Scam Targets Bankruptcy Filers

Scam Targets Bankruptcy Filers

Phone scammers are targeting bankruptcy filers in several states, using personal information from filings and posing as attorneys to get intended victims to immediately wire money to satisfy a debt.

The National Association of Consumer Bankruptcy Attorneys issued a warning that “Under no circumstances would a bankruptcy attorney or staff member telephone a client and ask for a wire transfer immediately to satisfy a debt. Nor would the bankruptcy attorney and staff ever threaten arrest if a debt isn’t paid.”

Bankruptcy filers in Vermont and Virginia reportedly have received calls. Vermont’s Attorney General says scammers use software to “spoof” the Caller ID system so the call appears to be originating from the phone line of the consumer’s bankruptcy attorney. Typically the calls come late in the evening or during non-business hours to make it difficult for intended victims to verify the call by contacting their attorney.

Consumers receiving this kind of call are advised to hang up and contact their bankruptcy attorney as soon as possible. Do not give any personal or financial account information to the caller.

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source:  uscourts.gov

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Can any Taxes be Forgiven in a Chapter 7?

Yes.  The interplay of the tax codes and the Bankruptcy Code is complex, but in somewhat oversimplified terms, if a tax return creating a tax debt was filed more than three years before the filing of the Chapter 7 petition, the tax debt can be discharged. Stated another way, if a Chapter 7 petition is filed within three years of the filing of the tax return creating the tax debt, the tax debt cannot be discharged, and the Debtor will still owe the taxing entity when the Chapter 7 is completed.  Certain taxes, such as employer withholding taxes, will not be forgiven, however, even if they are older than three years, and if you have not filed your income tax returns, even older taxes may not be forgiven.  Even then, however, a Chapter 13 filing can allow more time to pay in accordance with a plan, without additional penalties and interest to accrue.

Why is Chapter 7 the Best Option for Some People

Why is Chapter 7 the Best Option for Some People

Sometimes people simply cannot repay their creditors, no matter how good their intentions.  A Chapter 7 forgives a Debtor of most, if not all, of their debts.  A few exceptions are:

  • most taxes
  • child support and/or alimony
  • most student loans
  • court fines and criminal restitution
  • debt arising out of personal injury caused by driving drunk or under the influence of drugs
  • debt relating to money or property received by fraud

These exceptions either do not apply in a Chapter 13, or the debt that cannot be forgiven can be repaid in the plan of reorganization.  That is discussed in more detail below.  If a creditor has a mortgage on your house, or a lien on your car or other property, it is a secured creditor.  Chapter 7 seems to work best for those people who have their secured creditors under control, who are willing to give up property attached to debt that they cannot afford, or who have very little secured debt, but who cannot pay their other creditors.  A Debtor may struggle every month to pay the only secured creditor, the bank holding title to the Debtor’s vehicle, but after paying living expenses, may have no money to pay to finance companies and unsecured creditors. Under Chapter 7, the Debtor would be required to continue paying the regular payment on the car loan, but would have all other debts discharged. If the Debtor did not want to keep the vehicle, or could not continue making the regular payment, the car would be returned to the secured creditor. This creditor would then hold an unsecured claim which would be discharged (forgiven).

Cases in Review: February, 2015

Cases in Review: February, 2015

“Cases in Review” highlights recent cases that may by of particular interest to consumer bankruptcy practitioners   It is brought to you by Consumer Bankruptcy Abstracts & Research and the National Consumer Bankruptcy Rights Center.