Bankruptcy Law

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Can you spot a debt relief scam?

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When it comes to getting out of debt, if something sounds too good to be true, it likely is. When someone is facing a difficult financial situation and are unable to make ends meet, they may feel like there is nowhere else to turn. It is for this reason that it is important to be cautious when approached regarding debt relief.

The Federal Trade Commission (FTC) and Florida Attorney General are actively monitoring these types of scams in hopes of stopping them before more people become victims. Countless debt relief scams exist out, with individuals behind them looking for a way to make money with no intention of helping the person paying them. In fact, one of the strongest determinations of whether you are being targeted by a scam is when the company demands payment upfront. Odds are, once they take your money, they have no intention of doing anything at all.

The FTC and Florida Attorney general recently stopped this exact type of debt relief scam where the company told potential clients that they would pay, settle and completely get rid of their debt. However, once they took the person’s money to engage their services, they did absolutely nothing. In the meantime, the individuals who paid the company to settle their debts took the advice of the company’s representatives and stopped payment on their overdue accounts. Soon, these accounts fell into default, damaging the credit scores of the affected individuals.  Many of these victims were also faced with lawsuits from creditors.

This situation is unfortunately all-too-common. If someone offers to resolve your debt situation but insists that you pay them a large sum upfront, it is likely that this person is offering you a scam. A legitimate company will not force you to make a payment up front.

Another sign of a debt relief scam is the company will guarantee that all debts will be forgiven by creditors. No one can guarantee this fact, and if someone is making the effort to tell you that they can, odds are, they are part of a scam. Creditors are under no obligation to forgive debts.  Some will reduce the payment in a settlement amount, because they would rather at least receive some form of payment in lieu of having to pursue a collection action, but they are not obligated to do so.

When in doubt, do your research when choosing the right debt relief option. You may be able to find information about the scam before you become their victim, and if you do find yourself contacted by a debt relief scam, it is always recommended that the scam be reported to the Florida Attorney General’s Office and FTC.

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.

Bankruptcy Law, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

When to File for Bankruptcy

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Coming to the decision to file for bankruptcy is not an easy choice to make. Many individuals consider bankruptcy to be an admission of failure, but it can oftentimes be the only way for them to truly obtain a fresh financial start. Certain decisions and factors must be considered when coming to the decision to file for bankruptcy.

One consideration that often holds people back from making the decision to file is the effect the filing will have on their credit. The effects of bankruptcy on a person’s credit score depends on the score the filer had before filing for bankruptcy. If you have a higher credit score, the effect the bankruptcy will have will be more noticeable. However, if you have a lower credit score to begin with, the change may not be as much after filing for bankruptcy.

It helps to sort through the myths and facts before making that final decision, and if you do choose to file for bankruptcy, this does not mean all hope is loss. There are proven ways to rebuild your credit score after bankruptcy, and our clients are proof!

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s. – C.S.

Traditionally, two of the biggest reasons people file for bankruptcy are the result of a serious medical crisis or a divorce. Both can cause a person’s financial situation to change overnight. Even if someone has medical insurance, a major medical crisis can still put them in a tough financial spot, especially if that person must pay a high deductible for his or her medical costs. The same goes for a divorce and losing the financial support of another person in a relationship.

Several factors need to be considered when deciding which form of bankruptcy to choose. Chapter 7 bankruptcy takes approximately three to six months to have the debt discharged, which includes most of the filer’s unsecured debt, including medical bills, credit card debt and personal loans. Other types of debt are excluded for the most part, including student loan debt, child support, spousal support and tax obligations. The bankruptcy trustee may choose to sell of non-exempt property to pay off the debt, although most property falls under an exemption- which means you can keep it. Property that is secured and is associated with a piece of property, like a home, can be kept so long as the debtor is able to keep up on payments and maintain the property. Therefore, if most of your debt involves credit card debt or medical debt, Chapter 7 may be the best option for you to eliminate this burden.

If you are behind on your mortgage payments but want to keep your home, many times, the Chapter 13 filing is a more logical choice. In a Chapter 13 case, you can lump past due mortgage payments into the repayment plan and pay them over time while keeping current on payments.

The bankruptcy means test determines whether or not you are eligible to file for debt forgiveness through Chapter 7 bankruptcy. The test uses factors such as: income, expenses and family size to determine who can afford to repay their debts through reorganization and who cannot.

It is always recommended that you speak with an experienced bankruptcy attorney before making any decision to file or not file. If you are expecting a large lump sum payment, such as an inheritance or tax refund, the attorney may advise you to wait on filing and utilize that money on needed expenses first before filing to avoid losing it in a bankruptcy. Be honest with your attorney during this meeting and fully disclose all your financial circumstances so that the best decision can be made.

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.

Related Resources:

https://www.magnifymoney.com/blog/pay-down-my-debt/debt-guide-file-bankruptcy/

Bankruptcy Law, Debt Relief, Student Loans, Timothy Kingcade Posts

Florida Healthcare Workers Lose License to Practice Medicine Due to Unpaid Student Loans

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Student loan debt has become a crisis in America, but for many Florida borrowers, this crisis has hit close to home. Over 100 Florida healthcare workers have now lost their license to practice medicine due to their inability to repay their student loans. A recent crackdown by the state board of health was initiated in an effort to get student loan borrowers to pay back their loans.

For years, federal student loan companies have pushed states to enact laws that were tougher on borrowers who defaulted on their student loan obligations. One of the suggested penalties has been taking away professional licenses from defaulting borrowers. Florida is the only state that has begun enforcing these types of laws.

The Florida State Board of Health reported that approximately 900 healthcare workers were at risk of losing their license over the past two years. The board worked out repayment plans with the great majority of those workers, leaving 90 to 120 license suspensions since November 2016. These licenses include professional certifications for registered nurses, Certified Nursing Assistants, opticians and pharmacists.

However, now that these workers have lost their ability to earn an income, the question remains: how will they be able to pay their loan obligations? That argument is being made by area student loan attorneys. The decision to take away professional licenses for nonpayment of students is being questioned as putting a strain on employers and patients in an already short-staffed industry. Healthcare workers are already in short supply but taking away additional workers who have struggled paying their loan obligations will make the field even scarcer. Additionally, now that these workers have lost their ability to earn an income, it is more likely than not that they will end up depending on welfare benefits to survive.

Under the Florida law, the state has the power to garnish up to 100 percent of the healthcare worker’s wages before his or her license can be reinstated. Also, once the worker’s license is suspended, the only way he or she can get back the license is to pay a fine that is equal to 10 percent of the balanced owed. Critics of this law argue that it is entirely too unreasonable and makes it essentially impossible for the worker to get back on his or her feet.

It is estimated that over 10 percent of all student loan borrowers are now in default on their loan obligations. Approximately $1.2 trillion is owed nationally in student debt. Tuition costs seem to be rising every year, and the average student graduates with a large amount of debt, well up to $30,000 or higher. If the student continues on to graduate school, law school or medical school, the loan obligation can get as high as six figures. It comes as no surprise that these students, after graduation, struggle with meeting their monthly debt obligations, especially if they struggle finding employment after graduation.

The Florida law does require a 45-day written notice be issued to the borrower before his or her license is suspended. If you receive one of these notices, it is recommended you not ignore the notification but immediately contact your lender to discuss a possible repayment plan.

Click here to read more.

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all 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.

Related Resources:

https://marketsanity.com/florida-board-of-health-has-suspended-thousands-of-healthcare-licenses-over-defaults-on-student-loans/

 

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Generation X Carries Most Debt Out of All Generations

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Debt presents a problem for many Americans today, but one generation clearly stands out among the rest in terms of holding the most consumer debt. In fact, according to a recent study published by LightStream Survey conducted by the Harris Poll, nearly 80 percent of all members in the Generation X, ranging from ages 36 to 51, have some level of debt. The report showed that eight in ten members in this age category carry debt.

Coming in just below this were members of the Millennial generation, consumers between the ages of 20 and 35. Approximately 75 percent of all members in this age group carried debt. The next group was the Baby Boomer generation, which includes individuals between the ages of 52 and 70, with 69 percent of them carrying some type of debt.

While all three of these generations carry debt, it is the mindset of those in the Gen X category that presents the most cause for concern. Those surveyed in Gen X reported that they felt it was impossible to pay off a significant debt once it was incurred. Additionally, 25 percent of those in this demographic reported that they were not confident in how they were handling their finances. However, in the survey data, these individuals did state that they would be willing to give up hobbies or extracurricular activities to get rid of their debt payments, which does show some promise.

On average, individuals in Generation X carry $30,334 in “non-mortgage debt.” In comparison, Baby Boomers hold $27,513 and Millennials hold $22,784 in non-mortgage debt.

Getting out of debt can also be problematic for individuals in this generation, as well. Those who are younger may be able to use their savings or cash in their investments to reduce their debt, but it may be too difficult for Gen X members to dip into their retirement savings to pay off debt.

If you are struggling with insurmountable debt, dipping into retirement savings is never advisable.  These are protected in bankruptcy along with the following bankruptcy exemptions in Florida. Many individuals are already struggling to pay for obligations, including helping aging parents as well as adult children. While they are not quite at the age of retirement, they are approaching that point, making it too close for comfort to use retirement savings.

Continuing to struggle with debt is a slower, less effective way to pay it off.  Many different debt relief options exist, including debt consolidation, debt settlement or negotiation and bankruptcy – but it is important that as a consumer you research your options carefully.

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.

 

Bankruptcy Law, Student Loans, Timothy Kingcade Posts

Arrest Made in the Latest Student Loan Debt Relief Scam

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The head of a well-known alleged student loan debt relief scam is now being forced to account for his actions. Brandon Frere, the CEO of Ameritech and two other companies is accused of engaging in scams in the student debt relief business. He was arrested last week at the San Francisco International Airport.

When he was arrested, he was on his way to Cancun, Mexico, and had $3,900 cash on him, as well as five blank checks from his business, two blank checks from his personal bank account, 10 credit cards, gift cards and his Social Security card.

The claims against Frere are numerous. He is accused of withdrawing money that the company was holding in escrow for its customers, meaning the money belonged to the customers and not to the company. He is also accused of transferring millions of dollars from the company into his personal account and spending this money on cars, travel and other luxury items.

Days before Frere tried to leave the country, a judge granted a motion for preliminary injunction filed by the Federal Trade Commission (FTC). The same day that Frere booked his Cancun ticket, he withdrew $400,000 from accounts that were associated with his companies. Of that amount, $179,000 was transferred to his personal account. The remainder was transferred to family members and lawyers. Prosecutors estimate that Frere’s companies collected somewhere up to $28 million from student loan borrowers over four years.

It is estimated that student loan debt is a staggering $1.5 trillion, held by 44 million borrowers. It is also estimated that somewhere around 40 percent of all student loan borrowers will default on their obligations at some point in time.

These types of scams are not unique. In fact, many of these companies exist, taking advantage of student loan borrowers who are in an extremely difficult situation and are desperate for relief. It is extremely important that a student loan borrower does his or her research before choosing a repayment plan or relief option. Many times, borrowers make simple mistakes, like trusting a company they should not otherwise trust, that only hurts them in the end.

Once they had the borrower’s money, the company would continue to charge the borrowers monthly fees, ranging from $49 to $99. The borrowers were under the impression that the company was making their payments to their loans, but these payments were not being made, leaving these accounts unpaid and in default.

Another illegal practice that Frere and others were accused of was encouraging their company representatives to push customers to exaggerate the size of their families to receive more favorable student loan terms.

The FTC and various state attorneys general have been hard at work on cracking down on these types of scams and illegal collection practices. The FTC claimed that Ameritech would lure student loan borrowers with mailings promising the borrowers that they were prequalified for debt-relief. The company collected fees ranging between $600 to $800 to prepare and submit documents on behalf of the borrowers who were interested in government repayment and forgiveness programs. The problem with this is that there are free services provided by the U.S. Dept. of Education that offer the same.

Click here to read more.

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all 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.

 

Bankruptcy Law, Credit, Credit Card Debt, Debt Relief, Timothy Kingcade Posts

IRS Will Pay Tax Refunds During Government Shutdown

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The government shutdown has taxpayers nervous about what it will mean for their tax refund.  However, a statement made today by the acting director of the White House Office of Management and Budget, Russel Vought, said the Internal Revenue Service (IRS) will issue refunds even during the government shutdown.

It had been speculated that the IRS would accept tax returns, but refunds would be delayed until the government was fully functioning again. This situation is exactly what happened during previous shutdown contingency plans. However, the administration assured taxpayers that would not be the case this time around.  It is a decision that may reduce political pressure on Congress and President Trump to reach a deal to reopen the federal government.

Last tax season, the average tax refund was estimated at $2,899.  If you are struggling with debt, a tax refund can be your ticket to a fresh financial start and pay for the costs of bankruptcy.

Data from the Administrative Office of the U.S. Courts shows that Chapter 7 bankruptcy filings in March were 26 to 34 percent higher during March, and 15 to 25 percent higher during April from 2013 through 2016.

How do you know if bankruptcy is right for you? Consumers should strongly consider Chapter 7 if any of the following are true:

  • Problem debts, such as credit cards, medical bills or other high-interest loans, account for more than 50 percent of your annual income;
  • You are using credit to pay for everyday expenses;
  • Your credit cards are maxed out with no end in sight;
  • Your wages are being garnished;
  • You are being sued by debt collectors;
  • You are in danger of losing your home.

In the 2018 tax filing season, 18.3 million people claimed $12.6 billion in tax refunds within the first week of filing season alone. This “season,” normally begins at the end of January or early February, considering employers are required to mail W-2s by the end of January.

During shutdowns in years past, the IRS had stated that refunds could not be issued during a shutdown due to the agency’s interpretation of the Antideficiency Act. This act governed what type of work was allowable during a shutdown, which normally only included government work that was necessary to protect life and property. Previously, IRS work was not considered one of those categories.

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.

Bankruptcy Law, Timothy Kingcade Posts

How the Government Shutdown will affect Bankruptcy Courts

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The government officially began a partial shutdown on December 21, 2018 as a direct result of Congress not being able to enact an appropriations (spending) bill.  Negotiations between congressional Democrats and the Trump administration over the President’s demands for a border wall so far have not yielded an agreement. The bitter negotiations over funding for the border reached a milestone yesterday, now tying for the third longest on record without any end in sight.

Here is how the partial government shutdown will affect the United States Bankruptcy Court for the Southern District of Florida Operations.

  • Until further notice, the Court will continue operations and remain open during regular business hours in all divisions (Miami, Ft. Lauderdale, and West Palm Beach).
  • The Judiciary receives non-appropriated funding outside of appropriated funding from Congress and can continue its normal operations through January 11, 2019.  However, after this date, if there is not a resolution or a final budget set for fiscal year 2019, it can be expected the bankruptcy court will likely close on January 11, 2019.
  • The court’s case management systems – CM/ECF and ECF/Pacer will remain available, even in the event of a Judiciary shutdown.
  • The Miami Office of the U.S. Trustee is temporarily closed due to a lapse in federal funding.  However, a limited number of staff will be available to perform excepted activities (e.g., oversee appointment of trustees, scheduling of Section 341 meetings, perform activities related to means testing, and handle any emergency or urgent matters).
  • Section 341 meetings of creditors will be conducted as scheduled unless further notified.

Click here to learn more.  For the latest updates regarding the government shutdown and the affects it will have on the bankruptcy courts stay tuned to our blog.

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.

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Mistakes to Avoid Before Filing for Bankruptcy

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Making the decision to file for bankruptcy is never an easy one. Once you decide to file for bankruptcy, it is important that you avoid making mistakes that could impact your case or jeopardize your debts from being discharged.  Here are the top bankruptcy mistakes you should avoid before filing.

Filing too quickly

Bankruptcy is an excellent way to wipe out burdensome debt. However, you are limited to how often you can do so. The law places a limit on how often a person can file for bankruptcy. An attorney can advise you if the timing is right for bankruptcy and make sure your assets and income allow you to qualify for Chapter 7 bankruptcy,

Waiting too long to file

It can also be a mistake when someone waits too long to file for bankruptcy. In fact, a recent study revealed some of the downsides of waiting to file for bankruptcy. Many times, it is best to file for bankruptcy quickly in the event the filer wishes to avoid wage garnishment or has a lawsuit pending against them due to outstanding debt. Initiating a bankruptcy proceeding will allow an automatic stay to be issued, which puts an immediate halt to any collections actions that are ongoing at the time of filing. However, if the filer waits too long, once a wage garnishment is issued, he or she will not be able to eliminate that debt, which would not have been the case if he or she had filed before the final judgment was issued.

Incorrect or Inaccurate Information

When filing for bankruptcy, you are swearing under penalties of perjury that all information regarding your assets, income, debt, expenses and financial history is complete and accurate. If you make a mistake, fail to disclose an asset or file incomplete information, the bankruptcy court may dismiss the petition. If the court believes that you knowingly misrepresented anything at all, you could also be subject to criminal penalties, which includes fines even jail time.

Incurring more debt

Some people when they know they are going to be filing bankruptcy, run up additional debt on credit cards or take out loans. If you run up too much debt 70 to 90 days before filing on purchases that are not otherwise considered daily necessities, the creditor for this debt will likely object to a discharge by stating that you incurred this debt without any intention of paying it back in full. This practice is known as “presumptive fraud” and can result in the debt not being discharge.

Hiding assets

Another mistake some filers make before officially starting the bankruptcy process is hiding or moving assets to a friend or family member to keep them from being subject to liquidation. It can be tempting to want to hide an asset that would be subject to liquidation in hopes of keeping it safe, but this is considered bankruptcy fraud and can result in your case being dismissed and even criminal penalties, including fines and jail time.

Incoming assets

If you anticipate receiving a large amount of money or substantial assets in the near future, such as a sizeable inheritance or tax refund, it may be best to hold off on filing for bankruptcy. Once these funds are received, they may not be exempt from liquidation in a bankruptcy case. This money could alternatively be used to pay off creditors or attempt to get out of debt outside of bankruptcy. However, it is best to first consult with an experienced bankruptcy attorney if you believe you will be coming into money and are considering bankruptcy.

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.

Related Resources:

NOLO.com

Bankruptcy Law

Bankruptcy Judge Grants $600 Million Settlement to Former ITT Tech Students

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A major victory was won against for-profit educational institutions that have been accused of predatory lending practices. A federal bankruptcy judge in Indianapolis gave final approval to a $600 million settlement that will affect about 750,000 former students of ITT Technical Institute.

The now-defunct institution was once based in a suburb of Indianapolis, Carmel, Indiana. The school had over 136 campuses in 38 states when it shut down in September 2016. This $600 million settlement cancels all the student loan debt owed to the school.

The agreement specifically deals with student borrowers who attended ITT Tech between the years 2006 and 2016. The settlement also returns $3 million to students who paid payments on their loan to the school after the school’s parent company, ITT Educational declared bankruptcy in 2016.

After the school closed in 2016, students filed claims against ITT Educational and ITT Tech, alleging that they were subject to “systemic unfair and deceptive practices” by the school. The class of students argued that ITT violated consumer protection laws and also were in violation of breach of contract.

This settlement agreement may wipe out the debt that was owed directly to ITT, the issue of federal and private student loans that ITT students took out to pay tuition still exists. Only 33 of the former ITT students have been granted federal student loan cancellation. This number pales in comparison to the 13,000 borrowers who are unable to pay their student loan debt and have applied for cancellation.

However, despite this fact, proponents of student loan reform practices praise the settlement and believe that it has done more for students who fell prey to the predatory tactics of for-profit schools like ITT Tech.

Click here to read more on this story.

For borrowers who are struggling with student loan debt, relief options are available.  Many student loan borrowers are unaware that they have rights and repayment options available to them, such as postponement of loan payments, reduction of payments or even a complete discharge of the debt. There are ways to file for bankruptcy with student loan debt.  It is important you contact an experienced Miami bankruptcy attorney who can advise you of all 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.

 

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

IRS Found to Have Willfully Violated Bankruptcy Discharge, Ordered to Pay $175,000 in Damages

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The Internal Revenue Service (IRS) has been found to have violated a bankruptcy discharge according to a recent decision by the First Circuit Court of Appeals. Despite the IRS’s argument that it acted under a good faith belief that it had the right to continue to collect debts that were otherwise discharged in a bankruptcy.

The matter was decided in the case of Internal Revenue Service v. Murphy, 65 Bankr.Ct.Dec. 195 (2018). In this case, Murphy had received a bankruptcy discharge in 2006. However, despite this discharge, the IRS still attempted to collect on the debt on the belief that his tax obligations were not discharged under 11 U.S.C. § 523(a)(1)(C). This code section allows an exception to discharge for any tax if the “debtor made a fraudulent return or willfully attempted to in any manner to evade or defeat such tax.”

Murphy fought back under Section 7433(e) of the Internal Revenue Code, which allows the individual filing bankruptcy to petition the bankruptcy court to recover damages against the U.S. when the IRS has willfully violated the automatic stay or the final bankruptcy discharge.

In its defense, the IRS argued that that Murphy filed a fraudulent tax return to evade or defeat a tax, they had a right to try to collect on the debt from that debtor.

The lower court found that the IRS failed to file an objection prior to the bankruptcy discharge, both before or appropriately after the order was entered. The IRS continued trying to collect on the debt. It got so severe as the IRS levying insurance companies that did prior business with Murphy. In response, Murphy pursued a proceeding in bankruptcy court to get an official declaration from the court that the taxes were discharged in the original order.

Even though the IRS insisted that they were pursuing the debt in good faith because of tax evasion by Murphy, they never actually submitted evidence of evasion. The bankruptcy court granted a judgment for Murphy in 2010, declaring that his debts were, in fact, discharged. Even after this order, the IRS did not appeal this ruling. Instead, they continued to try to collect on the debt.

Murphy later filed another complaint against the IRS in 2011stating that by the levies the IRS issued in 2009, they were violating the discharge under Section 7433(e). The IRS fought back by saying they were not willfully violating the discharge, insisting that they were acting under the good faith exception. The bankruptcy court found in favor of Murphy, ruling that a willful violation includes the person acting “with knowledge of the discharge,” intending to take an action to collect on a debt the entity or person knows was discharged. The IRS did appeal this decision to Federal district court, who vacated the bankruptcy court decision but agreed with the definition of willful violation.

Eventually, after the case was remanded, the IRS settled the matter out of court in 2017. In the settlement, the IRS agreed to pay Murphy $175,000 in damages, only if it lost an appeal on the question of whether Section 523(a)(1)(C) provides a good faith exception to willful violation under Section 7433(e).

The IRS lost on its bet that the appeal would go in its favor. Instead, the First Circuit ruled that a creditor has willfully violated an automatic stay if it knew of the automatic stay or discharge and took an intentional action that violated the stay or discharge. The court ruled that a good faith belief in a right to property did not matter when determining whether the creditor’s action was willful. The court considered bankruptcy discharge to be equivalent to a violation of the automatic stay.

Looking back at the procedural history, the appeals court did note that the IRS could have but did not file an objection to discharge during the original bankruptcy proceedings. Further, they could have filed an adversary proceeding prior to collection to get an official statement from the court that the debts were not discharged. None of this was done in this case. This is not to say the IRS must appear in every bankruptcy case to have the taxpayer’s debts excepted from discharge. It may wait until the discharge is issued as a defense to collection efforts, but the IRS must prove some evidence and factual basis for their objection.

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If you or a loved one 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.