Archive for the ‘ debt ’ Category

Should Financially Distressed Illinois Cities File Bankruptcy?

Posted on: February 22, 2017 by in Bankruptcy, debt
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The nonprofit Manhattan Institute says that an “intervention bankruptcy” is a good option for cities experiencing pressing financial problems, as long as politicians are kept out of the loop.

Such a course of action is highly preferable to continuing operations on the brink of insolvency, because eventually they get to a point “where they cannot pay their creditors and [they are] liable to creditor lawsuits,” remarked MI Senior Fellow Dan DiSalvo. However, cities are under intense pressure from voters and interest groups to avoid the bankruptcy route, he added. The so-called Detroit model, which puts a state-appointed manager in charge of the city’s finances, is preferable to the so-called California model, under which elected officials retain control.

Under a 1990 law, financially distressed Illinois cities have access to special emergency funding options, and if they file bankruptcy, the elected leaders must relinquish control to a state-appointed manager.

Bankruptcy Symptoms

In the past, many observers criticized politicians in Washington for their “borrow-and-spend” approach to government finances, as according to some, leaders ran up large budget deficits with little thought as to the funding for their ambitious programs. Many cities are in a similar boat, because they promised large pensions to attract and retain workers to jobs that, relatively speaking, paid much less than private-sector alternatives. Later, when those bills become due, a few cities struggle to stay afloat.

Most personal bankruptcies occur because of job losses,divorces, illnesses, and other events largely beyond the debtors’ control. As a result, it is sometimes hard to know when to seek bankruptcy assistance.

  • – Unsecured Debt Servicing: As a rule of thumb, if a family accumulates more than $10,000 in consumer debt (credit cards and medical bills), it is all but impossible to repay it, especially if the family’s other loan balances are about average.
  • – Secured Debt: Again as a rule of thumb, most moneylenders begin initial adverse action (letters and phone calls) once an account becomes 30 days delinquent; more aggressive adverse action (repossession and foreclosure) follows shortly thereafter.

In most cases, an automatic stay takes effect as soon as debtors file bankruptcy, so for the duration of the case, moneylenders cannot take any adverse action against debtors without special permission from the bankruptcy court.

The automatic stay applies to dischargeable as well as nondischargeable debts. For example, if a moneylender is garnishing a debtor’s wages to satisfy a student loan obligation, the moneylender cannot continue such garnishment while the bankruptcy is pending, even though the underlying obligation will most likely survive.

Typically, Chapter 7 bankruptcy extinguishes unsecured debts in a matter of months; Chapter 13 gives debtors up to five years to repay past-due amounts on secured debts.

Contact Aggressive Attorneys

Bankruptcy provides both short and long-term debt relief. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in both Illinois and Indiana.

Resource:

ilnews.org/11794/report-illinois-allow-cities-declare-bankruptcy/

Dischargeable Bankruptcy Debts

Posted on: January 26, 2017 by in Bankruptcy, debt
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Mortgage underwriters talk a lot about debt-to-income ratio, and as a rule of thumb, a 43 percent DTI ratio is the ceiling for mortgage qualification purposes. The thinking is that people who owe more money than that cannot afford to pay it back, and therefore they are very poor credit risks.

So, according to current government statistics, if your family pays more than $1,600 in debts each month, and that includes mortgage notes and other secured debts, it will be difficult or impossible to repay these obligations in full without outside assistance. Unfortunately, that category includes most all middle-income families in Illinois and Indiana; fortunately, relief is available.

Debt Elimination

Although they operate a little differently, both Chapter 7 and Chapter 13 eliminate unsecured debts, including:

  • – Credit Cards: Families who have credit card debt owe an average of $16,000 on credit cards alone, which is almost more than most incomes can accommodate.
  • – Medical Bills: One in five families have unpaid medical bills, and as for the percentage of people who are at-risk for default, the number is even higher.
  • – Signature Loans: Although the moneylenders would like people to think differently, payday loans fall into this category. Auto title cash loans are usually secured.

Immediately upon filing, bankruptcy’s automatic stay forbids moneylenders from pursuing foreclosure, lawsuits, wage garnishment, and all other forms of adverse action, at least in most cases. A Chapter 7 discharges (forgives) debts in about four to six months, and a Chapter 13 discharges debts at the end of the three or five-year repayment period.

Bankruptcy judges can extinguish debts but not the collateral consequences of debts, meaning that income tax liens, blacklists, and other items usually survive bankruptcy.

Debt Reduction

Most people sincerely want to repay their debts to the greatest extend possible, either because of a moral obligation or because they want to retain the secured property, and Chapter 13 is tailor-made for these families.

Rather than throwing money at secured debt delinquency, Chapter 13 debtors consolidate all these accounts into one monthly payment based on their incomes, and moneylenders basically cannot object, as long as the judge considers the repayment plan to be reasonable. Moreover, if there is a legitimate dispute as to the amount owed, judges usually refer the matter to mediation, where the moneylender must negotiate in good faith to reach a mutually-satisfactory agreement. Even if there is no dispute, an experienced attorney can sometimes independently negotiate with the moneylender and obtain more favorable repayment terms.

What Stays Behind

Child support delinquency, past-due alimony, and other DSOs (domestic support obligations) are typically not dischargeable in bankruptcy, even though they are technically unsecured debts. The same thing applies to some criminal fines. Student loans are dischargeable if the debtor establishes an undue hardship, and income taxes (but not income tax liens) are dischargeable if the tax is at least three years overdue, the return has been on file for at least two years, and the taxing authority hasn’t assessed the debt in the last 240 days (nine months).

Go With Experienced Attorneys

Bankruptcy is the best way to help people eliminate and manage det. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle cases in Indiana and Illinois.

Resources:

consumerfinance.gov/askcfpb/1791/what-debt-income-ratio-why-43-debt-income-ratio-important.html

nerdwallet.com/blog/average-credit-card-debt-household/

The Freshest Start Of All

Posted on: January 19, 2017 by in Bankruptcy, debt
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General Motors intends to take its ignition switch liability argument all the way to the Supreme Court.

Earlier, the Second Circuit Court of Appeals in New York ruled that the automaker is still responsible for damages stemming from defective ignition switches, even though the company declared bankruptcy in 2009 and emerged a short time later. The company’s lawyers have consistently argued that while the “old GM” was clearly responsible for damages in these cases, the “new GM” is an entirely new corporate entity and the Bankruptcy Code guarantees the company a fresh start free from its prior liabilities. Indeed, a district court judge initially agreed with GM and ruled that the new company was not liable for damages.

The automaker recalled over 2.6 million vehicles that were linked to 124 deaths.

Back to the Starting Line

GM’s arguments have some merit, because the Bankruptcy Code guarantees a “fresh start” to the “honest but unfortunate” debtor; the real question in the GM case is just how honest the automaker was in the faulty ignition switch row.

The automatic stay is part of the fresh start, and it essentially allows debtors to legally ignore their debts. Moneylenders cannot take any adverse action against debtors as long as the automatic stay is in effect, and that includes repossession, foreclosure, wage garnishment, harassing phone calls, and any “easy payment plans” the moneylender may have imposed. While the bankruptcy judge has almost unlimited power to forgive debts, the power ends there. So, bankruptcy extinguishes debts but not security agreements, and if the debtor stops making payments on a house or car or whatever, the judge almost always allows the moneylender to enforce their liens. Similarly, bankruptcy cannot extinguish the collateral consequences of debt, like income tax liens.

The discharge order completes the fresh start. It is illegal for any moneylender or debt-buyer to attempt to collect a debt that was discharged in bankruptcy.

Strong to the Finish

A bankruptcy lawyer gets you back to the starting line, and the next move is up to you. That being said, there are many things you can do to help rebuild your credit after bankruptcy.

It may seem counterintuitive to tell people with prior debt problems to obtain a credit card, but the responsible use of credit is the only way to rehabilitate a credit score. Most debtors receive many such offers after they receive their discharge orders, because the moneylenders know that a waiting period applies and it will be several years before the former bankruptcy debtor can file another voluntary petition. It’s usually best to select a card with a relatively low credit limit that can be increased later; some people automatically gravitate to secured cards, but many of these issuers put a “secured card” note on credit reports, and that note diminishes the impact of on-time payments.

Speaking of on-time payments, secured debts must be paid on time, because these creditors report payment history directly to the credit bureaus. Other bills, like utility bills and car insurance payments, are not reported regularly, but unpaid accounts typically go to debt-buyers.

Count On Experienced Attorneys

To get the fresh start you and your family deserve, contact an experienced bankruptcy attorney in Chicago from the Bentz Holguin Law Firm, LLC for a free consultation. Convenient payment plans are available.

Resources:

law.cornell.edu/uscode/text/11/362

reuters.com/article/us-usa-court-gm-idUSKBN1422VN

Eliminating Debt Through Bankruptcy

Posted on: January 3, 2017 by in Bankruptcy, debt
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It would be nice if bankruptcy was a magic wand that instantly discharged all consumer debts. After all, bankruptcy is a fresh start, and people cannot obtain this fresh start while still saddled with debts they cannot pay.

Alas, the world does not work that way, largely because moneylenders have financial rights as well, and federal laws protect these rights. Therefore, the type of debt has a great deal to do with the dischargeability, or non-dischargeability, of that obligation.

Private Debts

When times get tough, many people use credit cards for food, gas, utility bills, and other necessary expenses; most landlords and banks do not accept credit cards for rent and mortgage payments. But for the most part, people typically use credit to buy non-essential items.

All that being said, the credit card companies bear some responsibility if the borrowers default on the cards and declare bankruptcy. Some firms are rather notorious for issuing cards to people who can only barely afford to repay the loans. Furthermore, credit card companies earn over $150 billion a year, so despite what they may say, a few thousand dollars is not a major loss, especially since it may be a tax write-off. When taken together, all these factors mean that although the charges are clearly the individual’s responsibility, the company is hardly a “victim.”

Medical bills are in basically the same boat, which is why they are 100 percent dischargeable as well, at least in most cases. Providers usually charge uninsured patients much higher fees than they charge insurance companies, so it is little wonder that almost 43 million Americans have at least one unpaid medical bill.

Dischargeable Public Debts

Although they are government-guaranteed, Small Business Administration loans are generally dischargeable in bankruptcy. However, if the SBA loan included a security interest or a property lien, bankruptcy does not extinguish the lien or security interest, because bankruptcy judges do not have that power.

Income taxes are also dischargeable in bankruptcy, and since the Bankruptcy Code does not define “income taxes,” the IRS or other taxing authority usually has the final say on what debts qualify for discharge and which ones do not. Regardless, the following rules apply:

  • – The debt must be at least three years old,
  • – The returns must have been on file for at least two years, and
  • – The debt has not been “assessed” in the last 240 days (basically, that means that the taxing authority has not sent the taxpayer a collection notice in the last nine months).

Similar to SBA loans, bankruptcy discharges the debt but does not extinguish any existing lien.

As discussed in a previous post, student loans are technically dischargeable in bankruptcy actions, though it is not easy to do so, under the draconian Brunner Rule. That is why some federal appeals courts have abandoned this rule and replaced it with a more lenient totality-of-the-circumstances test. Given the split in the circuits, and the ongoing student loan “crisis,” the Supreme Court may eventually weigh in and settle the matter.

Non-Dischargeable Public Debts

Domestic Support Obligations are almost never dischargeable in bankruptcy, because most DSO recipients are not wealthy governments, hospitals, or credit card companies, and they have substantial financial rights that all courts recognize, including bankruptcy courts. Bankruptcy probably will suspend legal proceedings in this area, such as motions to enforce or other collections proceedings, as well as wage garnishment. If the government has placed a lien on a financial account, bankruptcy may be able to release the lien, at least temporarily.

Count on Experienced Attorneys

Most types of debt are dischargeable in bankruptcy. For a free consultation with an experienced bankruptcy lawyer in Chicago, contact the Bentz Holguin Law Firm, LLC. Our law office has a small town atmosphere and access to nationwide resources.

modernhealthcare.com/article/20141211/news/312119987

Trump Adds ‘King Of Bankruptcy’ To His Cabinet

Posted on: December 21, 2016 by in Bankruptcy, chapter 13, debt
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President-elect Donald Trump tapped multi-millionaire investor Wilbur Ross to be his Commerce Secretary.

Some people in and around industrial Northwest Indiana call Mr. Ross the “king of bankruptcy,” because in the past, he has purchased companies in distressed industries at a discount, often while they are in bankruptcy, and either liquidated their assets or helped make them profitable again. In the early 2000s, when over two dozen steel manufacturers went bankrupt because of overcapacity and a financial crisis in Asia, Mr. Ross purchased four domestic companies to form the International Steel Group. Over the next few years, some workers kept their jobs, albeit with lower wages and benefits, while many steelworkers in Pennsylvania and Ohio lost their jobs. Mr. Ross later sold ISG at a $300 million profit.

National Association of Manufacturers President and CEO Jay Timmons supported President-elect Trump’s move, calling Mr. Ross “one of the savviest investors in the world” and someone who has “a firsthand understanding of the challenges manufacturers face to remain globally competitive in today’s economy.”

Bankruptcy: The Great Do-Over

Scott Paul, president of the Alliance for American Manufacturing, said that corporate bankruptcy was like life-saving surgery, because sometimes a skilled surgeon must sacrifice a limb in order to save the patient. Moreover, by most accounts, Mr. Ross honestly listened to union workers before he formulated an exit strategy.

Procedurally and substantively, personal bankruptcies have almost nothing in common with corporate bankruptcies, but philosophically, they are very much alike. Supreme Court Justice James Clark McReynolds was one of the first jurists to refer to bankruptcy as a “fresh start” for the “honest yet unfortunate debtor.” In Chapter 7s, debtors get their fresh starts in as little as a few months, because all their unsecured debts are discharged with the stroke of the judge’s pen. In Chapter 13s, debtors have up to five years to bring outstanding account balances to zero, and moneylenders typically have no other legal choice except to accept the debtors’ repayment terms.

Just like companies, families need a good bankruptcy exit strategy, if they want to avoid future financial issues. Part of a good post-bankruptcy strategy includes:

  • – Credit Card: Few things cause credit scores to rise faster than on-time payments on a revolving debt account. After six or eight months, most borrowers can ask for higher credit limits, and these larger limits make them look even more creditworthy.
  • – Honesty: As a rule of thumb, no one likes unpleasant surprises, and moneylenders do not like to learn about prior bankruptcies when they check credit reports. So, be upfront with future mortgage lenders and other moneylenders about prior credit issues. Typically, most lenders only care about the last six or eight months anyway.
  • – On-Time Secured Debt Payments: This is a must, because student loan payments, mortgage payments, vehicle payments, and other such accounts show up near the top on almost all credit reports.

It is illegal for any moneylender to discriminate based on a prior bankruptcy filing, but it is perfectly legal to make such decisions based on credit history and other relevant factors.

Contact Experienced Attorneys

In short, bankruptcy means a fresh start. For a free consultation with an experienced bankruptcy lawyer in Chicago, contact the Bentz Holguin Law Firm, LLC. After hours appointments are available.

Resources:

nrn.com/finance/logan-s-roadhouse-memo-reveals-bankruptcy-exit-strategy

nwitimes.com/business/steel/trump-nominee-wilbur-ross-a-divisive-figure-in-steel-industry/article_6ff2b253-45be-576c-99c9-91837c710a06.html

The Financial Comeback Trail

Posted on: December 20, 2016 by in Bankruptcy, chapter 13, chapter 7, debt
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Abraham Lincoln, one of Illinois’ favorite sons, declared bankruptcy in 1833.

In his early 20s, Lincoln worked various jobs in Springfield, and that work included employment at a local general store. When the establishment closed, the young and enterprising Lincoln decided to open his own store in New Salem with a business partner. The two men purchased other stores’ inventories on credit to fill their shelves, a risky strategy that backfired when sales dipped at the New Salem establishment. Lincoln later recalled that the store “winked out,” and after his partner died, Lincoln was liable for about $1,000 in debts, an astronomical sum at the time.

Since he filed before the modern Bankruptcy Code, Lincoln took seventeen years to repay the debt in full; he also lost his horse and surveying gear, which were his only assets.

What If It Were Today?

Today, debtors can choose between Chapter 7 and Chapter 13, and either one would have most likely protected Lincoln’s assets and shortened the debt repayment period. Furthermore, during repayment, the hypothetical Lincoln would probably not receive any threatening letters or phone calls, because of the automatic stay.

In both liquidation and repayment bankruptcies, most assets are exempt up to certain levels, including:

  • – Houses,
  • – Vehicles,
  • – Retirement accounts,
  • – Personal property, and
  • – Cash on hand.

Qualified Chapter 7 debtors normally receive debt discharge (debt forgiveness) orders in only a few months.

Depending on their income, Chapter 13 debtors have either three or five years to repay their debts, and after that debt repayment period, any remaining unsecured debts, like credit card and medical bills, are discharged. Before the repayment period begins, debtors propose a monthly debt consolidation payment that goes to satisfy all secured debts, like home mortgage arrears or past-due car payments; during the repayment period, moneylenders can only take adverse action with special permission from the bankruptcy judge.

Recovery from Bankruptcy

Although it is not much worse than foreclosure or repossession, bankruptcy is normally the worst possible blow to a credit report; Chapter 13s usually fall off after seven years and Chapter 7s normally take ten years. In other words, bankruptcy gives consumers fresh starts and places them back at the starting line, and there are a few ways to move forward thereafter.

First, take a hard look at why the filing was necessary. Typically, there was a serious financial storm, such as a sudden illness or layoff, and saving a little bit each month goes a long way towards weathering these storms. If poor spending habits contributed, and they sometimes do, these issues must be dealt with. Second, get a credit card after bankruptcy. Charge something every month, and pay off most of the balance before the due date. This habit creates a good payment history that raises your credit score. Third, pay secured debts on time. These payments are normally reported to the credit bureau, so this is another way to build up a solid payment history.

If they take full advantage of their fresh starts, most bankruptcy debtors may not even remember that they filed after their petitions fall off their credit reports.

Go with Zealous Attorneys

At the Bentz Holguin Law Firm LLC in Chicago, we are committed to consumers in Illinois and Indiana. Contact us today for a free consultation.

Resource:

quod.lib.umich.edu/l/lincoln2/5250244.0001.001/1:13.1?rgn=div2;view=fulltext

The Comeback Trail

Posted on: October 13, 2016 by in Bankruptcy, debt
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Bankruptcy blog sites are often replete with posts about recoveries from bankruptcy; for example, Abraham Lincoln, Cyndi Lauper, and Larry King all filed bankruptcy and they turned out alright. Their stories, and others like them, are both true and inspiring, and they show us that bankruptcy is a fresh start in the game as opposed to the end of the road.

However, these stories often come across like those television weight-loss commercials in which paid actors give testimonials such as “I lost fifty pounds on the XYZ plan; it was easy and you can do it too.” However, not everyone will lose fifty pounds on the XYZ plan, and it will almost certainly not be easy.

Bankruptcy recovery is much the same. It will not happen quickly and it requires effort, but in almost all cases, it does happen.

Everyday Actions

One of the most persistent myths about credit score is that paying bills on time makes a score go up. Unfortunately, that’s only true in some cases. Some monthly payments, mostly auto loans payments, student loan payments, and mortgage payments, are reported to the credit bureaus and on-time payments on these accounts will usually make one’s score go up. But most other bills, like car insurance, rent, and utilities, are not reported to the credit bureaus and on-time payments will have no effect on a FICO score. That being said, unpaid accounts are nearly always sold to debt-buyers. Such transactions do show up on credit reports, and “referred to collections” is one of the worst comments on a credit report.

To hasten the credit restoration process, many former debtors obtain credit cards. That’s much easier to do then one might expect, because since former debtors cannot file bankruptcy again for several years and they are actually better credit card risks than some non-filers, many people are inundated with credit card solicitations almost as soon as the ink dries on their discharge orders. There are a few things to remember:

  • – A secured card is sometimes a good option, because it has such a low credit limit. Try to find a card issuer that does not include a comment on FICO scores that the account is secured, because the positive impact is not as significant in these cases.
  • – There is some debate as to whether it is better to pay off the balance in full each month or leave a small unpaid balance that allows the moneylender to earn interest. A trial-and-error approach may be best, so do both and see what happens.

Bear in mind that almost everything is negotiable when it comes to credit cards.

That same principle applies when asking for secured loans on a house or car. Be upfront with the moneylenders and tell them about your situation. In most cases, if the moneylenders see six months of on-time payments, they will lend more money, albeit at a higher interest rate. In fact, many secured moneylenders like working with low-risk former bankruptcy filers, because they can legally charge more money for the loans.

Your Fresh Start Is Waiting

At the Bentz Holguin Law Firm, LLC, our lawyers know what it takes to obtain both short- and long-term debt relief. Call us today for a confidential consultation with an experienced bankruptcy attorney in Chicago.

Resources:

https://www.wisepiggy.com/credit_tutorial/improve_credit/will-paying-bills-on-time-help-my-credit.html

http://www.investopedia.com/ask/answers/110614/how-often-can-i-file-bankruptcy.asp

Rebuilding Credit After Bankruptcy

Posted on: October 5, 2016 by in Bankruptcy, debt
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Some people put off bankruptcy, or refuse to file altogether, because they are afraid it will “ruin their credit.” But, to be blunt, their credit is already “ruined,” in many cases. Negative information, like past-due mortgage payments or automotive repossessions, stays on credit reports almost as long as a bankruptcy filing. Furthermore, by following a few straightforward procedures, many former bankruptcy debtors do not even remember that they filed voluntary petitions after a few years pass by.

Professional Credit Restoration

Generally, consumers should be very wary of so-called “credit doctors” and other firms that promise amazing results after they receive small retainers. Typically, these companies do little more than tell you to pay your bills. Moreover, the exact makeup of FICO and other credit scores is a closely-guarded secret, so no one can say with any authority that making X payment will increase your credit score by Y amount.

That being said, experienced bankruptcy attorneys often offer referrals in this area to an effective credit restoration service. If nothing else, your bankruptcy attorney can review the paperwork before you sign and send money, to give you additional peace of mind.

Regular Debts

Conventional wisdom is that paying bills on time is the best way to raise credit scores. That belief is partially true and partially untrue.

Mortgage payments, car payments, and student loan payments are all reported to the credit bureaus. Make them on time, and your score goes up. Make them late, and your score goes down. It’s as simple as that. As most people have at least one of these kinds of loans, on-time payments are an easy way to raise scores.

But not all bills have this effect, at least not directly. Rent, utilities, and car insurance payments are generally not reported to the credit bureaus, so paying them on time will not raise your score. Bear in mind, however, that unpaid accounts eventually wind up with debt-buyers, and accounts that go to collection generally have a very negative impact on credit scores. That’s because many lenders believe that if the consumer lets an account go to collections, the consumer simply gave up and refused to pay.

New Debts

Therefore, many people need some extra help to rebuild their credit scores. It may seem odd to encourage bankruptcy debtors to obtain credit cards, but revolving debt is a very good way to raise scores. Former bankruptcy debtors are often inundated with credit card solicitations, because the lenders know that they cannot file bankruptcy again for several more years.

Choose wisely. Some secured cards do not have as positive an effect on credit scores as unsecured cards, but this is not true in all cases. As for payments, conventional wisdom is to pay the balance in full every month. But some observers believe that it is better to leave a small balance every month, so the bank earns interest.

When applying for credit cards or other debt, be upfront with the lenders. Tell them right away – before they access your credit report – that you filed bankruptcy. Chances are that, if you have a reasonable explanation for your past misfortune and have no late payments in the last six months or so, you will still get the loan. If the lender refuses to work with you, do not be afraid to walk out, because there are plenty of other lenders who will accommodate your situation.

Go With Aggressive Lawyers

At the Bentz Holguin Law Firm, LLC, we go to bat for you both before and after your bankruptcy filing. Call our Chicago office today for prompt assistance.

Resources:

http://www.consumerfinance.gov/askcfpb/1343/how-can-i-recognize-credit-repair-scam.html

https://www.wisepiggy.com/credit_tutorial/improve_credit/will-paying-bills-on-time-help-my-credit.html

Student Debt Relief Scams

Posted on: August 25, 2016 by in Bankruptcy, debt, student debt
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Are you struggling to make your monthly student loan payments? If so, you are not alone. Young Americans are carrying an unprecedented amount of student loan debt and many borrowers are having a hard time keeping up with their loan payments. Unfortunately, scam artists are capitalizing on this situation by running ads offering student borrowers lower monthly payments and even debt forgiveness plans. While there are some legitimate debt relief programs out there, most of them run by the government, be wary of any advertisement offering relief from student loans as many are scams.

How Student Debt Relief Scams Operate?

An article from CentralIllinoisProud.com reports that there are several different types of student debt relief scams currently circulating in the United States. The article notes that some of these scams, such as the “Obama Student Loan Forgiveness Program”, attempt to pose as government sanctioned programs. Many scams advertise lower monthly payments or debt forgiveness in exchange for an upfront fee. Some of these scams even make good on their promise of reduced monthly payments, however, what they are actually doing is passing off free federal government debt relief programs as their own and then charging borrowers for it. According to the Department of Education some of these scams charge monthly maintenance fees as high as $50 for this “service”.

What to do if You are Struggling with Student Loan Debt

CentralIllinoisProud.com suggests that student borrowers who are stuggling to pay their bills take the following actions:

  • – Contact your student loan servicer and ask them if there are any helpful debt relief programs available to you,
  • – Consolidate your loans in order to make it easier to keep track of your payments (note that this may not be in your best interest if they offer you a higher aggregate interest rate on your consolidated loan),
  • – Ask your student loan servicer if you can lower your monthly payments by enrolling in an income-based repayment plan,
  • – Enquire if you are eligible for a federal student loan forgiveness program, and
  • – Consider refinancing your loans with a private lender.

While all of these options are worth pursuing, unfortunately some borrowers will still be facing monthly payments that they are unable to keep up with. However, there is an alternate option available to some borrowers: bankruptcy. Filing for bankruptcy generally does not cancel student debt, however, if the borrower is able to show that paying the debt would impose an “undue hardship” a bankruptcy court may allow the student debt to be wiped out during the borrower’s bankruptcy proceedings. Be warned though, proving undue hardship under these circumstances is extremely difficult. If you are interested in pursuing bankruptcy in order to alleviate your student debt contact an experienced bankruptcy lawyer to discuss whether or not a count would likely find that requiring you to pay the debt would impose an undue hardship.

Need Legal Advice?

If you live in Illinois or Indiana and are in need of debt relief, contact the experienced lawyers of the Bentz Holguin Law Firm, LLC today. Our debt relief attorneys would be happy to sit down with you during a free consultation to discuss your financial situation and your legal options.

Be Warned: IRS and Debt Relief Phone Scams Are on the Rise

Posted on: August 25, 2016 by in Bankruptcy, debt
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According to an article in The Times of Chester County, IRS and debt relief phone scams are on the rise. Phone scams come in variety of different forms, but often involve a foreign phone call placed to a target in the United States. After answering the phone there is generally a pause and maybe a click before a voice claiming to be from the Internal Revenue Service (IRS) comes on the line. The scammer often claims that you must immediately pay money to the IRS or else go to jail, lose your house, or face some other awful outcome. The Times reports that recent scams have been particularly successful because the fraudsters are “spoofing” a local number, or a Washington, D.C. number, so that the victim’s caller ID does not report that the call is in fact being placed from abroad.

This type of phone scam is on the rise, and The Times notes that even their newsroom was targeted recently. In an attempt to investigate the scam, a reporter from The Times called back after receiving a seemingly fraudulent phone message from “an IRS representative” claiming that if they did not call back they would be sent to jail. The reporter asked the suspected scammer a serious of questions about who they were representing and whether or not they were located in Newport Beach, California, as the caller ID had reported. The scammer told the paper that they were calling from Washington, D.C. and repeatedly claimed to be calling on behalf of the IRS and that failing to comply would result in jail time. When the reporter eventually identified himself as a reporter for The Times the scammer hung up and refused to pick up the phone when the reporter tried to call back. While it is not advisable for individuals to engage with suspected scammers as the reporter did, the steps that you should take if you receive a suspicious phone call about back taxes or debt relief offers are outlined below.

What to do if You Receive a Suspicious Call from the “IRS”

If you receive a suspicious call from someone claiming to be from the IRS stay calm, do not be intimidated, and definitely do not give them any money. The first thing that you should do it hang up. Then, if you think that you may in fact owe back taxes call the IRS at 1-800-829-1040 in order to work out your payment issue. However, if you believe that the phone call you received was a scam you should report the incident to the Treasury Inspector General for Tax Administration at 1-800-366-4484. If you would like more information about how to report IRS related phone scams visit the IRS’s website.

Tips on How to Avoid Being Scammed

The Times notes that one way to avoid being scammed is to be aware that the IRS will never employ the following tax collection methods:

  • Calling about back taxes before sending a written notice,
  • Demanding that a taxpayer pays without the opportunity to appeal the amount owed,
  • Requiring taxpayers to pay using a specific payment method,
  • Asking for credit or debit card numbers over the phone, or
  • Threatening to have local law enforcement officers arrest you for not paying.

Need Legal Advice?

Owing money to the IRS is serious, however, there are legitimate debt relief option available to you. A good IRS relief attorney can help you assess your options, determine if filing for bankruptcy is in your best interest, and possibly even negotiate with the IRS to reduce the amount that you owe. If you are struggling to pay back taxes and live in the Chicago Metropolitan Area contact the Bentz Holguin Law Firm, LLC today.