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Earlier this week, the 11th Circuit Court of Appeals issued a ruling in the bankruptcy fraud case of United States v. Turner. Here are the relevant facts:Mr. Turner owned a parcel of rental property that was destroyed by fire. His insurance carrier issued a check to him for $40,000. Two days after receiving this check, Mr. Turner filed Chapter 13. Three days after filing, Turner deposited the check, used $11,500 to pay off the mortgage on the destroyed property and kept the rest of the money.Several weeks after these financial transactions, Mr. Turner filed his bankruptcy schedules. He did not list receipt of the $40,000 check. He also claimed that the balance on the rental property mortgage was $50,000, rather than $11,500.The bankruptcy trustee discovered these inaccuracies and moved to convert Mr. Turner’s case to Chapter 7, which the court approved. Three years later the United States attorney filed an action against Turner for bankruptcy fraud for making false statements and he was convicted. The 11th Circuit agreed to consider Turner’s appeal.The appellate court denied Mr. Turner’s appeal and he is now serving a 27 month sentence in federal prison.This case is interesting on several levels:
- the United States attorney will pursue bankruptcy fraud cases arising out of Chapter 13
- the amount of the fraud here was, relatively speaking, quite small at only $40,000, yet it resulted in a sentence of over two years
- Turner was indicted for fraud more than two years after he originally filed
It would be interesting to know what Mr. Turner was thinking when he engaged in this fraud. He scheduled the mortgage lender for the destroyed property, which means that he should have realized that they would receive notice of his filing and that they would file a proof of claim. Further, Mr. Turner paid off the mortgage lender for the destroyed property – he did not try to keep all of the cash he received.Perhaps Mr. Turner thought that the amount at issue – $40,000 – was so small given the millions of dollars passing through the bankruptcy system that no one would even notice or care, and that if he was caught he could simply offer to turn over the money. If this is what he was thinking, his conclusions were mistaken.Here is the message I am getting from the Turner case:
- when the Bankruptcy Code requires various disclosures, you must disclose. These are not optional. This is why, by the way, I insist that every bankruptcy client in my office must complete a written intake questionnaire and that any significant updates or corrections to the information disclosed must be in writing.
- the United States trustee takes bankruptcy fraud seriously – even when relatively small dollars are involved in a consumer Chapter 13 case
- penalties are harsh in bankruptcy fraud cases. Not only did Mr. Turner lose his freedom for more than two years, I suspect that he spent many thousands of dollars trying to defend himself as well
Thanks to my colleague Scott Riddle, publisher of the excellent Georgia Bankruptcy blog, for highlighting the Turner case on his Twitter feed.The post Chapter 13 Bankruptcy Fraud Case Reaches 11th Circuit Court of Appeals: Why You Should Care appeared first on theBKBlog.
Creditors Should Not Call Creditors should not be calling you after your bankruptcy case is filed. In some cases, creditors just have not received the required notice under the Bankruptcy Code. In some cases, notice has gone to the proper address, however, there is a collection firm involved now who did not have knowledge of+ Read MoreThe post Chicago Bankruptcy Attorney David Siegel Advises That During A Bankruptcy Case, Creditors Should Not Be Calling appeared first on David M. Siegel.
Here at Shenwick & Associates, our practice is limited to bankruptcy and real estate. So the intersection of the two, distressed real estate, is our specialty. Many homeowners are suffering from the triple threat of stagnant wages (or unemployment), depreciating home prices and burdensome monthly mortgage payments. Some homeowners have been fortunate enough to have their lenders restructure their mortgages. And others (who are not so fortunate) have had their homes foreclosed on, and have had some or all of their mortgage debt forgiven.
But, as with most good things in life, there's a catch. Under § 108 of the Internal Revenue Code, debt relief is considered "relief of indebtedness income" and subject to taxation.
In 2007, The Mortgage Forgiveness Debt Relief Act of 2007 (the "Act") was enacted, which generally allows taxpayers to exclude up to $2 million (jointly) or $1 million (if single or married and filing separately) of income from the discharge of debt on their principal residence. Both debt reduced through mortgage restructuring and mortgage debt forgiven in connection with a foreclosure qualify for the relief.
The Act applied to debt forgiven in calendar years 2007 through 2012, and was due to expire on Dec. 31, 2012. As part of the negotiations to avoid the "fiscal cliff," Congress extended its provisions to debt forgiven in 2013.
The Act doesn't apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home's value or the taxpayer's financial condition. The Act also doesn't apply to credit card debt or non–residential property. A Chapter 7 bankruptcy filing can discharge debt owed to taxing authorities due to relief of indebtedness income.
For strategies on dealing with distressed real estate or avoiding the potential pitfalls associated with relief of indebtedness income, please contact Jim Shenwick.
This is the case of Michael Greer who comes from Park Ridge, Illinois seeking advice concerning debt. Mr. Greer has never filed for bankruptcy before. He is not a homeowner and he is currently renting from an individual on a month-to-month basis. He has a 2004 Lincoln Navigator that’s worth approximately $12,000 and he owes+ Read MoreThe post Bankruptcy Attorney Recommends Chapter 7 For Illinois Man appeared first on David M. Siegel.
An Overview of Chapter 7 Bankruptcy in Florida This article is part of a series on the various state exemption laws that can change the outcome of a bankruptcy case, especially as it pertains to keeping your property. There are many misunderstandings about bankruptcy, one of which is the idea that because the Bankruptcy Code [...]The post Chapter 7 Bankruptcy in Florida: What You Need to Know appeared first on National Bankruptcy Forum.
Your credit report says loads about you. Are you a dependable bill payer? Does the amount you have outstanding in bills mean you might not be a good credit risk? Have you been sued? Useful information for creditors seeking to potentially extend credit to you. So, don’t you want the information on your credit report to be accurate? It may not be accurate, according to a recent government study.
The Federal Trade Commission’s report found one in four consumers had errors on their credit reports that might affect their credit scores. These errors could either prevent them from getting credit or raise the rates the consumers paid for credit.
These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.
It is very important that you check your credit report at least once a year to identify and correct inaccuracies. The Federal Trade Commission gives consumers the ability to get a free credit report once a year from all three credit reporting agencies. Don’t be misled by those “free credit report” sites. The FTC is the only place to get a true free credit report. The web address is annualcreditreport.com. Once you get a copy of your credit report, then you can start correcting errors. According to the FTC report, the credit score for one in 20 consumers increased 25 points following disputing incorrect credit entries. This can be the difference it takes to qualify for a home or car loan.
In FTC Study, Five Percent of Consumers Had Errors on Their Credit Reports That Could Result in Less Favorable Terms for Loans.
Your credit report says loads about you. Are you a dependable bill payer? Does the amount you have outstanding in bills mean you might not be a good credit risk? Have you been sued? Useful information for creditors seeking to potentially extend credit to you. So, don’t you want the information on your credit report to be accurate? It may not be accurate, according to a recent government study.
The Federal Trade Commission’s report found one in four consumers had errors on their credit reports that might affect their credit scores. These errors could either prevent them from getting credit or raise the rates the consumers paid for credit.
These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.
It is very important that you check your credit report at least once a year to identify and correct inaccuracies. The Federal Trade Commission gives consumers the ability to get a free credit report once a year from all three credit reporting agencies. Don’t be misled by those “free credit report” sites. The FTC is the only place to get a true free credit report. The web address is annualcreditreport.com. Once you get a copy of your credit report, then you can start correcting errors. According to the FTC report, the credit score for one in 20 consumers increased 25 points following disputing incorrect credit entries. This can be the difference it takes to qualify for a home or car loan.
In FTC Study, Five Percent of Consumers Had Errors on Their Credit Reports That Could Result in Less Favorable Terms for Loans.
A Creditor’s Right to Wage Garnishment in Florida Hinges on Whether the Debtor Supports a Family and How Much They Earn Yes, Florida law does allow creditors to garnish your wages. However, a creditors right to garnishment, and the amount they’re entitled to garnish, hinges on whether you qualify as a “head of family” under [...]The post Can Creditors Garnish My Wages in Florida? appeared first on National Bankruptcy Forum.
When you are struggling with your bills and in need of a bankruptcy attorney, where do you turn first? For most people, they will search the internet to gather information. There is a wealth of information available regarding the different Chapters under the bankruptcy code as well as a plethora of attorneys ready, willing and+ Read MoreThe post Choosing The Right Bankruptcy Attorney In Illinois appeared first on David M. Siegel.
Bank of America wouldn’t fix Ed and Ann’s credit reports after bankruptcy.
Our disputes were ignored, so we sued. The judgment was ignored, so we’re garnishing.
Here’s the whole story.
Two years ago, in February 2011, Ed and Ann checked their after-bankruptcy credit reports. They were surprised to see, at two of the three credit bureaus, their paid-in-full Bank of America accounts were showing “discharged in bankruptcy.”
That was making it harder for Ed and Ann to get back to good credit. Over the next year, in March, and April, and August, Ed and Ann wrote to the credit bureaus to get the Bank of America accounts fixed.
No luck.
In January 2012, we sued.
We sued the two credit bureaus, Trans Union and Experian, and also the bank. The credit bureaus then fixed the credit reports, but the bank just ignored us.
A Prince William sheriff will drop in on the local Bank of America to collect $5668, because the bank wouldn't fix Ed and Ann's credit report after bankruptcy.
Nobody was there for the bank on the May 2012 court date, so the judge gave both Ed and Ann $2000 for willful damages and $834 in legal fees. We mailed the judgment to the bank, we mailed a letter to the bank president, and we called the local bankruptcy lawyer who usually represents Bank of America around here.
None of that brought any response.
So, for 2013, we’re trying a garnishment.
There’s a Bank of America branch about six blocks from my office in Manassas. In the next couple weeks, a Prince William County sheriff will go there, and ask them for $5668, for Ed and Ann.
Will we get a certified check? A stack of hundred dollar bills? We’ve never done this before, so we’ll just have to see.
We tell all our clients to check their after-bankruptcy credit reports, and we work with them to do dispute letters, when the reports aren’t right. When letters don’t work, we sue.
We’ve sued hundred of times; this is the first time we’ve had to garnish a bank.
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