Chapter 7 Miami Bankruptcy Archives - Page 5 of 8

Tips for Negotiating with Debt Collectors

Posted on March 20, 2019by Admin

Working with a debt collector is normally not a pleasant experience. Debt collectors are persistent when trying to reach a debtor, and many will stop at nothing until they are successful at getting payment. Any time someone is late on or has missed a payment, that person should expect some type of communication from a collector, whether it be in written form or through phone calls. Many times, it is a combination of both. It helps to know your rights when dealing with a debt collector and know how to work with them on negotiating your debt.

Get Verification of the Amount Owed

Never assume that the information the debt collector is providing is completely accurate. Believe it or not, many scams are out there where debt collectors attempt to collect on debt that belongs to another person or is entirely past the statute of limitations. As soon as the debt collector makes contact, ask them to provide written verification of the amount owed.

Also, verify the credibility of the debt collector. Ask for the person’s name, the name of the company, a business address and a phone number. It pays to do some research into the company to see if they are, in fact, a legitimate debt collector. Also, review the amount they say is owed against your own records to ensure that the amount is accurate. Collection agencies are bound by law to send a validation letter within five days of contacting a debtor, listing the debt amount, the original creditor, and what the debtor should do in the event an error is discovered. It could be possible that a debtor owes on a specific debt but in a smaller amount than the collector is arguing they owe. Always verify before making payment.

Debtor Rights

One big mistake many debtors make is assuming that they have no rights when speaking with a debt collector, which is very far from the truth. Because many times, a debt collector’s actions will border on the edge of harassment or threats, the Fair Debt Collection Practices Act, or FDCPA, was enacted, which prohibits a debt collector from deceiving, threatening or harassing a debtor while collecting on a debt. The FDCPA prohibits any type of communication that threatens the debtor, includes profane language, or makes the debtor feel harassed. The collector can also not lie to the debtor, threaten to arrest or deport him or her, or threaten to take the person to court without any intention of doing so. A debt collector is also prohibited in the times that he or she can contact a debtor. Calls cannot be made before 8 a.m. or after 9 p.m. If a debt collector is violating the FDCPA, inform them of the violation and demand that no more communication be made. The collector can be reported to the Consumer Financial Protection Bureau, as well as the Better Business Bureau and the Florida Attorney General.

Look at the Type of Debt

It also helps to know what type of debt is involved when dealing with a collector. Many times, different options exist for payment plans based on the type of debt, whether it be credit card, medical debt, or something secured with collateral, like a car or home. Medical debt creditors tend to be more willing to work out a payment plan than credit card creditors. Also, if the debt involved is a medical debt, double check to make sure that the debt was processed by insurance first. Student loan service providers may also be more likely to work with a debtor on an income-based repayment plan or even may offer a deferment option to allow the debtor to get back on his or her feet first before continuing payment.

Some collectors will work with a debtor on a lump sum payment that is lower than the amount owed in exchange for releasing the debt. Ask if that is a possibility on the balance, and if it is, see if the collector will settle for a partial repayment over receiving nothing.

Be Aware of the Statute of Limitations

As mentioned previously, debt collectors will also try to get a person to pay on a debt that is past the state’s statute of limitations. It is highly possible that a phone call from a debt collector is on a debt that is past the time frame in which they have a legal right to pursue payment. The statute of limitations for Florida is five years for written contracts and four years for oral contracts or revolving accounts, such as credit cards.

Use the “Bankruptcy” Word

Sometimes it does benefit the debtor to mention that he or she is considering filing for bankruptcy. The collector wants to receive payment, and if the debt is something that is unsecured, such as a credit card or medical debt, it could easily be discharged through bankruptcy. If this happens, the creditor will end up receiving nothing. Tell the collector that bankruptcy is being considered not as a threat necessarily but more as a push to motivate them to negotiate. However, only do this if repayment in any form is an actual possibility. Otherwise you could be making empty threats.

Always Get It in Writing

When dealing with debt collectors, any time someone works out an agreement with the collector, it is imperative that he or she memorialize the agreement in writing. This rule of thumb applies for whatever type of agreement is reached, whether it be a debt repayment plan, a change in payment terms, or a lower interest rate. Request that the agreement be sent via mail, and always review the terms very carefully before signing on the dotted line. Make sure nothing has changed from what was originally discussed. Many times, a debt collector may add some additional language that was not agreed upon, and once the contract is signed, the debtor is bound by that agreement. Always review before signing.

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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 Do Bankruptcy Courts Handle Income Tax Debt in Chapter 7 Bankruptcy?

Posted on March 12, 2019by Admin

We have all seen or heard the advertisements promising to significantly reduce or even eliminate tax debt. Many of these companies are offering just that – empty promises, while charging clients unethical fees. Of all the types of debts handled in a bankruptcy case, income tax debt tends to be one of the non-dischargeable categories, along with student loan debt and child support obligations.

However, there are certain tax obligations that can be discharged in a Chapter 7 bankruptcy case depending on the following factors:

When You Can Have Your Tax Debt Discharged in Bankruptcy:

You must have filed a tax return. This must have occurred at least two years prior to the bankruptcy filing;
The taxes must be income taxes. Taxes other than income tax, including payroll taxes and fraud penalties are non-dischargeable in bankruptcy;
You must not have committed fraud or willful evasion. If you filed a fraudulent tax return or attempted to evade paying taxes (i.e. – using a false social security number on your tax return) your tax debt cannot be discharged in bankruptcy;
The debt must be at least three years old. For the tax debt to be eliminated in bankruptcy, the debt must have been originally due at least three years before filing for bankruptcy;
The tax debt must have been assessed by the IRS at least 240 days before you file for bankruptcy.

A Chapter 7 bankruptcy can wipe out your personal obligation to pay the debt and prevent the IRS from garnishing your wages. Whether you should file for bankruptcy may be a matter of timing, depending on the age of the income tax debt. An experienced bankruptcy attorney who specializes in this area of law can best advise you on the next steps to take.

Related Resources:

https://www.nolo.com/legal-encyclopedia/bankruptcy-tax-debts-eliminating-29550.html

Credit Card Debt, Debt Relief, Timothy Kingcade Posts

Help for Florida Seniors Struggling with Credit Card Debt

Posted on March 7, 2019by Admin

Credit card debt is increasing when it comes to individuals over the age of 65, according to a recent study. Many seniors are carrying this credit card debt into retirement. Medical debt can compound the problem. When seniors face health issues, putting the additional out of pocket costs not covered by their insurance can be tempting. In fact, medical debt is the leading cause behind U.S. bankruptcy filings today.

According to a 2018 report from the Employee Benefit Research Institute, approximately 42 percent of all houses where the head of household is between the ages of 65 and 74 carried credit card debt. This figure is a 10 percent increase from 1992 to 2016. When it comes to individuals over 75 years of age, 26 percent of them carry credit card debt, which is a six percent increase from 1992 to 2016.

According to the research associate who conducted the study, usually the median debt amount decreases when an increase is seen in the percentage of homes carrying credit card debt. For senior citizens, however, the increase is seen both in how many have credit card debt and how much debt they carry, which leads many to question why the increase has occurred.

Many different reasons can be attributed as to why credit card debt is rising amongst seniors. One reason is the fact that seniors are relying on a fixed income following retirement. For many, this income is just enough to pay for necessary living expenses, but if any increase in these expenses occurs or if the senior has a medical or unexpected financial emergency, his or her income may not be enough to meet the expense.

Additionally, many seniors come to the Miami area to retire, but they do not anticipate the higher cost of living. When they are already on a tight budget, they will resort to credit cards to keep up with extra expenses. However, problems arise when they are not able to pay the balance from these expenses from month to month. Health insurance and medical costs can also be an extreme burden for aging Floridians. The result of this is many of these senior citizens are carrying debt into retirement.

This fixed income can be a combination of pension, other retirement funds and Social Security. It is estimated that approximately 21 percent of married couples and 44 percent of single adults currently rely on Social Security for 90 percent or more of their income. With the average Social Security check being $1,413, this does not leave much wiggle room. It only takes one financial crisis for that person’s entire financial situation to implode.

Several different steps can be taken to help a senior who is struggling with credit card debt get out of his or her situation. The worst thing that a person can do is to ignore the debt in hopes that it will go away. Debt collectors are persistent when trying to get payment on a debt, and they do not discriminate based on the age of the debtor. Ignoring the debt will also lead to higher interest rates, fees and penalties that can make the situation even worse.

If a senior citizen finds that he or she is not able to pay on a debt, many of these credit companies will work with the debtor on a payment plan or settlement on the debt. The cardholder is within his or her rights to work directly with the creditor on a mutually-beneficial resolution, including a settlement on the debt or a lower payment.

Of course, bankruptcy is always a viable option depending on the situation. A person can spend years struggling with medical and credit card debt that would otherwise be eliminated in a Chapter 7 bankruptcy case. Someone’s age should not be a deterrent if bankruptcy is the best option for him or her. A bankruptcy attorney can meet with the individual free of charge to discuss his or her financial situation and determine the best path forward.

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Related Resource:

https://www.nerdwallet.com/blog/credit-cards/seniors-credit-card-debt/

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

Credit Cards Are a Way of Life for Most Americans

Posted on February 28, 2019by Admin

For many Americans, credit card debt has become a way of life. According to CreditCards.com, more than 39 million Americans have carried some form of credit card debt for at least the last two years. While using a credit card responsibly can help establish credit, it can become problematic when the debt accumulates.

Credit card companies camp out at universities, promoting their cards to students at colleges and offering free gifts for those who sign up that day. The problem is, many of these students have no idea how to pay off debt and see these cards as a way to buy products without any consequence. Before they know it, these cardholders are carrying a balance they have no way of paying. According to the survey from CreditCards.com, eight million of those surveyed say they do not remember a time when they were not in debt.

The CreditCards.com survey was conducted by YouGov, who surveyed over 2,500 adults. Of those surveyed, 1,780 were credit cardholders and 1,040 of them carry debt on these cards. These cardholders are not charging unnecessary expenses, however. In fact, most of the individuals surveyed said that they used their credit cards to pay for daily spending on necessary expenses, such as groceries or utilities, or on emergency expenses, including medical bills and car repairs.

The survey also reported that the millennial generation was the group that was the most concerned about credit card debt. Due to their high level of student loan debt, many of these younger consumers are not able to cover their daily living expenses on top of their student loan payments.

While the consumers surveyed who were in older generations who use credit cards to pay off medical expenses, millennials say they have no choice but to resort to credit cards to pay for food and living expenses. When the bill arrives, they are not able to pay off the balance in full.

The key to handling credit cards successfully is to not let the balance get out of hand. If possible, pay the balance down monthly after using the card for required expenses. Since the average interest rate is at 17.55 percent, carrying a balance from month to month can make it nearly impossible to pay down the debt. Minimum monthly payments will only allow the cardholder to pay off any interest accrued during that monthly billing cycle.

If you are struggling to pay off credit card debt, certain tips can be helpful in dealing with the debt. One tip is to not fall victim to companies promising rewards for spending on their cards. If you are paying the balance off in full every month, the rewards offered can be beneficial, but if you are carrying a balance and still using the card to earn rewards on top of the balance owed, you are only making the situation worse. If your credit card has a high interest rate, consider a balance transfer to a new card with a lower interest rate. However, be sure that you know what the promotional period is for that card so that you pay off the balance before the promotional time expires. Otherwise, you may end up with an even higher interest rate when all is said and done.

People living in the Miami metro area, which includes both Fort Lauderdale and West Palm Beach, carry the second-highest credit card debt balances in the country, second to San Antonio, Texas.

As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, harassing debt collection calls, penalties and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.

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Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

What It Means to Commit Bankruptcy Fraud

Posted on February 21, 2019by Admin

When filing for bankruptcy, it is extremely important that you fully disclose all information requested and that all information provided be accurate and true. Although, most people who file for bankruptcy are honest hardworking people, some individuals can be tempted to hide property and assets. This is called bankruptcy fraud, which is a federal crime that the U.S. Department of Justice takes very seriously.

Bankruptcy fraud occurs when a person knowingly and fraudulently commits certain prohibited acts in their bankruptcy case. It is estimated that somewhere around 10 percent of all U.S. bankruptcy filings include some form of bankruptcy fraud. If this fraud is discovered, the person committing the fraudulent act can face fines up to $250,000 and even imprisonment for up to five years in federal prison.

The four most common types of bankruptcy fraud include: concealment of assets, petition mills, multiple-filing schemes, and bust-out schemes. It must be shown that the person intended to commit the crime of bankruptcy fraud, which means that intent to deceive must be present. The person must have planned to commit the fraudulent act. If, for instance, someone makes a mistake in their forms or accidentally forgets an asset when preparing the documents, fraudulent intent is not necessarily there.

One of the most common types of bankruptcy fraud is concealment of assets. Concealing assets accounts for approximately 70 percent of all bankruptcy fraud cases reported. A person should never assume they can outsmart the bankruptcy court. Bankruptcy trustees are experts at finding undisclosed cash, property, vehicles, boats, jewelry, antiques, and collectibles. If you are caught trying to hide assets, the consequences are big. Your discharge will be denied, and you will be unable to discharge the debts you listed in a subsequent bankruptcy filing.

Another form of bankruptcy fraud is making false statements either in sworn documents filed with the court or in person to the bankruptcy trustee. Debtors are required to fill out a bankruptcy petition and a number of other supporting documents, which includes a schedule of income and assets as well as a sworn financial declaration. By submitting these documents, you are swearing that all information provided is completely true.

Bankruptcy fraud can also be committed by someone filing too many bankruptcy cases in two or more states. These filings can be made using the same name and information or also false name and information, so long as they were filed by the same person. In these types of cases, the debtor will list the certain assets on some claims while other assets on the others, thus confusing the system. The ultimate goal of these multiple filings is to keep assets from total liquidation, giving the person time to conceal assets he or she wishes to keep.

Another form of bankruptcy fraud that seems to focus heavily on non-English speaking claimants involves bankruptcy petition mills. These “mills” are fraudulent schemes committed by a third-party, where that person claims to be a consultant who can help someone avoid eviction. That person gets all of the tenant’s information and files a bankruptcy petition without the tenant ever knowing. While the bankruptcy case is pending, the perpetrator of the crime will often completely clean out the tenant’s bank accounts and destroy his or her credit. Sadly, these types of schemes are on the rise, especially in areas where many non-English individuals reside.

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Bankruptcy Law

Famous Celebrities Who Went Bankrupt before Becoming Rich

Posted on February 19, 2019by Admin

Sometimes you have to go through hard times before you make it big. In fact, many famous people did just that before they became successful. They represent your typical rags to riches stories, and these life stories go to show that even the most successful people struggle on their way to the top. For individuals thinking of filing for bankruptcy, these stories often give them hope that filing for bankruptcy will be the beginning of greater things to come.

Dave Ramsey

Dave Ramsey is known for his financial advice, so it may seem hard to believe that even he struggled financially at one point in time. However, even his rise to the top had its peaks and valleys. He started with a great deal of real estate holdings through his brokerage firm, Ramsey Investments, but his real estate success was not long-lasting. His holdings ended up being leveraged, resulting in creditors calling in their debts. Ramsey eventually filed for bankruptcy. After bankruptcy, he went a different direction and focused his efforts on financial counseling for his local church. He attended workshops on consumer financial issues and used this knowledge to build his own seminars. Now he is known for his first book and subsequent programs titled Financial Peace. His net worth is over $55 million, and individuals all over the world swear by his program in their own financial success.

Abraham Lincoln

You would not assume that one of our nation’s most famous presidents would have filed for bankruptcy, but it is true. In his 20s, before he entered politics, Lincoln and a partner opened a general store in Illinois, buying their store’s inventory on credit. However, as business did not sore, their debts were not paid off. He ended up selling his sake in the store, but after his business partner died, Lincoln was on the hook for over $1,000 in debt. While technically bankruptcy did not exist at that time, he worked out a payment plan to repay his creditors successfully over the span of 17 years.

Walt Disney

Orlando, Florida is well-known for one specific name, and that name is “Walt Disney.” Like the others mentioned, you would not think that Disney would have gone through something like bankruptcy, but it is, in fact, true. He was barely out of his teen years when he filed for bankruptcy. Disney formed a company called Laugh-O-Gram Studio in 1920 where he made animated fairytales. He formed the company on the assistance of a financial backer, but after that source went broke, Disney was not able to pay off his debts, let alone his animators, forcing the company to file for bankruptcy one year later. He obtained a family loan in 1923 when he started a new company. Five years later, Disney created Mickey Mouse, and his career and the company took off. Disney almost had to file for bankruptcy in 1937 upon the release of Snow White and the Seven Dwarfs, but he was able to get a bank loan to finance the movie. The company took off even further from that point, resulting in the rest of the classic movies we all know and love.

P.T. Barnum

Even the creator of one of the greatest shows on earth went through his fair share of financial struggles. P.T. Barnum is one of the founders of Ringling Brothers and Barnum & Bailey Circus, a show that lasted from 1871 to 2017. Barnum began his career at 25 when he purchased the Scudder’s American Museum in New York City, one of the most popular attractions in the city at that time. However, the building burned down five times, resulting in Barnum to continually put out money to refurbish the building. The cost of keeping up with building expenses was not supported by the museum’s revenue, forcing him into eventual bankruptcy. He ended up conducting lectures on “The Art of Money Getting,” which allowed him to repay his past debts. It was not until he was 64 when he joined forces to create one of the most famous circus attractions of all time.

Willie Nelson

Willie Nelson is one of the most well-known country singers of all time, but even Nelson struggled financially. Growing up during the Great Depression, his family struggled to pay their living expenses, and Nelson even had to pick cotton to earn money for his family. Oddly enough, his cotton picking sparked his desire to perform. At age 13, he chose to sing in local dance halls to earn money. He became a disc jockey at a local radio station in Texas, which allowed him to do his own recordings, thus sparking his career. While he never formally filed for bankruptcy, he went through extreme financial difficulties after the IRS claimed he owed over $32 million, resulting in them seizing his assets in 1990. He was able to eventually settle the debt, but it was definitely a defining experience for him. He even released an album called The IRS Tapes: Who’ll Buy My Memories. All profits from the sale of that album went directly to the IRS.

Elton John

Another famous singer, Sir Elton John, went through his own financial struggles. He first came onto the music scene with the release of the single Your Song in 1970. After that, he released hit after hit, resulting in enormous fame and wealth. He lived quite the lavish lifestyle, and eventually in 2002, that lifestyle caught up with him. He declared bankruptcy after properties he owned incurred a large amount of debts. It is estimated that he spent somewhere near 1.5 million British pounds monthly around that time, which definitely led to his financial issues. However, he has managed to bounce back after he entered into a contract to perform in Las Vegas at Caesars Palace in 2003. He also contributed on several Walt Disney movies, including The Lion King, resulting in a steady cash flow, bringing his wealth currently to approximately $450 million.

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Bankruptcy Law, Credit

A Record 7 Million Americans Are 90 Days Past Due on Their Car Loans

Posted on February 14, 2019by Admin

The struggle to keep current on monthly bills is a real one felt by many Americans. It can be hard to meet all your obligations, from utility bills to car loans. It is estimated that seven million Americans are at least 90 days past due on their car loan payments, according to the Federal Reserve Bank of New York.

What does this mean for the economy? Many economists believe it is an indication that, despite the strong economy and low unemployment rate, many Americans are still struggling to make ends meet. In fact, when the rate of car loan delinquencies is high, this means that Americans in the lower-income classes are significantly struggling financially.

The problem is a car is extremely important to someone who is having a hard time paying bills. That person needs it to get to and from work, and not having a form of transportation can cause that person to lose his or her job, thus continuing the cycle. Losing your car, leading you to lose your job will result in losing other important items, such as a place to live.

The Federal Reserve figures showed that the majority of people who were behind on their car loan bills had lower credit scores and were under the age of 30. What this indicates is that younger consumers are struggling to pay for their car loans on top of other expenses. One of these expenses that older Americans do not have that these younger consumers have are student loans. Perhaps these young consumers are not able to pay both their student loan expenses as well as their car payments?

Reports show that 17.5 million vehicles were sold in 2016 in the U.S. Car sales are not suffering by any means, and for the most part, those consumers purchasing cars have enough credit to be approved for decent loans and are able to repay their loans. However, the category of borrowers who are considered “subprime,” meaning they have credit scores under 620 seem to default more frequently.

One thing financial experts warn American consumers about is to be cautious as to where they get their financing. For the most part, banks and credit unions have smaller default rates as compared to companies that claim to be “auto finance” companies. One way to ensure that you are getting a good loan is to not get your auto financing from the dealership, unless it comes from a bank directly. Get the financing first and then go to the dealership with the financing documents in hand.

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Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

What Happens When You Stop Paying Your Credit Cards?

Posted on January 31, 2019by Admin

Missing credit card payments can come with some serious financial consequences. How a credit card delinquency is handled depends on how long the bill has gone unpaid. A credit card payment is considered “late” if it has been unpaid for at least 30 days after the due-date. However, credit reports list delinquencies in different ranges as to how late the payment may be, and includes the following categories:

30 to 59 days late;
60 to 89 days late;
90 to 119 days late;
120 to 149 days late;
150 to 179 days late;
Over 180 days late.

Your credit report will not show a missed credit card payment so long as it has been made no later than 29 days past the due date. After 30 days has passed, the credit card company will likely charge a late fee and potentially increase the interest rate on the card. This fee and interest rate hike will be reflected in the next month’s bill.

However, if a genuine mistake was made or a valid reason exists for why the payment was missed, you should contact your credit card company immediately to see if they will waive the fee as a courtesy. If you have been a good customer up until this point and have a good payment record, most credit card companies will understand and be willing to work with you.

Whether they waive the fee is one issue, but the credit card company will likely report the fact that you missed the payment to the three major credit reporting agencies, Equifax, Experian and TransUnion. Your credit score will likely drop once this report has been made. If you have an otherwise stellar credit score, you can see the hit more noticeably as opposed to someone who has a lower credit score. This single missed payment can remain on your report for up to seven years, but if you are able to continue making your payments on time after this mistake, your score will rebound, and creditors will see that you are not a future risk.

If you are 60 days late in making your payment, the financial consequences will be more severe. You will incur late fees and a likely a higher interest rate, even more than the one you received when 30 days late. The credit card company may also bump the interest rate to a penalty APR, which can be expensive and can get as high as 29.99 percent. It is likely that this penalty APR will stay with you for up to six months before the card holder decides to lower the interest rate. The higher the interest rate, the longer it will take for you to pay down your credit card debt completely. You may find that the high interest rate is all you are paying with monthly payments and that you are not making any dent in the principal.

Payments that are 60 days late can hurt your credit, but just like with payments that are 30 days late, you can eventually bounce back from this slip so long as you demonstrate smart financial behavior.

However, as soon as your payments are past 90 days late, the credit card company will likely turn the account over to a collection agency. Many will wait until the payments are more than 180 days past-due before turning the account over to a collection agency and will simply try to collect on the debt themselves first. As soon as you are past 90 days, you will either be notified that the card company has sent the account to an in-house collection department of outside collection agency. After 90 days, not only will fees and penalties increase, but the cardholder may also lower your card’s credit spending limit.

If the account is more than 120, 150 or even 180 days late, this means you have missed at least four payments. You will see many of the same consequences that come along with being 90 days past-due, but the consequences are understandably harsher. Debt collections calls will increase significantly. If, at this point, the account was not previously sent to collections, the debt will likely be sold to a third-party collection agency. This step of selling the debt to a third-party collector is known as a “charge-off,” which basically means the credit card company has written the debt off as a financial loss on their books. It does not mean the debt is forgiven or gone, but it means a new company that has the right to collect on the debt owns the account. If your debt has been charged-off, this will reflect very negatively on your credit report.

You can work with the debt collectors on settling the account, potentially paying for a less than full balance, or you may consider consulting with a bankruptcy attorney. It is important that you act quickly, however, in the event the debt collector files a collection action and obtains a judgment against you on the debt and a wage garnishment. So long as the debt is within the Florida statute of limitations for collections, which is five years, the debt collector is within its rights to file a legal action against you to pursue collection on the debt. However, if a bankruptcy case is filed before a judgment is issued, the automatic stay will put an immediate halt to the collection matter to allow for the bankruptcy process to occur. Since credit cards are unsecured debts, bankruptcy is often the best option for an individual struggling with insurmountable credit card debt.

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Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

Mistakes to Avoid Before Filing for Bankruptcy

Posted on December 21, 2018by Admin

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.

Related Resources:

NOLO.com

Bankruptcy Law, Debt Relief, Timothy Kingcade Posts

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

Posted on December 14, 2018by Admin

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.