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February 17, 2010

Tax – Technical Issues

Filed under: Taxes — Barry @ 11:46 am

Please note, that this post is intended for my colleagues who are tax attorneys.  If you are not a member of the California Bar and would like to submit through this office, please let me know, or else send your comments as indicated below.

Barry

Dear Members of the California Tax Procedure and Litigation Committee,

A big thanks to those who have provided the Committee Chair with their comments regarding the following topics requested by the U.S. Tax Court:

  • Innocent Spouse Trial Issues: the Tax Court is interested in whether, among other things, there is anything that could be done better or the status quo ante is acceptable;
  • Levy/CDP Cases: the Tax Court is interested in whether, inter alia, there is anything that could be done better or the status quo ante is acceptable;
  • The Tax Court wants our feedback on its new electronic filing, which is to be effective January 1, 2010: do we like it better than before and whether any attorneys are having any problems getting used to it, if so what are they, and if so, what are some proposed solutions for improvement and easier use (or is the new system perfect?);
  • With respect to litigation and suggestions for improvement by the Tax Court, the Tax Court is interested in any “technical issues and anomalies encountered by attorneys before, during, and after trial” (or if there are none); and,
  • The Tax Court is interested in a discussion of how the Tax Court Rules that have gone in effect in January of this year (e.g., limiting interrogatories to 25) should be implemented and applied in practice (or if these new rules have no need for improvement, etc.).

However, the Committee Chair still needs more comments to make our Committee’s contributions to the U.S. Tax Court meaningful. And the Committee Chair needs them before the end of February. Let’s use this opportunity to help improve our practice before the U.S. Tax Court.

Please send your comments via e-mail to Michael R.E. Sanders, Chair, at sanders@taxatty.com

Thank you for your support.

Mike

Your Credit Reports are Supposed to be Kept Confidential under Fair Credit Reporting Act

Filed under: Credit Reports — Barry @ 11:09 am

Gregory Navone of Las Vegas and the two mortgage brokerage companies he owned – First Interstate Mortgage Corp. and Nevada One Corp. – were charged in the FTC’s December 2008 complaint with improperly disposing of at least 230 credit reports and other “sensitive consumer records” collected by the firms. Navone did not immediately respond to a request for comment.

Just a short note today.  [This post was originally posted several weeks ago, but the website crashed].  Your credit reports (just like your medical records) and other financial records are supposed to be kept confidential.  What this means is that anything with identifiable information should be securely disposed of and should never be thrown in the trash.

A great big no-no is leaving your social security card number where it can be used by others for various reasons… Number 1, Identity Theft.

Apparantly, Gregory Navone of Las Vegas and the two mortgage brokerage companies he owned –  First Interstate Mortgage Corp. and Nevada One Corp. didn’t understand this or did not care.  They were charged by the FTC’s  with improperly disposing of at least 230 credit reports  and other “sensitive consumer records” collected by the firm.

They have agreed to pay a measily $35,000 for this violation.  This amounts to a little over $150 for each of the 230 records.   Do you think this is enough?

To read more check out:  http://bit.ly/5lvgWx

What Happens to my family if our home is foreclosed on…?

Filed under: Forecloseure,Mortgages — Barry @ 10:43 am

First, we need to look to federal law.  Sections 701 et, seq. of Public Law 111-22 (Protecting Tenants at Foreclosure Act of 2009) provides limited protection to “bona fide tenants” receive protection from immediate foreclosure if the owner of the residence is foreclosed on.  However, owners, their children, or their parents are not afforded protected from eviction.    [The protection of tenants will be discussed in a future post.]

We therefore need to look to state law, since federal law does not protect the owners, their children or their parents in the event of a foreclosure.

In general, California law does not protect an owner who becomes a tenant after the home has been foreclosed on whether by non-judicial or judicial foreclosure.

What this means is that the new owner must give a 3-day notice to quit before filing an unlawful detainer action.  It is to the foreclosed owner’s benefit to immediately on notice of the sale to contact the new owner (usually the bank) and try to negotiate a lease for the property or “cash for keys”.  REMEMBER YOU SHOULD ACT QUICKLY AS SOON AS YOU RECEIVE NOTICE THAT THE PROPERTY HAS BEEN SOLD.

Negotiating “cash for keys” can be beneficial for both parties. The new owner does not have to go to the time and expense of an unlawful detainer action and possibly the costs of an eviction.  The former owner gets some cash to pay for the costs of the move.  Since the new owner is giving cash only on possession, they can often avoid damage by disgruntled former owners.

The buyer of the home at foreclosure is only “required” to give you a “Three Day Notice to Quit” before they may file an unlawful detainer proceeding against you.  This does not mean that they will not give you more time or work with you to get you out of the property.  The cost (legal fees, and court costs) of filing an Unlawful Detainer action (in Los Angeles County run approximately $1,000.00.  If the owner will negotiate, they might pay this amount to you instead of the court and an attorney.  Further, the owner knows that you understand that just getting the court order does not get you out of your home.   Often the judge will try to get the parties to enter into an agreement to allow the tenant a certain period to move; this is usually entered as a stipulated judgment (a judgment that will only be entered if you do not live up to the agreement).

Once you have been served with an unlawful detainer action, you have only 5-days to file an answer.  The 2010 Los Angeles County court filing fee to file an answer depends on how much the owner says you owe.  It can range from $205 to $355, unless you qualify for a fee waiver.

After the court grants possession, the new owner must apply to the court for a “Writ of Execution.”  The writ of execution must be given to the sheriff to evict you; the new owner may not forcibly move you out. This means that the new owner cannot go in, change the locks and throw your possessions in the street or trash; only the Sherriff can evict you!   The sheriff must give you a 5-day notice before they can come in to forcibly remove you from the premises.   Some sheriff’s departments move quickly, some are very slow in proceeding with even posting the notice.  The minimum fee for the eviction is $125.  The former owner will be responsible for the costs of storage.

The following article from the May 24, 2009 Los Angeles Times discusses evictions in Los Angeles County.  http://articles.latimes.com/2009/may/24/local/me-ridealong24

It is always best to work out a mutually beneficial arrangement between the new owner and old owner, as opposed to going to court and being forcibly evicted.  A cash for keys agreement can give you as little or as much time to move as you and the new owner can agree.   An unlawful detainer action in court through forcible eviction can take as little as three weeks to as many as two to six months or more.

February 16, 2010

The Debt Collectors are Scared… The FTC is Investigating

Filed under: Credit — Barry @ 7:05 pm

Do you know what a debt buyer is?  I didn’t until quite a few years ago.  My wife started getting phone calls telling her that she owed money to some company unnamed company.  Sometimes the call was from Illinois, Missouri, Alabama, and sometimes even from outside of the United States.   The collector always said they were trying to collect on a debt they claimed was owed them, who always started the call with “We are trying to collect a debt, any information we obtain will be used for that purpose.”  My wife did not know what they were talking about, much less about some debt from the late 1980’s.

It turns out they were the debt buyers.   These are companies who buy old debt and questionable debt from that banks, credit cards and others have in all likelihood written off and figure they will never see.  The problem is that many times it is not your debt or, if it was you paid off the creditor some time ago.  Most of the time if you ever owed the money, you paid them off more than 4 years ago (the California Statute of Limitations for collecting debts), so you probably no longer have proof that you paid them off.  Very often, the debts are beyond the statute of limitations and the creditor may no longer sue you in court or get a judgment against you; further they may not put anything on your credit report.

  1. There are some problems with many debt buyers.
  2. The Debt Buyers get a percentage of every dollar they collect.
  3. The debt collectors are on commission… they have reason to lie and try to get you to pay!
  4. They will often try to reactivate an old beyond statute of limitations debt by convincing you to make a “small” payment.
  5. The  debt may have been Discharged in Bankruptcy.
  6. A previous debt buyer may have returned it as uncollectable and received a refund, and then the original owner may sell it to yet another debt buyers.
  7. They are more often using pressure tactics because they are calling from outside the country… Pakistan is a favorite as of late.

BEWARE

Making a small payment may reactivate a beyond statute of limitations debt and RESET the statute of limitations.

Do not talk to them.

Tell them to send you something in writing (preferably to your PO Box).

Write them, with a copy to your attorney, the state attorney general and their state attorney general disputing the debt, denying the debt and telling them to no longer contact you by telephone.

File a complaint against them WITH the FTC or your state Attorney General

But anyway, the debt collectors are afraid because the Federal Trade Commission is looking into their industry.  What are they afraid of… SUNSHINE!  But ultimately they are afraid that delinquent debt prices will drop… this means that if American Express (I’m not singling out American Express) currently gets $0.20/per dollar of debt sold, they may only be able to get $0.10/per dollar of debt sold.

Further many of the debt buyers are afraid that their stock prices will go down as well.

If you would like to read more… check out… http://bit.ly/6o5XRW

Do I need to list all my debts on my bankruptcy?

Clients and prospective clients  aways ask whether they need to list all their debts in their bankruptcy.  The simple answer is YES; you must list all your debts.  You must list all debts whether they are secured or unsecured.

Just because you have listed all your debts does not mean that you cannot reaffirm them, or decide (outside of bankruptcy) to pay them in part or in full at any time, either before or after receiving your discharge.  However, this gives you flexibility in determining which if any debt you are going to repay.

Often a client will ask whether they cannot list a credit card with the intent to keep it.  Frankly, the issuer will close most credit cards within days of their becoming aware of your filing.  Remember, the Credit Reporting Agencies (Experian, Equifax, and TransUnion) scan the bankruptcy filing system in live time and report the filings to their clients (most of your creditors).  Most of the time, a credit issuer will cancel your account whether or not you owe them anything.

Since you cannot assure which creditors will find out about your filing, you should always include them in your list of creditors.

One caveat, failing to disclose a creditor can:

  1. Prevent your discharge to that creditor (in certain circumstances), or
  2. Prevent you receiving any discharge at all… Failing to list every creditor may constitute perjury or committing fraud on the Bankruptcy Court, which would deny you of any discharge.
  3. The best policy is to list every debt, including what you owe to your mother, your brother, Aunt Sally, or Uncle Sam.  If the Court discharges a debt, you may still decide to pay that creditor later.Please note that deciding to pay a creditor, i.e., your Aunt Sally before you file is also a problem and may allow the bankruptcy court to order your Aunt Sally to pay the money back to the court. (There are different time limits for different creditors; this will be covered in a later post.)

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