status. Thus, obtaining an ITIN is typically the only other way to obtain a discharge of debt through bankruptcy.
Roughly more than half of the 11 million undocumented immigrants in this country have ITIN’s. Many of these ITIN holders file their income taxes each year despite their potential illegal status. The road to citizenship often rests on proof of paying taxes and an ITIN would provide the only identification number to do so. Thus, it may be presumed that only some undocumented immigrants in this country may file for bankruptcy depending on whether they file taxes or at least have an ITIN.
Shunneson also cautions against filing for bankruptcy even if the immigrant has an ITIN if there is a pending lawsuit against them. Pending lawsuits, depending on the nature of the suit, may prevent continuation of the bankruptcy process and may open up potential issues with Immigration authorities. It is advised to speak to an attorney if this is the case.
Regardless, there are many reasons why an undocumented immigrant should obtain an ITIN. For tax purposes, you may receive your federal withholding back. You may be required to show proof of paying taxes for purposes of the Naturalization process in a N-400 Citizenship application, and, if in dire financial straights, an ITIN may qualify you, even if illegal, to receive a discharge of your debts.
Obtaining an ITIN number is free and easy. You should caution against paying someone to receive an ITIN because the process is so simple and free.
You may find out more about how to receive an ITIN on the IRS website here:
When a debtor obtains property after the filing which is on account of both prepetition and postpetition services, the property is divided between the debtor and the estate in the same ratio as the services. In re Jess, 215 B.R. 618 (9th Cir.BAP 1997). So what does that mean? Well if your stock options are dependent on your personal services, you had better pay attention. That’s because courts in California will generally divide a pro rated share of your stock options between pre-filing and post-filing interests.
Say you have 20,000 shares of Acme Stock which was awarded on January 1, 2010. It vests on January 1, 2014. If you filed BK on January 1, 2012, about 50% of the debtor’s interests in the stocks vested prior to filing and a remaining 50% interest will vest after the BK filing. What that means is whatever vested prior to filing is potentially property of the BK estate, while whatever is postpetition is property of the Debtor. Yes, even though the stocks aren’t fully vested until 2014, the bankruptcy estate may get half of the value of those stocks.
What if the stocks aren’t dependent on one’s services? What is there is a strike price? What if the stocks are assignable? Well those are all things a debtor better figure out PRIOR to filing the BK.
Be sure to consult a thoughtful bankruptcy attorney when filing a bankruptcy case where you hold assets. Make sure to do your due diligence and run through all the contingent and noncontingent assets that may be relevant to your case.
By Mary Ann Pekara
It's tax time and you're getting ready to file your taxes. Have you had any debt forgiven this year? How much debt? Have you thought about how that affects your taxes?
Many people do not realize that forgiven debt is sometimes taxable income. Now, there are exceptions to every rule but it is important to look into if you had debt forgiven last year and what that could mean.
Certain types of forgiven debt are exempt from Federal taxes. Those include but may not be limited to:
- Debts discharged in bankruptcy
- Debts canceled when you are insolvent
- Mortgage debt forgiven in foreclosure
- Some student loan debt
Other forgiven debt, specifically if you saved over $600, may be considered taxable income according to the IRS. This must be claimed on your tax return, otherwise the IRS has grounds to come after you.
Credit and debt collectors are required to file 1099-C forms with the IRS for forgiven debts of $600 or more. Some collectors will send a copy of the form to their customer but it is not required that they do so.
The 1099-C is a very complicated form and it is important to double-check the form before submission to verify that all the information is correct.
The IRS is expected to get $6.5 million in debt forgiveness this year based on the 1099-C form.
If you're unsure of anything, contact a local professional as soon as possible.
Medical bills continue to be one of the main reasons why consumers seek bankruptcy protection. Anyone who has dealt with a long term illness, hospitalization, being underinsured or no medical coverage is aware of rising healthcare costs. Even a brief stay at the hospital has been known to create a financial burden on monthly living [...]
Updated daily, this blog will keep you informed on the latest bankruptcy news! 
Learn more about how Bankruptcy works and what you need to know.