Archive for: ‘June 2018’

Debt Collectors’ Dialing Strategies Come Under Scrutiny in State Supreme Court Ruling

June 28, 2018 Posted by kingcade

A recent Massachusetts Supreme Court ruling has given consumers more protection from creditors seeking payment on outstanding debts while leaving some questions unanswered for creditors. The court has ruled in Armata v. Target Corporation, that creditors are not exempt from rules that limit contact with consumers who owe them money.

A copy of the decision can be found here.

In this case, the consumer, Debra Armata, incurred debt through her Target-brand debit card, and this debt became more than 30 days past due. Target then began to collect on the debt and contacted Armata using a predictive dialer. These devices transfer the cardholders who do answer the phone to a live representative about 95 percent of the time with the other five percent of the time leading the person to a recorded message.  There are no voicemails left if the person does not answer the phone.

Under Massachusetts law, debt collection laws limit how many times a creditor can try to contact a consumer telephonically to collect on a debt, limiting these calls to two every seven days. However, according to the Massachusetts Attorney General, any unsuccessful attempts by the creditor do not constitute initiation of communication if the creditor was “truly unable” to reach the debtor or leave a message.

Target did not argue that it contacted the plaintiff more than two times in seven days. However, the company argued it did not initiate communications because it uses an auto dialer and does not leave voicemails if no one answers. The company stated it was exempt from these regulations for this reason as it was “truly unable” to reach Armata.

The Court disputed this argument stating that Target was trying to create too large of a loophole that would essentially allow any creditor to avoid the limits imposed by state law by using auto dialing technology. It would leave debtors unprotected from these continuous communications.

The attorney general’s term “truly unable” was better defined in the opinion. One example given by the court was if the person did not answer the phone and did not set up his or her voicemail. If that situation occurred or the person’s voicemail was full, or phone disconnected, then the company would qualify as being “truly unable” to reach the consumer.

The court also clarified that creditors who use automatic dialers or those who voluntarily decide to not leave voicemail messages, such as Target, are subject to the state’s regulations.

Target had also argued that the company was not able to leave voicemail messages because doing this would risk violating the Fair Debt Collection Practices Act (FDCPA). The court pointed out that the company did not fall within the restrictions of the FDCPA, since that law covers third-party debt collection agencies and not the actual creditors themselves, such as Target.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Private Debt Collectors a ‘Most Serious Problem’ at the IRS – Here’s what you need to Know

June 25, 2018 Posted by kingcade

The IRS reactivated a program previously instituted where private debt collectors are used to collect upon unpaid taxes owed by individuals with delinquent tax debts. This IRS Private Debt Collection (PDC) program, however, has been identified as a serious problem, according to the National Taxpayer Advocate.

According to a recent report, taxpayers who had debts assigned recently from the IRS to these private debt collection agencies ended up entering into repayment agreements they simply could not afford. Approximately 43 percent of them were earning income well below their allowable living expenses.

The PDC program also ends up costing the U.S. Treasury Department more than it is worth. In fact, experts criticize these programs as the private collection companies are allowed to keep 25 percent of what they end up collecting, which means the programs cost the Treasury more than the money that comes in after all is said and done.

This brings the question to many taxpayers of how they know whether they are likely to be contacted by a PDC. The taxpayers who are normally chosen are those who have IRS debts that are considered by the IRS as an inactive tax receivable. A tax debt is declared “inactive” after the IRS removes it from the active case list due to either lack of resources or the inability to find the individual. If more than a year has passed since the taxpayer had any communication with the IRS for the collection of the over-due tax, the debt will be considered “inactive,” as well.

When a PDC contacts a debtor, they will normally request full payment of the debt from the taxpayer first. If the taxpayer is not able to make full payment immediately, the private collection agency will then offer the person an installment agreement. However, many times, the installment agreements that are offered and later accepted by the taxpayer end up being more than that person can handle.

What Agencies Have IRS Authorization?

Currently, four PDC agencies have been selected by the IRS to operate the private debt collection program. Only these four firms should be contacting taxpayers, and they include:

  • CBE Group in Cedar Falls, Iowa;
  • Conserve in Fairport, New York;
  • Performant in Livermore, California; and
  • Pioneer in Horseheads, New York.

Phone Scams

Phone scams have been on the rise after individuals have reported being contacted via phone by a person who claims to be affiliated with the IRS and receiving demands for immediate payment. The IRS will not call taxpayers to collect on a debt. Rather, any demand for payment from the IRS will be by a letter on official IRS letterhead, called a Notice CP40. The letter will tell the taxpayer that the tax debt has been assigned to a PDC. The PDC will then confirm in a separate letter that the tax case has been assigned to them. In both of these letters, the taxpayer should see a 10-digit identifier number in place of the taxpayer’s Social Security number. The purpose of this number is to allow for two-party authentication between the taxpayer and the PDC.

Other Red Flags 

The IRS has also provided other red flags taxpayers should be aware of when receiving any questionable communication from someone claiming to be from the IRS. These red flags include the following: 

  • PDCs will not ask the taxpayer to pay them for any fees or owed taxes, and they will not accept payments from the taxpayer. Rather, these companies will inform the taxpayer that any payments for these tax debts should be paid by check directly to the IRS or paid online through the IRS website.
  • If a payment is made by check, it should be written payable to the “United States Treasury.” The IRS nor the PDC will take payment in the form of a gift card, prepaid debit card or iTunes gift cards. Scammers have been known to regularly request payment in these forms.
  • If a taxpayer is contacted by a tax collector, the taxpayer should call the IRS to confirm first that the debt has been assigned to a PDC before working with that company.
  • The PDC cannot enforce collection actions against the taxpayer, including issuing a levy or filing a notice of federal tax lien. Instead, they must follow all IRS rules per the Fair Debt Collection Practices Act (FDCPA).

Tax Debts That Cannot Be Assigned

Lastly, the IRS cannot legally assign a tax debt to a PDC in cases where the taxpayer is deceased; the person is under the age of 18-years-old, or to a person in the military who is in a designated combat zone. If someone is the victim of tax-related identity theft, is classified as an innocent spouse and is currently involved in an exam, installment agreement or offer in compromise, he or she is exempt.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Why Waiting to File Bankruptcy Can Hurt You

June 21, 2018 Posted by kingcade

The decision to file for bankruptcy is never an easy one to make. There are a number of myths surrounding filing for bankruptcy, which can oftentimes lead people to wait.  It often can seem like an admission of personal or financial failure, and for this reason, many filers will hold off on filing for bankruptcy for years, allowing their financial issues to only worsen. In fact, the longer people wait to file for bankruptcy, the more likely they will end up struggling, according to a law review study recently published. By the time the individual files for bankruptcy, their personal life and well-being, as well as their financial situation will be damaged to the point where getting a fresh start can be extremely difficult.

Waiting Can Be Draining

The period of time before an individual files for bankruptcy is often referred to as a “financial sweatbox.” The filers are already under an immense amount of stress, are facing debt collector phone calls and lawsuits and are going without basic necessities to avoid the inevitable: having to file for bankruptcy. This “sweat it out” period can end up lasting for years before the person finally comes to the decision that bankruptcy is best for him or her. A recent Notre Dame Law Review piece titled “Life in the Sweatbox” focused on this period of time, showing how waiting it out can be more damaging than making the leap to file for bankruptcy sooner rather than later.

The study used data from the Consumer Bankruptcy Project, which is a long-term academic research project that focus on people who end up filing for bankruptcy, reviewing the reasons why they file, as well as the consequences. The data includes information from approximately 3,200 bankruptcy cases between the years 2013 and 2016. “Life in the Sweatbox” focuses on 910 of the 3,200 filers.

Of those surveyed, over 66 percent of them were determined to be “long strugglers,” meaning they had been in the sweatbox for over two years. Approximately one-third of them waited five years or more to file for bankruptcy. They reviewed statistics from 2007 which showed that the number of people who were “long strugglers” doubled in numbers.

The problem is the longer the people waited, the worse their financial situation became. Those who waited had half the median assets compared to other debtors who did not wait or did not wait as long. In addition, the median debt-to-income ratio of these long strugglers was over 40 percent higher than other debtors. Approximately 50 percent of the long-term strugglers were facing debt collection lawsuits while only 35 percent of the others were facing them.

It was discussed that the stigma that exists around filing is what keeps people from making that decision to file for bankruptcy. However, bankruptcy laws provide the ability for debtors to get a fresh start. Prolonging the decision to file only allows for assets to be depleted making it even more difficult for the person to get a true fresh start.

When to File for Bankruptcy

If a person’s debts are more than 40 percent of his or her income, it is recommended that he or she reaches out for financial guidance. Also, if the person is using debt to pay for basic necessities or other debts, this is another red flag that perhaps that person is in over his or her head.

A bankruptcy attorney can review what debts are crippling the individual. If they are unsecured consumer debts, including credit cards, personal loans or medical bills, these can all be wiped out in bankruptcy.  Lastly, if the individual is forgoing basic necessities such as food or medical care, it is highly recommended that he or she discuss options with a consumer bankruptcy attorney.

Click here to read more on this story.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

 

 

 

New Bill Seeks to Enhance Foreclosure Protections

June 20, 2018 Posted by kingcade

The Mortgage Servicing Fairness Act of 2018, introduced by Rep. Maxine Waters (D-CA), aims to protect homeowners against foreclosure and increase the Federal Housing Finance Agency’s (FHFA) oversight of mortgage servicers that conduct business with Fannie Mae and Freddie Mac. Both of these agencies own or guarantee nearly 60 percent of all mortgage loans.

Waters, who is a ranking member of the House Committee on Financial Services, introduced the bill on Monday and said the new legislation will strengthen FHFA oversight of servicers who conduct business with Fannie Mae and Freddie Mac. The new legislation will require:

  • Documentation of servicer behavior;
  • FHFA evaluation of the services provided to borrowers; and
  • Will penalize servicer failure to meet minimum standards established by the FHFA.

The bill is supported by the National Consumer Law Center and the National Fair Housing Alliance.

Click here to read more.

Choosing the right attorney can make the difference between whether or not you can keep your home. A well-qualified Miami foreclosure defense attorney will not only help you keep your home, but they will be able to negotiate a loan that has payments you can afford. Miami foreclosure defense attorney Timothy Kingcade has helped many facing foreclosure alleviate their stress by letting them stay in their homes for at least another year, allowing them to re-organize their lives. If you have any questions on the topic of foreclosure please feel free to contact me at (305) 285-9100. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Beware of ‘Get Out of Debt Quick’ Scams

June 19, 2018 Posted by kingcade

Getting out of debt is a goal for many people, and in a perfect world, a ‘get out of debt quick’ offer sounds too good to be true.  However, just like the ‘get rich quick’ schemes, if it sounds too good to be true, odds are it probably is too good to be true.

Debt relief companies prey on consumers who are drowning in debt and going through a great deal of personal stress as a result. While some legitimate debt relief companies do exist, the majority of them are looking to scam individuals who are desperate to get out of debt at all costs and find relief from the numerous collection calls they are receiving.

One of the most important steps an individual can take before choosing to work with a debt relief company is to thoroughly investigate and research the company. With online resources available, as well as review websites, it is easy to find out quickly whether a debt relief company is legitimate or not.

Most importantly, never pay an upfront fee to one of these companies. If the company is requesting this, it is highly likely you will never hear from the company again after the initial fee has been paid. In addition, if the company is guaranteeing that they can eliminate all of your debt that should be a red flag as well. No debt relief company has the ability to guarantee that a creditor will forgive any debt. In fact, the Federal Trade Commission has warned against these types of statements. If a debtor comes into contact with a company that makes any of these statements, the FTC encourages the individual to file a report and expose a possible scam.

The main question you should ask is: How much progress can be made through lifestyle changes and spending habits?

If smarter spending and lifestyle changes are sufficient, a debt management or debt consolidation program may be the best choice. These types of programs work on the balances with the highest interest rates first or consolidate debts by taking out a new loan with a lower interest rate to pay off older balances first. Debt management or consolidation normally requires a monthly fee. These companies will work with your creditors to lower the total debt balance.  The hope is that creditors will rather receive a lower lump-sum payment on the debt rather than risk not being paid at all in a bankruptcy situation.

However, sometimes the  debt amount can be just too much to handle. Debt settlement may be the best option in these cases, or even bankruptcy if the settlement of the debt is still not enough. Debt settlement can take anywhere from between two to four years for a company to work with creditors to pay down debt. If bankruptcy is the best option, Chapter 7 bankruptcy can be completed in three to six months while Chapter 13 can take anywhere from three to five years.

Make sure and explore all of your options and make the best decision for your situation. A bankruptcy attorney can help decipher these options and give recommendations on what would be ideal and in your best interest.

Click here to read more.

If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.