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A 2017 ruling by the Georgia Supreme Court most likely represents a significant weakening to a consumer protection provision contained in Georgia’s home foreclosure law.Georgia law allows what is known as a non-judicial foreclosure. This means that if you fall behind on your mortgage payments, your mortgage company does not have to go to court to seize possession of your home.Instead, buried deep in the fine print of your mortgage paperwork is language that allows your lender to foreclose on your property simply by giving you written notice and thereafter advertising a foreclosure sale in the legal newspaper of the county where the property is located.In Georgia, a lender can seize your house in less than 40 days if you are in default. Compare this to a home foreclosure process that typically lasts a year in a judicial foreclosure state like Florida.Despite this extremely short foreclosure process, Georgia law does contain one small bit of consumer protection in the form of the deficiency confirmation process. If your lender foreclosures, they can take your home quickly but you would most likely not be liable for any deficiency claim if the foreclosure sale nets less than the balance due on the loan.This is because Georgia law says that before a lender can sue on a deficiency it has to first go to a Superior Court judge within 30 days of the foreclosure and convince the judge that the foreclosure sale was “reasonable.” Since most foreclosure sales result in the lender “buying” the property back for the balance due on the loan, very few lenders even tried to argue that the foreclosure sale price represented the fair market value of the home. Therefore we almost never saw lenders suing (former) homeowners for a deficiency balance after foreclosure.Enter the Supreme Court of Georgia with the case of York vs. Res-GA, LJY, LLC. In this case, Res-GA, LJY was the lender, having purchased York’s mortgage from The Community Bank. The Community Bank had included in its loan documents a waiver provision whereby York agreed that in the event of foreclosure, the lender (Community Bank or whoever owned the note) did not have to go through the confirmation process before suing the borrower (York) for any deficiency.By allowing this waiver the Supreme Court of Georgia is basically giving a green light to mortgage lenders in the state to include waiver provisions in all mortgage documents from this point forward.The problem with this, of course, is twofold. First, when a borrower is at a closing, signing dozens of pages, he is most likely not thinking about potential foreclosure problems or that he has just given his lender the right to sue for tens of thousands of dollars and bypassing any court protection. Further, even if the borrower knows about this waiver issue, he is not in a very strong negotiating position. If the borrower refuses to sign the waiver the lender can refuse to loan the money and the borrower won’t get his new house.Given Georgia’s incredibly fast foreclosure process I find it absurd that the Georgia Supreme Court would hand the banking industry the power to extract even more money from borrowers, but that is exactly what has happened.Until this point I have generally counseled recently foreclosed homeowners to hold off on filing bankruptcy following a foreclosure because further financial claims arising from the foreclosure sale were so unlikely. Now, I suspect that aggressive lenders will drive more struggling borrowers into bankruptcy. We will see if that happens.The post Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision appeared first on theBKBlog.
A 2017 ruling by the Georgia Supreme Court most likely represents a significant weakening to a consumer protection provision contained in Georgia’s home foreclosure law.Georgia law allows what is known as a non-judicial foreclosure. This means that if you fall behind on your mortgage payments, your mortgage company does not have to go to court to seize possession of your home.Instead, buried deep in the fine print of your mortgage paperwork is language that allows your lender to foreclose on your property simply by giving you written notice and thereafter advertising a foreclosure sale in the legal newspaper of the county where the property is located.In Georgia, a lender can seize your house in less than 40 days if you are in default. Compare this to a home foreclosure process that typically lasts a year in a judicial foreclosure state like Florida.Despite this extremely short foreclosure process, Georgia law does contain one small bit of consumer protection in the form of the deficiency confirmation process. If your lender foreclosures, they can take your home quickly but you would most likely not be liable for any deficiency claim if the foreclosure sale nets less than the balance due on the loan.This is because Georgia law says that before a lender can sue on a deficiency it has to first go to a Superior Court judge within 30 days of the foreclosure and convince the judge that the foreclosure sale was “reasonable.” Since most foreclosure sales result in the lender “buying” the property back for the balance due on the loan, very few lenders even tried to argue that the foreclosure sale price represented the fair market value of the home. Therefore we almost never saw lenders suing (former) homeowners for a deficiency balance after foreclosure.Enter the Supreme Court of Georgia with the case of York vs. Res-GA, LJY, LLC. In this case, Res-GA, LJY was the lender, having purchased York’s mortgage from The Community Bank. The Community Bank had included in its loan documents a waiver provision whereby York agreed that in the event of foreclosure, the lender (Community Bank or whoever owned the note) did not have to go through the confirmation process before suing the borrower (York) for any deficiency.By allowing this waiver the Supreme Court of Georgia is basically giving a green light to mortgage lenders in the state to include waiver provisions in all mortgage documents from this point forward.The problem with this, of course, is twofold. First, when a borrower is at a closing, signing dozens of pages, he is most likely not thinking about potential foreclosure problems or that he has just given his lender the right to sue for tens of thousands of dollars and bypassing any court protection. Further, even if the borrower knows about this waiver issue, he is not in a very strong negotiating position. If the borrower refuses to sign the waiver the lender can refuse to loan the money and the borrower won’t get his new house.Given Georgia’s incredibly fast foreclosure process I find it absurd that the Georgia Supreme Court would hand the banking industry the power to extract even more money from borrowers, but that is exactly what has happened.Until this point I have generally counseled recently foreclosed homeowners to hold off on filing bankruptcy following a foreclosure because further financial claims arising from the foreclosure sale were so unlikely. Now, I suspect that aggressive lenders will drive more struggling borrowers into bankruptcy. We will see if that happens.The post Georgia Supreme Court Rules in Favor of Mortgage Lenders Over Homeowners in Important Decision appeared first on theBKBlog.
California is home to some of the most respected colleges and universities in the country. In the Sacramento area, students have opportunities to enroll at institutions like California State University (CSU), the UC Davis School of Medicine, and the McGeorge School of Law at the University of the Pacific. Unfortunately, while there’s no arguing that students can receive a world-class education in California, there’s also no arguing that college can be expensive – sometimes, expensive enough to drive young people and their families into debt. However, under the right set of circumstances, Chapter 7 bankruptcy can relieve student debt by eliminating college loans. Continue reading to learn more from our Sacramento bankruptcy lawyers about eliminating student loans with Chapter 7 bankruptcy in California.
Student Debt Statistics: California vs. National Average
We usually hear about student debt in news articles and political debates. But for millions of families, the student debt crisis isn’t merely an argument unfolding on the television set – it’s a real, immediate financial burden that creates constant pressure simply to stay afloat. Student loans create an extraordinarily heavy debt burden for millions of young people and their loved ones, sometimes forcing students to drop out, change schools, or take on second jobs.
The problem isn’t getting better, either. On the contrary, our nation’s student debt burden – already in excess of $1.3 trillion – is growing heavier every day. According to a Forbes article published in February 2017, “Student loan debt is now the second highest consumer debt category – behind only mortgage debt – and higher than both credit cards and auto loans.”
Students in California may have it especially tough. While the average student loan debt per capita in California is “only” $4,160, which is $760 less than the national average of $4,920, the Institute for College Access and Success still ranks California among the nation’s top 20 states with the highest student loan debt, with average student loan debt of $22,191.
It’s obvious that student debt poses a major financial problem for tens of millions of people, including many who attended college here in California. The question is, what can graduates and their families actually do about it? It’s one thing to call your representative – but what if you need financial relief now?
Depending on your situation, Chapter 7 bankruptcy could provide the debt relief you need. Keep reading to find out how.
Eliminating Student Loans in Chapter 7 Bankruptcy
Bankruptcy is a legal process that allows single people, married couples, and business owners to reduce, pay off, or eliminate their debts according to their financial ability. Most people who file bankruptcy in California use a type of bankruptcy known as “Chapter 7,” which is also called “straight” or “ordinary” bankruptcy. According to the United States Bankruptcy Court for the Eastern District of California, Chapter 7 cases accounted for more than 6,300 of the 8,500 bankruptcy filings in the court’s Sacramento courthouse last year. In other words, about 75% of the people who filed bankruptcy in Sacramento during 2016 chose Chapter 7 bankruptcy.
Chapter 7 allows filers to wipe away many of their debts. Debts that can be erased in Chapter 7 bankruptcy are called “dischargeable debts.” Medical bills and credit card bills are key examples of dischargeable debts in Chapter 7.
Student loans are usually non-dischargeable in Chapter 7 bankruptcy, which means that in most cases, they cannot be erased by bankruptcy. However, exceptions exist that may apply to your situation.
If you can show that the debt is causing you undue (excessive) financial hardship by meeting certain standards under the “Brunner test,” the court may agree to discharge the debt and eliminate your student loan liability. To pass the Brunner test and discharge student loans in Chapter 7 bankruptcy, you must prove that:
- Repaying your loans is preventing you from attaining a minimum standard of living for yourself and (where applicable) your dependents.
- Your current financial circumstances are unlikely to change.
- You have made sincere (“good faith”) efforts to pay back what you owe.
Don’t assume that you’re stuck with your debts if student loans are causing you stress and anxiety. Reach out to our Sacramento Chapter 7 bankruptcy lawyers today to start exploring your financial options with confidence and peace of mind.
Sacramento Chapter 7 Bankruptcy Attorneys Can Help
If you’re struggling to keep up with your monthly student loan payments, you certainly aren’t alone. More than 44 million borrowers currently owe repayments on student loans, and many require some form of assistance. If payment reductions, administrative forbearances, and other solutions haven’t helped to get your college debts under control, filing Chapter 7 bankruptcy may be an effective financial strategy.
To learn more about filing for Chapter 7 in a free and completely confidential consultation, call the Roseville Chapter 7 lawyers of The Bankruptcy Group today at (800) 920-5351. We handle business and personal bankruptcy cases in the Roseville, Folsom, and Sacramento areas.
The post Does Chapter 7 Cover Student Loans in California? appeared first on The Bankruptcy Group, P.C..
If you are filing for
bankruptcy, it is likely that you have been facing debts and financial difficulties
in various areas of your life. This can include your property, and your
vehicle. Because many of us depend on our cars to get us to and from work,
and to handle the daily needs of life, it can be difficult to consider
whether giving yours up is a wise decision. Because bankruptcy is always
unique to the financial circumstances at hand, whether you should keep
yours will depend on the situation.
At Allmand Law Firm, PLLC, our Dallas bankruptcy lawyers work personally
with our clients to understand their current financial situations, including
their current debts, and their most appropriate options for securing the
financial fresh start they need. If you have a vehicle, we can help you
determine what steps you may need to take, and you can also educate yourself
about whether keeping your vehicle is the right decision during bankruptcy.
For example, consider the following:
- Is the car worth more than the car loan? We’ve heard of upside down mortgages; but many people enter bankruptcy
with car loans that are upside down. Paying for a vehicle valued at $10,000
with a $15,000 loan is just not smart when you’re trying to get a
fresh start in bankruptcy. If your car loan is inflated and exceeds the
value of your vehicle you may want to consider surrendering the car in
bankruptcy and buying a cheaper alternative. - Does the lender insist that you sign a reaffirmation agreement in bankruptcy
if you want to keep you car? Signing a reaffirmation agreement will make you legally liable for the
car loan even after your bankruptcy discharges other debts. This is risky
because if you are unable to pay the reaffirmed loan after bankruptcy,
you will be liable for any balance after the car is repossessed and auctioned off. - Do you have more than two years of car payments left on your car loan? The longer the repayment period on your car loan the higher the risk that
you may default after bankruptcy. Reaffirming a car loan after bankruptcy
that has a 2 year plus repayment period could put you at financial risk.
Whether you wish to protect your vehicle or not, our attorneys at Allmand
Law Firm, PLLC are available to discuss your rights and options as you
prepare for and navigate the bankruptcy process. If you have questions
regarding your property and assets during bankruptcy, we encourage you
to speak personally with a member of our legal team to obtain information
relevant to you and your case. We offer FREE financial empowerment sessions
to residents throughout the Dallas – Fort Worth area.
Contact us today to request your FREE consultation.
The post Should I Keep My Car After Bankruptcy? appeared first on Allmand Law.
There are dozens of intersections in life that call for an attorney’s insight. Wynn at Law LLC gladly steps in to advise clients who have reached those intersections, like bankruptcy or buying a home. One of the most emotionally taxing of the intersections is how to handle the decisions at the end of a life, whether it’s sudden or the result of a long-term illness. Planning ahead, before you reach this inevitable intersection, can make the situation more bearable, or at least manageable.
In one of our earlier articles, we talked about the Last Will and Testament — a crucial part of estate planning after someone passes. A Living Will is a legal document that sets out a person’s healthcare wishes in the event they cannot articulate the wishes. A Healthcare Power of Attorney (POA) is a separate alternative. The Living Will has your instructions — what you will and will not permit. The POA designates an ‘agent’ to make the decisions. Usually, the agent is a spouse, but can be a close friend. No matter who you choose, you have to let that agent know your wishes clearly.
The POA is even more powerful when it goes beyond healthcare decisions to include financial decisions as well. This Durable POA ensures the person making the healthcare calls has the money to pay for the procedures. The signer gets to choose how limited in scope the POA is: For example, it can be limited to using bank accounts only and not things like selling the house.
Where Wynn at Law LLC adds value with such a POA is that the document and our Firm can be – if needed – the go-between if things get charged up among family members or family and caregivers. Things like resuscitation, painkillers, tube feeding, and organ donation can be powderkeg issues when they’re not backed up by a Living Will or a POA.
‘Why would you create a Durable POA over creating a Living Will?’ is a common question. The answer is simple: The POA agent can represent your thoughts on things for which you didn’t foresee in drafting a Living Will. You can’t plan for everything in writing in a Living Will, and the bills don’t stop just because a person is hospitalized. When you and your family come upon this intersection in life, these estate planning tools help keep the focus on the care you would have chosen and nobody has to guess.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Viktor Levi, used with permission.
The post The power of advanced directives appeared first on Wynn at Law, LLC.
There are dozens of intersections in life that call for an attorney’s insight. Wynn at Law LLC gladly steps in to advise clients who have reached those intersections, like bankruptcy or buying a home. One of the most emotionally taxing of the intersections is how to handle the decisions at the end of a life, whether it’s sudden or the result of a long-term illness. Planning ahead, before you reach this inevitable intersection, can make the situation more bearable, or at least manageable.
In one of our earlier articles, we talked about the Last Will and Testament — a crucial part of estate planning after someone passes. A Living Will is a legal document that sets out a person’s healthcare wishes in the event they cannot articulate the wishes. A Healthcare Power of Attorney (POA) is a separate alternative. The Living Will has your instructions — what you will and will not permit. The POA designates an ‘agent’ to make the decisions. Usually, the agent is a spouse, but can be a close friend. No matter who you choose, you have to let that agent know your wishes clearly.
The POA is even more powerful when it goes beyond healthcare decisions to include financial decisions as well. This Durable POA ensures the person making the healthcare calls has the money to pay for the procedures. The signer gets to choose how limited in scope the POA is: For example, it can be limited to using bank accounts only and not things like selling the house.
Where Wynn at Law LLC adds value with such a POA is that the document and our Firm can be – if needed – the go-between if things get charged up among family members or family and caregivers. Things like resuscitation, painkillers, tube feeding, and organ donation can be powderkeg issues when they’re not backed up by a Living Will or a POA.
‘Why would you create a Durable POA over creating a Living Will?’ is a common question. The answer is simple: The POA agent can represent your thoughts on things for which you didn’t foresee in drafting a Living Will. You can’t plan for everything in writing in a Living Will, and the bills don’t stop just because a person is hospitalized. When you and your family come upon this intersection in life, these estate planning tools help keep the focus on the care you would have chosen and nobody has to guess.
*The content and material in this original post is for informational purposes only and does not constitute legal advice.
Photo by Viktor Levi, used with permission.
The post The power of advanced directives appeared first on Wynn at Law, LLC.
When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan.Usually the most significant objections we see are the following:
- Funding – are you paying the trustee the amount you set out in your proposed plan?
- Terms – if creditor claims came in higher than expected, do we need to amend your plan to squeeze these claims into the maximum 60 month term of your plan?
- Good faith – does your plan allocate enough money each month to creditors?
In the majority of Chapter 13 cases, we will have to amend your plan prior to confirmation to satisfy the objections filed by the Chapter 13 trustee or by creditors. Usually this means that we will have to bump up your Chapter 13 plan payment.From our perspective as your attorney, the issue with increasing the plan payment has to do with the long term viability of your case. We know, for example, that during the 5 year term of your plan, you are likely going to need new tires for your car, repairs to your home, a medical emergency or an unexpected funeral to attend. Creditors and the trustee will push back on allocating any funds for an unknown future expense. This is where an experienced attorney will negotiate on your behalf.After your case is confirmed, your job primarily involves making payment to the trustee and direct payments, if applicable, to your mortgage company, vehicle leasing company or to any other creditor who is eligible to receive direct payments under the terms of your plan.If you fall behind on your trustee payments, the trustee will file a motion to dismiss your case. If you fall behind on a mortgage, lease or other direct creditor payment, that creditor will likely file a motion for relief from stay.Hearings will be scheduled for any motion to dismiss or motion for relief from stay, and we will have an opportunity to work out a payment plan to get you caught up. Obviously, however, if you didn’t have the money to make your regular trustee or creditor payments, you may struggle even more to catch up any arrears.If your financial situation takes a turn for the worse, or if you need to allocate your funds to cover an emergency, we also have the option of asking the judge for a 2 or 3 month suspension in your requirement to make trustee payments, and we can also file a proposed amendment to your plan to either surrender secured property that you cannot afford or to reduce the plan payment based on reduced income.In general, however, Chapter 13 assumes steady and consistent income and steady and consistent expenses. The more instability you have with income or expenses the likelihood of a plan failure and dismissal of your case.Chapter 13 cases do not always result in a completed plan and order of discharge of debts. The percentage of Chapter 13 cases that successfully complete is only about 33%. This means that two out of every three Chapter 13 plans end up being dismissed or converted to Chapter 7. Some people use Chapter 13 as a tool to buy time and preserve assets in the hope that a new job comes through, to to remain in a home as long as possible.I advise my clients to use the power of bankruptcy to walk away from secured property (i.e., a house, car, furniture, jewelry) that you have to stretch to afford.Whatever your goal, if you need to file either Chapter 7 or Chapter 13, Ginsberg Law can help. We have been representing Atlanta area debtors for almost 30 years and we are standing by to serve you.The post What Happens After Your Chapter 13 Plan is Confirmed? appeared first on theBKBlog.
When your Chapter 13 plan is confirmed, it means that the bankruptcy judge assigned to your case has formally approved your plan of reorganization and all creditors are bound to the terms of your plan.In the Northern District of Georgia, a hearing on the confirmation of your plan will be scheduled automatically a the time you file your case. Usually, these hearings are scheduled for about 2 to 3 months from the date you file your case. Therefore, you can think of the first 2 or 3 months of your plan as a kind of probation period.While in this probationary period, you have all the benefits of bankruptcy – namely the automatic stay that protects you from creditor action – while the Chapter 13 trustee watches to see if you have the capacity to meet your plan obligations. This is also the time when creditor claims are filed and either creditors or the trustee can object to your proposed plan.Usually the most significant objections we see are the following:
- Funding – are you paying the trustee the amount you set out in your proposed plan?
- Terms – if creditor claims came in higher than expected, do we need to amend your plan to squeeze these claims into the maximum 60 month term of your plan?
- Good faith – does your plan allocate enough money each month to creditors?
In the majority of Chapter 13 cases, we will have to amend your plan prior to confirmation to satisfy the objections filed by the Chapter 13 trustee or by creditors. Usually this means that we will have to bump up your Chapter 13 plan payment.From our perspective as your attorney, the issue with increasing the plan payment has to do with the long term viability of your case. We know, for example, that during the 5 year term of your plan, you are likely going to need new tires for your car, repairs to your home, a medical emergency or an unexpected funeral to attend. Creditors and the trustee will push back on allocating any funds for an unknown future expense. This is where an experienced attorney will negotiate on your behalf.After your case is confirmed, your job primarily involves making payment to the trustee and direct payments, if applicable, to your mortgage company, vehicle leasing company or to any other creditor who is eligible to receive direct payments under the terms of your plan.If you fall behind on your trustee payments, the trustee will file a motion to dismiss your case. If you fall behind on a mortgage, lease or other direct creditor payment, that creditor will likely file a motion for relief from stay.Hearings will be scheduled for any motion to dismiss or motion for relief from stay, and we will have an opportunity to work out a payment plan to get you caught up. Obviously, however, if you didn’t have the money to make your regular trustee or creditor payments, you may struggle even more to catch up any arrears.If your financial situation takes a turn for the worse, or if you need to allocate your funds to cover an emergency, we also have the option of asking the judge for a 2 or 3 month suspension in your requirement to make trustee payments, and we can also file a proposed amendment to your plan to either surrender secured property that you cannot afford or to reduce the plan payment based on reduced income.In general, however, Chapter 13 assumes steady and consistent income and steady and consistent expenses. The more instability you have with income or expenses the likelihood of a plan failure and dismissal of your case.Chapter 13 cases do not always result in a completed plan and order of discharge of debts. The percentage of Chapter 13 cases that successfully complete is only about 33%. This means that two out of every three Chapter 13 plans end up being dismissed or converted to Chapter 7. Some people use Chapter 13 as a tool to buy time and preserve assets in the hope that a new job comes through, to to remain in a home as long as possible.I advise my clients to use the power of bankruptcy to walk away from secured property (i.e., a house, car, furniture, jewelry) that you have to stretch to afford.Whatever your goal, if you need to file either Chapter 7 or Chapter 13, Ginsberg Law can help. We have been representing Atlanta area debtors for almost 30 years and we are standing by to serve you.The post What Happens After Your Chapter 13 Plan is Confirmed? appeared first on theBKBlog.
A typical story of a homeowner and the con artist scum who prey on desperate homeowners:
“I tried to keep my home despite the fact they started foreclosure proceedings. I self represented myself and filed initial bankruptcy chapter 13 forms which stopped the first trustee sale/ auction date. I got stuck on the second set of forms and missed deadline. I accepted the fact I would lose our home. A month later I got a note on front door from someone saying they wanted to buy house & could stop trustee sale/auction scheduled the next day. I thought Trustee sale was actually planned next month so I was caught by surprise.
I called the # on the note they told me I could get money and sell house to them and they could stop sale all I needed to do was sign some papers. So I met them early the next morning to review & sign which ended up being bankruptcy forms. I told them what had happened with dismissed case but they said not to worry.
Apparently they went down to bankruptcy court filed forms on my behalf to get the case # to stop trustee sale.
This is where it gets confusing they said (& mortgage lender confirmed) someone purchased it at sale. But they told me they were able to get it sell rescinded. (Mortgage lender couldn’t confirm this with me) now they want me to meet them with mobile notary to sign papers for them to buy house and offering $5000 cash to me. I owe a lot less than what similar homes have sold for in my neighborhood (about 50k-60k less).
Based on what I’ve told you does this sound normal? How could they rescind trustee sale? And what should I be cautious about signing moving forward? Any insight is much appreciated.
I’m a single widowed mother and really have no friends or family to be able to ask their opinion.“
NOTES FROM DIANE: I looked at the bankruptcy documents filed with the court. The con artist who talked this young woman into filing bankruptcy failed to follow any of the bankruptcy requirements:
- they did not provide proof of identity,
- they did not file the required form which discloses their name, contact information and the document preparer id number issued by the Arizona Supreme Court.
- They did not file the required list of creditors
- they did not to file the other 50+ pages of bankruptcy information.
These cons are now asking the young woman to come to their office and sign paperwork which would sell them her home. Supposedly they will give her some money to move out – can you say “bounced check”.
I explained that she was in bankruptcy and, no matter what the con artists said, she could not sell her house without first obtaining a bankruptcy court order.
If this young woman does nothing at all this second bankruptcy will be dismissed, like her first chapter 13, and she will be left with two bankruptcies, plus a foreclosure on her credit. Plus, she will still have all the obligations that would have been discharged if she followed through with either of the bankruptcies (credit card, HOA judgment, etc.)
I suggested she contact the Self-Help Center at the Bankruptcy Court and make them aware of this scam. Perhaps she will, but most likely she will fade into the night and the con artists will go on to prey on other innocent and desperate homeowners.
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About the Author:
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys. 
I would be flattered if you connected with me on GOOGLE+
*Important Note from Diane: Nothing on this website should be construed as establishing a lawyer-client relationship between you, me, the author of any page or the website owner (me) who happens to be a lawyer. Everything on this web site is available for educational purposes only, is not intended to provide legal advice nor create an attorney client relationship between you, me, or the author of any article. You may pick up some information about bankruptcy, foreclosure or the practice of law written by myself or others. Any information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*
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The post Typical Foreclosure and bankruptcy con artist scam appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
By Allie Howell
In 2015, IRS agents strode into a Dallas wedding boutique, shut it down, and sold the entire inventory in just four hours to recoup alleged unpaid taxes. Now, the former owners are seeking financial compensation. They have filed a $2 million lawsuit, alleging multiple IRS rule violations and acts of impropriety.
Tony and Somnuek Thangsongcharoen opened their store, Mii's Bridal Salon, in Dallas, Texas, in 1983. The elderly Thai immigrants sunk their life savings into designer wedding dresses and were left penniless when the IRS sold them all, according to the couple's attorney.
"They've really been destitute," Jason Freeman, their attorney, tells Reason. "This really completely wiped them out financially."
In the lawsuit, the couple claims that the IRS conducted the entire seizure illegally, broke multiple statutes, and ultimately conspired to shut Mii's down.
According to the legal filing, the IRS believed Mii's owed $31,422.46 (which the couple disputes) and internally documented their 1,600 dress inventory as being worth $615,000.
The legal filing claims that the agent on the case originally recognized that the entire inventory would not need to be sold to satisfy the debt. However, Freeman obtained internal IRS communications through a Freedom of Information Act Request and found that IRS higher-ups decided that the agency should "shut down this failing business."
The lawsuit contends that the IRS violated its own rules in the process.
On the day of reckoning, March 4, 2015, 20 armed agents and members of the Dallas Police arrived at Mii's and told the Thangsongcharoens that they had two hours to write a $10,000 check or forfeit the entire inventory.
It was "totally improper to come in and demand a check like that within a matter of hours," Freeman says.
The couple didn't fill out a check, so four hours later, the IRS had sold the entire inventory and additional items through auction for $17,000. In conducting the sale so quickly and from within the store, the plaintiffs believe the IRS failed to comply with notice of sale and public sale requirements.
The auction took place under the IRS perishable goods sale procedures. Invoking it allows the IRS to seize and sell goods immediately instead of waiting 10 days and posting public notice of a sale, as is typically required. According to Freeman, such a quick sale "really circumvents statutorily prescribed safe guards" and is only meant to be used for perishable goods, not wedding dresses.
But the procedures also allow the IRS to sell goods immediately if it claims it would cost more to store them than they would gain from waiting to sell them. And that's how the IRS justified the immediate auction.
Freeman's internal documents show that the IRS internally devalued Mii's inventory in order to justify the perishable goods sale. They arrived at a valuation of $6,000—about $4 for a designer wedding dress. The IRS then claimed that storing the dresses would cost the agency more than they could sell them for.
Freeman also argues that the IRS overstated the costs that would be necessary to store the dresses, making the entire scheme "a bad faith engineered valuation designed to get what they wanted".
The IRS had decided that a perishable goods sale would be the "resolution where the government will benefit the most," as stated in internal communications.
Mii's was never able to reopen after the seizure. Tony Thangsongcharoen claims the stress of the ordeal caused him to have a heart attack and undergo quadruple bypass surgery.
The $1.8 million lawsuit was filed in the United States District Court for the Northern District of Texas Dallas Division earlier this year. It is meant to cover "damages resulting from the reckless, intentional, and/or negligent disregard of the Internal Revenue Code (I.R.C.) and governing Regulations by officers, agents and/or employees of the Internal Revenue Service ('IRS')".
Freeman says he hopes this lawsuit will help prevent future IRS misconduct.
"I don't think this is how citizens and taxpayers should be treated, ever … ," Freeman says. "While most government acts are performed with unquestionable integrity and good faith there are unfortunately exceptions to the rule. … When it happens they need to be held accountable. That's the only way to prevent it from becoming the rule."
So far, the government has moved to keep this case from getting a jury, requested the amount requested in the lawsuit to be trimmed, and commented that the Thangsongcharoens lack legal standing. According to the government, only Mii's, the bridal shop itself, should remain as a plaintiff.
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