Recently in Debt Relief Category

Northern California Man Fakes Bankruptcy to Avoid Child Support

shutterstock_41419909.jpgDo judges take child support seriously? Oh, yeah.

Take the case of a businessman from Northern California who declared bankruptcy and hid assets just to avoid paying child support and alimony.

Steven K. Zinnel and his wife split up in 1999 and a contentious divorce ensued. He declared bankruptcy and it was finalized in 2005. He wasn't really bankrupt; he had moved his assets to shell companies in order to reduce his child support obligations.

The courts don't look lightly on people who hide assets, try to file bankruptcy, and attempt to avoid support payments. In fact, this particular father received a prison sentence of 17 years. In addition, he must pay a $500,000 fine and forfeit assets worth more than $2.8 million.

Call to FBI Leads to Arrest of Zinnel

Zinnel's problems began soon after he contacted the FBI and asked an agent to investigate his ex-wife for trying to get illegal access to his private health insurance information. When the FBI heard his ex-wife's side of the story, they became more interested in Zinnel's bankruptcy than her alleged offense.

The FBI discovered that Zinnel had laundered funds through a company owned by his attorney Derian Eidson. He and Eidson had set up a trust account through which he could essentially launder money from an investment in an electrical firm and some real estate. Furthermore, prosecutors discovered that Zinnel had placed much of his property in other people's names before and after his 2005 bankruptcy.

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Judges Can Exercise Discretion Over Attorneys' Fees in Bankruptcy Cases

January 7, 2014, by Law Offices of James V. Sansone

Atty fees.jpgA recent study found that while bankruptcy attorney fees vary from state to state, between 2005 and 2009 fees averaged $1,080 to $1,200. In Idaho, fees were as little as $700. In other parts of the country, they can climb to $2,500.

Those fees are in addition to the fees the bankruptcy court will collect when you file. Filing fees can range from $306 for a Chapter 7 filing to $1213 for a Chapter 15 bankruptcy.

Is Your Bankruptcy Attorney Charging You Too Much?

If you feel that your attorney is overcharging you to handle your bankruptcy, you may find some relief from the judge. Bankruptcy judges may regulate attorney compensation and have the authority to discipline attorneys for charging excessive fees.

Take the example of James Glen Whitley. In 2008 and 2009, he failed to reorganize his debts under his Chapter 13 filing. On March 4, 2009, the court dismissed Whitley's 2008 petition without prejudice (without prejudice means that none of Whitley's rights or were considered to be lost or waived). However, in 2009 the court dismissed his case again, this time with prejudice (when a judge dismisses the case with prejudice, the party who filed the claim is forbidden from re-filing the case). But then a few months later, the court vacated its dismissal of Whitley's case and converted his filing to a Chapter 7 case.

This Was a Complicated Legal Case

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Filing for Bankruptcy During the Federal Shutdown: What You Should Know

October 8, 2013, by Law Offices of James V. Sansone

Shutdown.jpgFederal defense worker Rob Merritt was barely making ends meet when President Barack Obama and Congress reached an impasse, forcing many federal departments to come to a halt.

As soon as the shutdown began, visitors to national parks were turned away and U.S. residents found doors shuttered to other federal services. In many departments, large numbers of federal employees were furloughed, leaving those who remained poorly equipped to properly serve members of the public.

For example, the National Labor Relations Board furloughed 1,600 employees, leaving 11 workers in place. The Internal Revenue Service, which employs 94,516 workers, dropped to just 8,752 workers.

Even worse, the U.S. Department of Housing and Urban Development, which subsidizes housing costs for the nation's poor, slashed 8,360 employees from its normal rank of 8,709.

Some federally furloughed employees, some of whom have to continue to work without pay, are now like Merritt, financially vulnerable.

Merritt, who earns $80,000 annually, was already borrowing money using his credit cards to support his wife and four children. He accumulated an insurmountable amount of debt when he underwent heart surgery in April. His wife was in the process of changing careers but had to stop interviewing to help take care of her husband.

If Merritt had been furloughed - like tens of thousands of other federal workers - he would be filing for bankruptcy right now. He's one of the luckier federal employees. Although his check will be delayed, he will eventually receive one - unlike furloughed employees who aren't working and won't ever be able to recoup the lost income.

Is Now a Bad Time to File for Bankruptcy?

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Protect Yourself from Unscrupulous Collection Agencies

September 24, 2013, by Law Offices of James V. Sansone

debt-collectors.jpgAre you being hounded by debt collectors? Did you know that you have rights that can protect you from unscrupulous collection agencies?

A San Francisco federal judge recently approved a preliminary $3.2 million settlement in a class action lawsuit involving a private debt collector who posed as a district attorney in an attempt to collect $20 million from overburdened and scared consumers.

Case Summary

Corrective Solutions, the debt collector in this case, contracted with district attorneys to collect on bounced checks. Then the company targeted consumers with a history of bounced checks.

Corrective Solutions sent the consumers letters on phony district attorney letterhead, threatened them with jail time, and suggested that collection fees of up to $200 would be applied to each check that had bounced.

The debt collector lost his case when a preliminary settlement was reached earlier this month. A final hearing on the settlement is scheduled for January 2014.

This wasn't the first time Corrective Solutions had to deal with unhappy consumers and the justice system. Corrective Solutions was previously called National Corrective Group, Inc., which filed for Chapter 11 Bankruptcy four years ago to avoid four class action lawsuits in several states.

How Can You Protect Yourself from Agencies Like Creative Solutions?

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Abusive Debt Collection Tactics Are Under Fire

bigstock-Tax-Man-898892-300x199.jpgAre you being harassed by a debt collector? You now have a formidable advocate on your side: President Barack Obama.

Obama's consumer protection agency, angered by the tactics of some debt collectors, is on a mission to teach consumers how to battle abusive attempts at debt recovery.

From Home Loans to Credit Cards

Not so long ago, federal regulators began targeting the debt collection practices of some mortgage lenders. Unfortunately, some of those same, harassing tactics are now being used in the credit card business as they attempt to recoup delinquent debt.

It's been reported that national banks and large department stores sometimes relentlessly pursue consumers who are delinquent in their payments even though this debt collection method is restricted under the Fair Debt Collection Practices Act.

Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits collection firms from committing deceptive or abusive acts or practices. The Consumer Financial Protection Bureau (CFPB) is using this regulation to curb the efforts of collection firms by teaching consumers how to protect themselves.

If you are being targeted by a collection firm and feel that its actions against you border on being abusive or deceptive, you can use a letter the CFPB created to send to your bank or other collection agency to stop the abusive tactics.

The CFPB also has letters to let collection firms know that you need additional information before proceeding with payment. In addition, there are templates for informing collection agencies that you dispute the collection amount and that it needs to stop contacting you until it can provide evidence proving that you're responsible for the subject debt.

The CFPB is also educating consumers about the little known fact that consumers have the right to tell collection agencies to stop harassing them with their incessant phone calls.

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Are Santa Rosa College Students Headed for Bankruptcy?

Ball-Chain-student-loan-debt-wedding-300x295.jpgAfter years of studying and spending tens of hundreds of hours in the library, you're finally free from school.

Unfortunately, you're not free of the student loan debt you accumulated.

If you just graduated from law school or medical school, your student loans will be even higher and possibly saddle you with debt you'll need to repay for many years to come.

The good news - if you consider this good news - is that you're not alone. It is now estimated that 70 percent of the graduating classes of 2013 owe an average of $35,200.

$1.1 Trillion in Student Loan Debt

According to the Consumer Financial Protection Bureau and the Department of Education, 38 million student-loan borrowers now owe in excess of $1.1 trillion. Their debt includes federal, state and private loans and loans made by their families. Some students placed a portion of their debt on their credit cards and are paying exorbitant interest rates.

The student loan debt in California is lower than the debt in New York but more students in California are delinquent in repaying their debt, according to a Wall Street Journal report. Some experts believe this discrepancy is due to students attending East Coast private schools that better equipped them to repay their loan debt.

Hello, McDonalds!

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Financial Instability of Sonoma County Families Breeds New Forms of Fraud

bankownedpic.jpgSonoma County foreclosures may be less common than they were two years ago, but they continue to besiege financially vulnerable homeowners.

According to The Real Estate Report, notices of default in Sonoma County - the first step in the foreclosure process - jumped 52.1% in February. But the good news is that there were still down by 70.1% from the previous year.

Due to the avalanche of foreclosures in recent years, banks continue to own about 685 properties in the county.

Financial Vulnerability Breeds New Forms of Fraud

The Great Recession saw too many people lose their jobs and their homes. Unfortunately, unscrupulous individuals saw a window of opportunity amid this atmosphere of pain and financial uncertainty.

As part of their fraud, companies cropped up, claiming they could prevent foreclosure by negotiating with a consumer's lender or obtaining a loan modification.
These services were offered at a price and naïve and desperate homeowners facing the prospect of foreclosure gladly paid the fee.

Many of the companies pretended to be affiliated with the government or government housing assistance programs. Others falsely claimed to offer legal services or "audits" of consumers' loan paperwork to help them negotiate a resolution with their lenders.
Unfortunately, promised services were never delivered.

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What Do You Do When Your Credit Report Is Wrong?

CreditReportIllustration.jpgHave you checked your credit card report lately? It could have errors that are causing you to unnecessarily pay higher interest payments, mortgage and vehicle loans, and insurance premiums. Those errors could even prevent you from landing a new job.

According to a study by the Federal Trade Commission (FTC), as many as five percent of consumers had errors on one of three major credit reports. In some cases, the errors worsened the consumer's overall credit rating.

Credit reports contain more than a record of your debts. It also includes information about whether pay your bills on a timely basis and will note if you've been sued or filed for bankruptcy.

Your Credit Information Is for Sale

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What Happens When Your Debt is Purchased?

February 19, 2013, by Law Offices of James V. Sansone

images.jpgThe Federal Trade Commission (FTC) receives more complaints about debt collectors, including debt buyers, than about any other single industry.

The Problems with Debt Buying

What is debt buying? It occurs when companies purchase a creditor's debt and then tries to collect the amount owed. Debt purchasing can be a lucrative business, with companies known to purchase debt for just a few cents on the dollar.

For consumers, debt buying can become a nightmare. There are cases in which debt collectors seek to recover funds from the wrong consumer for an erroneous amount.

In 2009, the FTC studied the issue by obtaining information from nine of the largest debt buyers that together amassed 76.1% of all debt sold in 2008.

As part of the study, the FTC studied 5,000 portfolios containing nearly 90 million consumer accounts. Although the accounts were worth $143 billion, debt buying companies purchased the debt for $6.5 billion. Credit card debt accounted for 62% of the portfolios.

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You May be Responsible for Your Ex's Credit Card Debt - Santa Rosa Divorce

November 27, 2012, by Law Offices of James V. Sansone

couple in debt.jpgIf you remember nothing else from this post, remember this one rule, lenders don't give a damn about what your judgment for dissolution says.

A marital dissolution judgment addresses, among other things, division of both the assets and debts accrued during the marriage. This includes credit card debt. However credit card companies, and other third parties not a party to the action are not bound by the judgment.

Unless you are careful right from the moment you decide to separate, you can end up being liable for credit card debt incurred by your ex. It is best if divorcing couples exit the marriage without any joint debt.

When divorce is anticipated, make every effort to close any joint accounts, paying off the existing debt or allocating it to new credit card accounts - one for each of the responsible spouses.

If you rely instead on a divorce degree that allocates a portion of the debt to your ex, but both names stay on the account, creditors can still come after you for any unpaid debts if you ex fails to make payments or declares bankruptcy. These debts become yours. In addition, your ex's late or missed payments will damage your credit record.

Some credit cards are in one spouse's name, with the other listed as an authorized user. Authorized users cannot be held liable for charges on this type of account. If you are the owner of the account, immediately request that your spouse be removed as an authorized user. If you are the user, ask to have you name removed from the account.

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Are Inherited IRA's Exempt From The Bankruptcy Estate?

August 21, 2012, by Law Offices of James V. Sansone

401k-nest-egg.gifAccording to the 5th Circuit Court of Appeals the answer is NO! In the case of In re Chilton, 426 B.R. 612 (Bankr. E.D. Tex. 2010), A bankruptcy debtor inherited an individual retirement account (IRA) from the debtor's deceased parent prior to the debtor's bankruptcy, and the debtor claimed an exemption in the property pursuant to 11 U.S.C.S. § 522(d)(12).

Pursuant to 11 U.S.C. § 522(d)(12), a debtor is permitted to exempt certain property, including "Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986The bankruptcy trustee objected to the exemption.

The debtor placed the funds distributed from the parent's IRA into a new account created in the deceased parent's name from which the debtor, as the beneficiary of the new account, was required take distributions prior to retirement. The debtor contended that the new account was tax exempt and contained retirement funds, and thus the funds in the account were exempt from claims of creditors.

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FTC Enjoins Fake, Harassing, Payday Loan Debt Collector's Business

800-loan-shark.gifPayday loan companies, or as they used to be called "loan sharks", are creating a real problem for consumers who are in dire need of a quick buck for an unexpected expense.

The Federal Trade Commission (FTC) is an independent agency of the United States government. Its principal mission is the promotion of consumer protection and the elimination and prevention of what regulators perceive to be harmfully anti-competitive business practices.

On April 11, the FTC announced a temporary restraining order against Broadway Global Master, Inc. a debtor collector enjoining them from conducting business or withdrawing any funds from their bank accounts. Broadway obtained detailed information about payday borrowers from an unknown source and engaged in intimidation to collect over $4 million from them.

According to the FTC, representatives from Broadway would contact debtors and pretend to be law enforcement officers, use a FBI caller ID, threaten arrest, a state placement of the debtor's children, or to call the debtor's employer, and use obscene language.


















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Banks Are Not Required To Present Any Proof In Order To Obtain Default Judgment

debt-consolidation-reverse1.jpgIn HSBC Bank Nevada, N.A. v. Aguilar, the Appellate Division of the Los Angeles County Superior Court held that a bank was not required to present any proof in order to obtain a default judgment against a holder of a credit card.

HSBC Bank Nevada, N.A., sued Lizet Aguilar for money damages based on Aguilar's alleged default on a credit-card agreement. Aguilar did not respond. HSBC requested entry of default and a clerk's judgment.

The clerk entered Aguilar's default, but refused to enter judgment. The clerk instructed HSBC to submit either an original promissory note or contract or, if necessary, a declaration of a lost original. HSBC did not comply with those instructions. The trial court ordered a show-cause hearing.

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NACBA Petitions Bankruptcy Court For Global Consumer Relief

nacba_logo.jpgIn response to the recent Chapter 11 bankruptcy filing by ResCap, the mortgage arm of Ally Financial, formerly known as GMAC Mortgage, NACBA will be seeking global relief from the automatic stay to allow consumers in bankruptcy cases of their own to bring actions in those cases related to ResCap/Ally/GMAC claims. NACBA is committed to quickly obtaining the broadest and most efficient relief from the stay as possible, so that consumers and their attorneys can continue to bring lien-strip actions, objections to claim, and other actions in bankruptcy cases, without having to individually seek permission from the bankruptcy court in New York. NACBA is both working with the U.S. Trustee and retaining counsel to bring appropriate motions.

This will benefit any debtor who is in bankruptcy and has a mortgage from Ally Financial or GMAC Mortgage. This way debtors will still be able to obtain all the benefits of bankruptcy without any additional work or attorney fees.

The Law Offices of James V. Sansone assists individuals file for bankruptcy protection under the United States Bankruptcy Code and assists creditors to protect their rights when a bankruptcy is filed. We are located in Santa Rosa, California and serve clients throughout Sonoma County, Mendocino County, and Lake County, including Santa Rosa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport, and Kelseyville.

BAPCPA Drove Up Bankruptcy Cost For No Benefit?

February 28, 2012, by Law Offices of James V. Sansone

400_F_8149068_G6FqNK8Lrs9X6TLq75mNJ0ALMLfmwyD3.jpgThe changes made to the Bankruptcy Code in 2005 significantly increased the cost of filing for bankruptcy for consumer debtors without producing a statistically significant increase in creditor recoveries, according to a recently completed study funded by the American Bankruptcy Institute H.N. Schnelling Endowment Fund and the National Conference of Bankruptcy Judges Endowment for Education.

The study looked at what it cost a consumer to file for bankruptcy before and after the changes took effect. The study showed that the hardest hit were debtors who filed no asset Chapter 7 Bankruptcy Cases, with an increased cost of approximately 51 percent.

In Chapter 13 cases, the TDAC increased by 24 percent dismissed cases and by 27 percent in cases where the debtor received a discharge.

"It takes more skill and experienced to responsibly and professionally represent consumer debtors--especially in this economic climate--than it used to. "Moreover, the system is less tolerant of mistakes and yet there are so many more opportunities presented by BAPCPA for even seasoned attorneys to make errors. Without a detailed understanding of how to make the system work, the temptation is there for lawyers to 'cut corners' in order to minimize time spent on a client's case, or conversely, to spend so much time on a case that the legal fee exceeds what an insolvent client can reasonable afford.

Efficiency coupled with a high level of skill, while important to every area of law practice, is crucial to the success of a consumer bankruptcy practice. Best practices' for consumer bankruptcy lawyers requires finding a balance between comprehensively addressing a financially distressed client's interests, and doing so in a time sensitive and efficient manner", the report stated.

The Law Offices of James V. Sansone assists individuals file for bankruptcy protection under the United States Bankruptcy Code. We are located in Santa Rosa, California and serve clients throughout Sonoma County, Mendocino County, and Lake County, including Santa Rosa, Petaluma, Cotati, Rohnert Park, Sebastopol, Healdsburg, Sonoma, Kenwood, Glen Ellen, Windsor, Bodega Bay, Ukiah, Willits, Clearlake, Lakeport, and Kelseyville.