Archive for February, 2013

NATIONAL DO NOT CALL REGISTRY

1) You can register on-line at www.donotcall.gov.

2) You can register by phone, calling 888-382-1222, from the phone you want to register.

3) You can expect the calls to stop in 31 days.

4) You CAN register cell phone numbers.

5) You cannot register a business phone number, only personal phone numbers.

6) Registered numbers are never removed from the list without your permission, unless you give up the phone number.

7) Political organizations, charities, and legitimate phone surveys will still be able to call you after you are on the list.

8) Third party telemarketers calling on behalf of charities can be stopped from calling you by demanding to be taken off the caller’s calling list, or the telemarketer may be subject to a $16,000 fine.

9) For 18 months after buying something from a merchant, that merchant can solicit your business by phone. If you ask the company to stop calling you, they must do so, or face the possible $16,000 fine.

10) If you have been on the do not call list for 31 days, and receive a call from a telemarketer that you believe is in violation of the law, you can report the violation to www.donotcall.gov, or to 888-382-1222.

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TAX DEBT AND BANKRUPTCY

You have neglected to file state or federal taxes, or have filed, and can’t afford to pay what you owe. Can bankruptcy help? Like the answer to all legal questions – yes and no.

You cannot avoid paying employment trust fund taxes (payroll taxes and social security withholdings) you owe for employees that you have failed to pay the government over the years, but there are some circumstances that can result in a bankruptcy discharge for back federal and state income taxes. The first requirement is that you must be able to prove to the taxing authority and/or the bankruptcy court that either you have filed all back tax returns for any year you want a tax debt discharged, or that you have not been required to file returns during intervening years because your income was too low.

If you file a late return for that few years that you didn’t file your federal return, you must wait two years from the date the taxes were due (usually April 15 of a particular year) before that tax obligation is dischargeable. If you filed timely, your tax debt must be more than three years old before it can be discharged. If for some reason you filed the tax return more than three years ago, but the tax was not assessed more than 240 days before the bankruptcy is filed, that debt cannot be discharged. Tax debts that are the result of fraudulent tax returns will probably not be dischargeable.

The calculation of the above time limits may be affected by your filing an offer in compromise, by a previous bankruptcy; or by a stay of collections due to a bankruptcy or appeal of a tax liability.

Precise dates and proof of filing must be obtained by the debtor. Federal information (your tax transcript) is available through your local IRS office, or can be obtained by calling the IRS at 800-908-9946.

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OPTIONS TO FORECLOSURE

After a filed or threatened foreclosure, if you have decided to surrender your house, talk to the bank and see if they will just take the house without requiring you to pay any more toward your mortgage. Even if they agree to such an arrangement you would be wise to consult an attorney to be sure the deal you’re making is the one you are signing. Such an agreement by the bank will basically be a mathematical analysis of market value versus the amount you owe on your loan. If the bank can sell the house to someone new, now, and get as much as they would get from you if they sued you, the bank might cooperate with you and let you surrender it. Remember that you can always surrender a home to a bank; the real question is whether they will sue you for the money remaining due on the mortgage.

The days of driving downtown to the bank to have a cigar with “George Bailey” to decide if he will let you miss a few more payments while you are off work from a back injury, are about over. Most banks or local loan institutions sell your mortgage to a new company maybe several times in the course of the first few years of the mortgage. You will know who you are making your payments to (the loan servicer), but you won’t know anyone at that organization.

Don’t turn your back on the situation, ignoring the past due notices, and forcing the bank to foreclose. With the current status of all the big financial institutions that have lied in foreclosure hearings, with the glut in the housing market, and with the political pressures for mortgage companies to work with mortgagors, the financial institutions do not want to foreclose!
If you want to keep your house, there is a step to pursue before foreclosure or bankruptcy – contact the mortgage company’s “loss mitigation department. After the recent recession, nearly all the big mortgage companies created “loss mitigation departments.” These new divisions of mortgage companies have the job of working with people in danger of foreclosure, to modify the terms of the mortgage so no foreclosure is necessary.

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WHAT NOT TO DO BEFORE FILING BANKRUPTCY!

If you’re considering filing bankruptcy, there are few things you can do other than let time pass before filing, to correct improper financial moves you may have made that will adversely affect your bankruptcy. Illinois has a four year “look-back” period that permits the court to review financial transactions you may have made fraudulently to avoid bankruptcy responsibility, but it is more common for bankruptcies to self-destruct because of transactions in the last year or two.

Without a doubt, the number one mistake people make before filing bankruptcy is to use their tax refunds to pay off a friend or relative who loaned them money. You need to try to look at the big picture to understand why this is frowned upon by the court.

Bankruptcy is your opportunity to eliminate unsecured debts (credit cards, hospital bills, and personal loans from family members). To do so, you keep all your property that is protected by the Illinois exemption laws, and usually a Chapter 7 filer has no property that is not protected. If you have no big bank accounts, no expensive paid off cars, and don’t own an expensive home without a mortgage, you will probably keep everything if you file Chapter 7. If you do own property that is not protected by exemptions, you can file Chapter 13, to make at least partial payments to your unsecured creditors over time.

The court will expect you to treat all unsecured creditors in the same way. You will treat credit card companies, and hospitals, the same way you treat Mom when you file Chapter 7. You can no more decide to pay off your department store credit card so you can keep getting those sale coupons in the mail, than you can pay off Mom before filing – to the exclusion of other creditors.

Before filing bankruptcy, it is common for one to get a personal loan from Mom or Dad, with the promise to pay-off the loan from the filer’s upcoming tax refund. The tax refund is received, the debt is paid, and a bankruptcy is filed. Mom is happy, the bankruptcy filer is happy, but the credit card or hospital remains hungry for their payment.

As you prepare to file your bankruptcy, one of the questions you must answer, under oath, and at the penalty of perjury, is: “List payments to family members who were creditors in the last year.” That payment to Mom fits the category of the question, so you must answer, “Yes.”

Before your bankruptcy is closed, you will be questioned by the trustee. In a Chapter 7, the trustee is the lawyer for all the unsecured creditors who virtually never send their own lawyers to get involved in the bankruptcy process, because they know in 99% of the cases, they will get no money. The trustee will question the debtor, and when the trustee finds out that one creditor has been given preferential treatment (and usually it’s a family member), the trustee has the right to take back that preferential payment from Mom, and to divide it up among the unsecured creditors.

The first response by the prospective bankruptcy filer, to the bankruptcy lawyer confronted with this sort of a problem is – “Well, I’ll just get that money back from, Mom.” But the horse is already out of the barn. Saying that you reacquired the money does not negate the fact that you made a preferential payment. Either Mom gives the money to the trustee, or you can give an equal amount of money to the trustee for payment to the unsecured creditors.

Remember that you are not the first person to file a bankruptcy. You can bet that nearly any sort of method to skirt the law, has been tried, and the law changed to eliminate loop holes. Before you try self-help to fix pre-filing financial transactions in your bankruptcy – talk to a lawyer.

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