Frank H. Coxwell, PC

Bank-sign-150x150Banks do unexpected things when one of their customers files bankruptcy. Nothing they do is to help you. Even if you think your bank is the greatest, there may be reasons to change banks before you file your bankruptcy case.

  1. They May Take the Money in Your Account.

Your bank owes you the money that is in your account. But if you owe them money on a personal loan or a car loan, they have the right to take the money in your account to pay themselves what you owe them.  This is called a set off, or an offset.  While your bank can do this at any time, based upon the loan documents, the notice of bankruptcy is what will set this off.  All of a sudden, you can’t get to the money in your account. Your money is the bank’s money.

Millions of letters are mailed by the IRS each year to taxpayers for many different reasons. If you get a letter from the IRS here are a few suggestions on what to do.

Open the letter right away and don’t panic. Most IRS letters will be about your federal tax return. Each letter will deal with a specific issue. Each letter will give you specific instructions on what to do. It is important you read the letter carefully. Read it two or three times, if necessary, to fully understand what is being said.

An IRS letter could be about changes to your account, taxes you owe, or a request for payment. It could be a request for more information about your tax return.

tax-return-150x150I’m speaking of your actual tax return – the 1040 Form with all schedules and attachments.  Make sure you get an electronic copy or a paper copy of your tax return if you’ve filed electronically.  Starting with 2017 tax returns, the IRS may ask you for the amount of your Adjusted Gross Income (AGI) from the last return you filed in order to verify your identity.

The Adjusted Gross Income (AGI) is the amount at the bottom of the first page of your tax return. So, if you file your own tax return, print a copy or save it to your computer before you log out. If you use a tax preparation service, make sure you get a printed or emailed copy from them when the tax return is filed.  Trying to track down the person that prepared your taxes six months or more later to get a copy can be a frustrating process.

There are also many other reasons to always maintain a copy of your tax returns.  For example, you may be asked to provide a copy of your tax return for your child when they apply for college and/or financial aid.  If you are considering filing bankruptcy, you will need to provide a copy of your last two years of tax returns to the Trustee. Whenever you wish to buy a home, you will be asked to provide copies of tax returns by whomever you are applying with for a mortgage loan.

Criminals are impersonating IRS agents and making aggressive and threatening phone calls to taxpayers.

phone-scam-150x150During filing season, the IRS sees a surge in scam phone calls that threaten police arrest, deportation, license revocation and other things. Be on guard against these con games that happen throughout the year, especially during tax season.

“Don’t be fooled by phone calls by criminals impersonating IRS agents with threats or promises of a big refund if you provide them with your private information,” said IRS Commissioner John Koskinen. “If you’re surprised to get a call from the IRS, it almost certainly isn’t the real IRS. We generally initially contact taxpayers by mail.”

“Everyone can share the word about scam phone calls– just hang up and don’t engage these people,” Koskinen said. “Despite recent successes against phone scam artists, these scams constantly evolve and people need to remain vigilant. We’d like to thank law-enforcement, tax professionals, consumer advocates, the states, other government agencies, the Treasury Inspector General for Tax Administration and many others for helping us continue this fight and protect taxpayers.”

How do the scams work?

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I’m speaking mainly to those who know that they need to file a Chapter 7 bankruptcy case.  If you wait until you are back to work for several months and everything is going well again (except for what is now the older debt), you run the risk of becoming ineligible to file a Chapter 7 case.  Eligibility is not based on how much debt you have – it’s based on your household income for the past six months and whether or not you have any “disposable” income that could go toward paying some or all of your unsecured debt.  The court looks at the past 6 months of your income, compares it to certain qualified expenses, and determines what is left over (your disposable income) that could go toward paying your other debt.  This process is called the Means Test.

For example, today I met with a newly married couple and they both were out of work for several months.  When things were bad, they did some research online about bankruptcy, talked to some friends, and pretty much knew that a Chapter 7 would be their best bet to pull out of this bad situation.  Their credit card bills, medical bills, and various other unsecured debts were all past due, but they had managed to keep their house and car payments current. In this instance a Chapter 7 would be their best option.  They did well in their research and friends had pointed them in the right direction, to my office.  They both got hired at really good paying jobs. However…..they waited and put off contacting me.  They didn’t have any idea how important the timing of the Chapter 7 bankruptcy filing would be. The hardest job I have is convincing people to come and see me early, sooner rather than later. Many times we just talk and make plans to file later on. But at least they would have the information and knowledge about what they need to do and when to do it.

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If you are overwhelmed with medical expenses, you are not alone. I read an article recently where it stated that medical bills and accounts now represent over 50% of debt classified as being in collections status.   That’s huge!  According to the Federal Reserve, the government agency that keeps up with these things about 1 in 6 credit reports have medical debt collection accounts listed.  About 40% of these credit reports were also experiencing a lower credit score and the majority of these debts were listed as still unpaid.

There are two major issues.  One – people are struggling with the amount of medical debt that they are in – there isn’t a payment plan out there that would be feasible for them to attempt.   And two – people are struggling with somewhat manageable medical debt but the medical collections community seems to have absolutely NO desire to work with them on any type of reasonable payment plan.

I met with a couple the other day that make good money and had health insurance.  The husband recently had to undergo surgery and the bills were steadily coming in from the doctors, labs, and the hospital – but overall it wasn’t too bad.  The problem is that they all wanted their money immediately.  Pay or be sent to collections in 30 days. Pay the debt collector or be sued.  Be sued and be garnished or have your bank account frozen.

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Yes! You can get back money that was garnished from your wages (if the debt is dischargeable) if you file bankruptcy.  In Mississippi, you can only recover garnished wages were taken within 90 days of your filing for bankruptcy and the amount taken was more than $600.  You are not entitled to recover everything that’s been garnished if you’ve been garnished more than 90 days before you file bankruptcy; just the 90 day portion they took right before you filed bankruptcy.  ***Keep in mind that filing bankruptcy STOPS a garnishment the moment the case is filed!

Depending on which kind of bankruptcy case you file and the amount, the money may go back to you or it may go to the Trustee.  But either way, it’s beneficial to you.  How would it be beneficial for it to go to the Trustee? Keep reading. I’ll explain!

Example #1: You have been garnished for the past 2 months for a total of $800 and you file a Chapter 7 bankruptcy tomorrow.  The first two criteria are met (within 90 days and over $600) so you stand to regain all $800.

Example #2: You have been getting garnished for 6 months for a total of $1,500 and you file a Chapter 7 bankruptcy tomorrow.  You’re qualifying but only the portion taken within 90 days will be eligible – which lets say totals $700.  The creditor is entitled to keep the other portion ($800).

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Before you accept a new credit card, there are a few things you need to know and to consider:

  1. Don’t accept too many – Be selective about the cards you choose and don’t have too many at one time. There is rarely a good reason to have more than one or two.
  2. Beware the Subprime – Sometimes lenders will offer you subprime cards instead of turning you down for bad credit. Generally these subprime cards have high interest rates, expensive fees, and low limits. Avoid those that “help” bad credit (take for instance the cards offered on Bad Credit Offers site) because these can often make your credit worse than it was to start with.   Use a trusted source like Consumer Reports to compare credit card offers.  There are also lenders that offer you a new card, but add the old debt to the new account.  If you have filed bankruptcy and wiped out credit card debt, this action would be a violation of your discharge and you should notify your bankruptcy attorney right away.

2016 loan mod seminar3I attended the Regs X & Z / Loan Modification Seminar held in Shelby, NC this year with my daughter, Rachel. She is in law school and has heard me talk a lot about the mortgage crisis and how much wrongdoing happens every day to good, hardworking people so she went with me to learn more. It was wonderful! It is very rewarding to save someone’s home and bring to account a mortgage company that seems bent on taking it by almost any means necessary, lining their pockets as they go. 2016 loan mod seminar2

If you are an attorney and you are addressing mortgage fraud, predatory lending practices, and a host of other violations in this arena, attending Max’s boot camps and seminars are a must to keep up to date with the laws and defenses available to aid your client.  If you are reading this and are looking for a lawyer outside of Mississippi to help you with mortgage issues, I encourage you to look at the list of attorneys on his site that have been trained by Max and are keeping up to date.  If you are in Mississippi, call me. I’ll be happy to discuss your situation and the options available to you to get things back under control and save your home. 2016 loan mod seminar4

22nd annual conferenceI enjoyed speaking at the conference this year to my peers. The only thing I love more than taking a bite out of a banker and save someone’s home is teaching other attorneys how to do the same!  The title of my session was “Pulling Back the Curtain…” I compared mortgage companies to the Wizard of Oz – who was no wizard – just a great trickster who hid his activities behind the curtain.  You pull that curtain back and his power is gone! We need more attorneys equipped to fight the good fight and I’m determined to do my part to see that it’s done.