The Telltale Signs of an Email Fraud

Edited by Jenny Greenhough of Rocket Lawyer | August 10, 2012

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Rocket Lawyer Guest contributor Christopher C. Carr , Esq., MBA on how to spot a fraudulent client or transaction in your inbox. Slightly reedited for this blog publication.

                       

 

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Don’t let a fraudster pull the wool over your eyes.

As discussed in my prior post, attorneys need to stay on alert for collection scams. Even for a savvy attorney, it’s easier to become an unwitting target of fraud than you may realize. For example, publicizing a big win in a lawsuit on your website may indeed bring you new clients, but some of them may actually be intent on profiting from a fraud perpetrated against your firm.

These scams can take on many guises. For example, a few weeks ago I got a very sophisticated scam letter. This time it was purportedly the representative of a Japanese law firm wanting local representation for litigation against debtors in the US. I immediately asked for his bona fides and he wrote back pretending to be insulted by my lack of trust. I then wrote back and explained that I had been taken in before and had lost some $2,000 in such a scheme and had thus adopted a policy whereby my firm holds all payments until final payment is issued to my bank by the depository bank on any settlement check (not just provisional payment because the check can still bounce until honored by the depositary institution).

Needless to say, I never heard from my Japanese “colleague” again.

Reading the signs

Let’s look at some if the identifying marks of this trade:

  1. Typos and other language errors: Note the punctuation errors and idiomatic problems in the text above. These are harbingers of this type of fraud and may actually be intentional for the purpose of hiding the true identity of the author from the authorities. However, the message will virtually always contain typos or non-idiomatic English usage, suggesting that the drafter is not even employed by the institution they claim to represent.
  2. No logos/Crude or Incomplete Logos: Another dead giveaway is a suspiciously “plain” appearance. But don’t use this as your only guide. I have recently begun seeing fake PayPal and even some bank items bearing an authentic looking logo.
  3. International debt collection: The message will nearly always solicit your assistance to collect a debt purportedly owed by some American commercial entity or ex-spouse of a foreign national.
  4. Different names: The account you are supposed to credit with the payment will not be in the same name as your client. There may be some excuse like “it’s my mother’s account and she has a different last name than mine.”
  5. Urgency: Anyone who pressures you to pay them however gently or subtlety should be immediately suspect; it means they’re trying to get paid before you receive notice of final payment.
  6. Slow build-up: Sometimes the scammers take a different route: they actually pay a couple of checks for smaller amounts to lull you into a false sense of security. Then they float a big rubber check with a reason like: “We are in a cash flow crunch, would you please pay us early just this once because you are holding up a lot of our money.” If you fall for it, the check bounces and they are never heard from again.
  7. Righteous indignation: When you express doubt about their claims or start asking questions, they respond as if they’re offended. In actuality, they’re trying to make you doubt your own better judgment.
  8. Reality check: As always if it seems to be too good to be true, it probably is!

So how do you test for legitimacy?

If you see any of the telltale signs above or anything else that makes you suspicious, make sure you:

  • Check their IP address. It should be in the same location as they claim.
  • Ask them to wait until you are notified of final payment. Just watch for the “slow build-up trick”.
  • Ask for their ID. Make sure it’s legitimate, and do some in depth Internet research as well to see if the company they claim association with is legit and has a real address where they say it is.

If you use caution, common sense, and follow the tips above, you should be able to spot a scammer without too much trouble. The old adage applies:  IF IT SEEMS TOO GOOD TO BE TRUE, IT MOST LIKELY IS. Otherwise, you and your family or coworkers could find yourself the victim of a home-shattering or firm-busting fraudulent transaction.
About the Author

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


Mr. Carr blogs regularly on debt and bankruptcy topics at https://christophercarrlaw.wordpress.com/.

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Don’t Let a Scam Put Your Solo or Small Firm Out of Business

Don’t Let a Collection Scam Put Your Solo or Small Firm Out of Business

This Article and a companion piece first appeared on RocketLawyer.com,  Edited by Jenny Greenhough| July 27, 2012

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By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

 

ROcket Lawyer Guest contributor Christopher C. Carr , Esq., MBA describes a debt collection scheme that nearly took him in and what attorneys can learn from his experience.

Wolf in sheep's clothingSometimes clients aren’t as they appear.

A single fraudulent transaction can easily wipe out the entire bank account of a small firm and expose the firm and members of the firm to lawsuits in the matter of just a few days.  A few years back I was taken in by a fraud scheme, and suffered what was luckily a much smaller loss, so when another scam came in through my email a year ago, I knew how read the signs.

In this most recent case, I would have been defrauded to the tune of $180,000 by a collection scheme that came in through my email. A supposed British subject hired me to collect $600,000 owed her under a very real looking promissory note from her ex-husband, a West Chester, Pennsylvania resident. I even got her to sign a fee agreement. The background of their relationship and source of the debt is beyond the scope of this article; suffice it to say that their ruse was very detailed and convincing.

These two had a relationship alright, but it wasn’t the one they told me about.

When I contacted him by email threatening suit, the correspondent in the fraud (the supposed ex) hemmed and hawed a bit (to make it look realistic) but ultimately agreed to pay a large installment on the debt. A Fed Ex pack duly arrived a few days later containing a check written on a Nova Scotia bank. I called the bank and verified that he was a customer of the bank but they would not tell me his balance for reasons of privacy.  I then deposited the check in my bank and watched my “available balance” soar.  The fee letter required me to remit the proceeds less my fee by wire to an account in the UK.  Had I done so, I and my bank would have been left holding the bag for hundreds of thousands. So I waited.  I ultimately got a notice from my bank that the check had been dishonored upon presentation to the Nova Scotia bank, which took about 10 days from the time of my deposit.

The couple perpetrating the international fraud obviously counted on this “float” period where I had funds in my account that did not really exist. Clearly their check was written on a foreign bank to try and extend this time as long as possible.

I contacted the local police who took a police report but nothing ever came of it. Although I didn’t suffer any loss in this instance, there would have been little or no insurance coverage for such a loss, had it occurred.

The only traceable elements of this scam typically are:

  • The account (and routing information) into which the proceeds are to be paid
  • The IP address of the defrauder (where the computer or other device is located in the world). It cannot be cloaked and can be checked using a free service available via the internet.

This information can be of use in detecting fraudulent activity as to avoid detection and apprehension these people will rarely be where they say they are.  This should be a dead giveaway.

What do you need to do ethically if a client attempts to defraud your or others? My blog on a related topic may provide some answers.

My advice is to fellow attorneys is to stay on alert when it comes to transferring large sums of money.  Never take anything for granted, and you won’t get taken to the cleaners.

About the Author

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  


Mr Carr is licensed in Pennsylvania and Ohio and is admitted to the US District & Bankruptcy Courts for the Eastern District of Pennsylvania & the Middle District of Pennsylvania. 

WWW: http://www.westchesterbankruptcyattorney.org/
Bankruptcy Blog: https://christophercarrlaw.wordpress.com/

Attorney Carr may also be reached to schedule an appointment at 610-380-7969 or via email at cccarresq@aol.com.

How Do Creditors Manage to Find Debtors with Such Seeming Ease?

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

One of the prime indicators that someone may need to file bankruptcy is when they start to get bombarded by calls and letters from creditors.

Well, just how do creditors manage to locate debtors? Especially in our mobile society where that have moved to a different city or even state, with no forwarding address.

  1. Social Media: Think creditors (and others) are not monitoring the information you post publicly?  Think again, virtually any information you might post, such as where you work, live, shop, etc., can unwittingly provide vital clues as to your whereabouts.
  2. Credit Card Applications: This is one of the most fruitful resources for your creditors. Not only is your residential address and contact information listed, so are references, contacts and acquaintances that creditors can use to track you down if you have relocated. Banks, credit references or relatives may also be detailed on the application and these also can provide promising leads.
  3. Relatives, Friends, Acquaintances, Neighbors, Etc.  These types of contacts are still acceptable if done properly. Collection agents may contact any number of people to get information on you, though there are some restrictions as to how/when they can do this under the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act.
  4. Self supplied information such as Phone Numbers. If a collection agency has or obtains your phone numbers, they may be able to then get your address using a reverse lookup. This is one reason why creditors will so frequently ask if they can add a phone number to your information on file.
  5. Voter Registration Forms: Any time you register to vote in a new area, that information can potentially be accessed by your creditors. Even if you move, your old county retains these records.
  6. Department of Motor Vehicles: These records are available to registered collection agencies in many states across the country. So when you get your license and register your car  in that new state, you may be automatically giving them the information they need to find you.
  7. USPS Change-of-Address forms: Many major credit agencies receive change of address forms when you move from your previous location. They may also take the initiative to check with the post office themselves.  Obviously, this is one of the best ways for creditors to track you down because you thereby tell them exactly where you are going.
  8. Skip Tracers:  Creditors also employ skip tracers.   These are professionals whose job it is to locate a person’s whereabouts for any number of purposes. The term “skip” refers to the person being searched for, and is derived from the idiomatic expression “to skip town”, meaning to depart (perhaps in a rush), leaving minimal clues behind to “trace” the “skip” to a new location. Records that “skiptracers” use may include phone number databases, credit reports (including information provided on a loan application, credit card application, and in other debt collector databases), job application information, criminal background checks, utility bills (electricity, gas, water, sewage, phone, Internet, and cable), social security, disability, and public tax information.  Much of this information is not available or not easily obtainable by the general public or comes from data bases that are not widely known.  Source: Wikipedia: http://en.wikipedia.org/wiki/Skiptrace

Once credit agencies do locate a debtor, their contacts are supposed to be in conformity with the Federal Fair Debt Collection Practices Act (FDCPA) and correlative state laws regarding debt collection, such as Pennsylvania’s Fair Credit Extension Uniformity Act (PFCEUA), both of which prohibit debtor harassment.  (The PFCEUA extends the requirements of the FDCPA to direct creditors.) However, many collectors are now evading the law by setting up shop in foregn countries and then calling in to the US.

©Christopher C. Carr, Attorney at Law 2012, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

M is for Matrimonial Property Obligations and the Discharge in Bankruptcy

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

    M by BigBlue Meanie                    There are two main types of domestic support obligations (‘DSO”) defined in the bankruptcy code. The first kind of DSO encompasses things such as child support payments and alimony. (To simplify, let’s just call this type: “support“). The second type of DSO comes from the distribution of property in divorce; in Pennsylvania the statutes refer to this as “equitable distribution“, which is the terminology I will use here. The latter usually consists of the spouse’s equitable share of the equity — as adjudicated by the courts or agreed to in a property settlement agreement, which also must be court approved in Pennsylvania — in the marital residence but can also include joint bank accounts and other valuable items.

In the general definitions within the Bankruptcy code 11 USC Sect.. 101(14 a-c), both support and equitable distribution appear as DSO’s, misleading one to think that perhaps the two will be treated identically in bankruptcy. However, while this is true of a Chapter 7, it is otherwise for a Chapter 13. The difference in treatment as between the two different kinds of domestic support obligations only become apparent when one looks at how they are treated those portions of the Bankruptcy Code dealing specifically with the discharge of these specific categories of debt.

At first glance in 11 USC Sect. 523(a)(5) and 11 USC Sect. 523(a)(15), the sections of the Code dealing with equitable distribution, it appears that these two subsets of domestic support obligations are treated the same. That is to say, neither support nor equitable distribution obligations appear to be discharged in bankruptcy, meaning specifically that in both a Chapter 7 bankruptcy these debts survive the bankruptcy and remain obligations of the debtor and alternately in a Chapter 13, they both must be paid in the plan and/or any amount left over so survives.

However, 11 USC Sect. 1328(a)(2) changes the picture radically, at least insofar as discharge after completion of a Chapter 13 Plan is concerned. (Note that virtually anyone who has a regular income can elect a Chapter 13 filing as versus a Chapter 7.) This provision essentially states that once all the plan payments are made and the debtor complies with its other requirements, the DSO types not listed in the statute will be discharged: one of the provisions so listed is 11 USC Sect. 523(a)(5), which again deals with with support debts. However, whether by design or inadvertence, Congress conspicuously excluded from that list 11 USC Sect. 523(a)(15), which again pertains to equitable distribution obligations.

Thus, unlike support, which cannot be discharged either in a Chapter 7 or a Chapter 13, the proceeds of an equitable distribution can be discharged to the extent that the ex-spouse still owes same once the Chapter 13 plan payments have been otherwise completed. A clever bankruptcy lawyer, knowing this, will to the extent possible, draft a plan which, perhaps by favoring secured and other priority unsecured debt in order and amount of payment, provides for less than all of the equitable debt to be discharged, which has the effect of excusing the debtor spouse from his or her remaining equitable obligations, even though ironically these were awarded to the creditor spouse by a court of law. The (alas little appreciated) lesson for the family lawyer representing the creditor spouse is to require all equitable debt to be paid up before the property settlement agreement is authorized, so as to avoid eventual loss of some or all of their equity in a potential Chapter 13 bankruptcy.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

Others blogging on M include:

  • Bill Balena,      CLevand Bankruptcy lawyer tells us that M      is for Mistakes .
  • Omaha and Lincoln,      Nebraska Bankruptcy Attorney, Ryan D. Caldwell says M is for Means Test.
  • Marin County      Bankruptcy Lawyer, Cate Eranthe blogs M is for Means Test, a popular topic.
  • New York Bankruptcy      Lawyer, Jay S. Fleischman agrees M is for Means Test too.
  • Colorado Springs bankruptcy      Attorney Bob Doig says M is for Meeting of Creditors.
  • Northern California      Bankruptcy Lawyer, Cathy Moran believes M is for Modify & also for Monthly Income.
  • Hawaii Bankruptcy      Lawyer, Stuart T. Ing says M is for Mortgage Arrears.

Picture credit: Bigbluemeanie

WHAT YOU NEED TO KNOW ABOUT CHAPTER 7 BANKRUPTCY

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

WHAT IS CHAPTER 7 BANKRUPTCY?

Lucky Number 7 by ganesha.isisThe avowed goal of bankruptcy is to give debtors a “fresh start.” What is a Chapter 7 bankruptcy and how does it go about accomplishing this? The “automatic stay” in bankruptcy applies immediately once a Chapter 7 case is filed and generally halts all collection activities, foreclosures, repossessions, sheriffs’ sales, and etc. while in effect. Let’s first look at the different types of bankruptcy proceedings.

The United States Bankruptcy Code offers two primary paths for consumers:

  • A Chapter 7 Bankruptcy: In a so called “straight” bankruptcy, the Trustee in bankruptcy seeks to liquidate the debtor’s non exempt property and distribute the proceeds to the creditors in order of priority, in exchange for discharge of all eligible debt. (Exemptions for various property classifications are set out in federal and state law.) However, certain debts such as guaranteed student loans and domestic support obligations are non-dischargeable in bankruptcy. Most 7’s are “no asset” bankruptcies.

Certain higher income debtors who do not meet the new Means Test must instead file a Chapter 13 Bankruptcy. If you think you might be a candidate for a 13, you might wish to visit my article on the topic.

  • A Chapter 13 “debtor in possession” Bankruptcy: Here, unlike in Chapter 7 proceedings, the debtor retains possession of the assets (hence its nickname). In order to be confirmed by the court, the debtor must prove sufficient income to support a 3-5 year plan wherein payments on secured debt such as mortgages and auto loans (including arrears) and non-dischargeable items continue and unsecured creditors typically get paid a small portion of their debts. For debtors facing mortgage foreclosure, Chapter 13 may be the only choice to halt the process while seeking other remedies within or outside of bankruptcy. However, recent statistics indicate that only about 35% of all 13 plans are ever completed.

There are overall limits as to how much unsecured and/or secured debt a debtor may have and still utilize Chapter 7 or 13.  For those who do not qualify, there is only one option:

  • Chapter 11, a third type of Bankruptcy, is primarily used to help in debt businesses restructure. An example is the bankruptcy from which GM has successfully emerged with the help of a massive US bailout. It is much more complex, time consuming and expensive than Chapter 7 or 13, but is the sole resort for individual debtors with debt which exceeds the limits mentioned above.

Other than consumer perceptions that bankruptcy is somehow unethical or “wrong”, the primary issue with filing bankruptcy is that it remains on the debtor’s credit for up to 7 (Chapter 17) or 10 years (Chapter 13) from filing and may interfere with efforts to obtain credit, purchase or refinance a home or even obtain employment. However, it should be noted that most who seek this relief already have impaired credit and, more importantly, in reality new credit is generally extended to debtors who keep their payments current for a year or two following discharge. So, in effect bankruptcy can work to “repair” credit.

In summary, the automatic stay provides an effective if temporary refuge from foreclosure and other debt collection activities and many debtors ultimately do obtain the permanent solution to their debt problems, the “fresh start” which is the ultimate objective of the US bankruptcy laws.

©Christopher C. Carr, Attorney at Law 2009, All Rights Reserved

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Mod Services.

Photo by ganesha.isis

N is for Negative Impact of Bankruptcy on Credit and How to Overcome it.

N by procsilas in Bankruptcy is for the Negative Impact of Bankruptcy on Credit and How to Overcome it.

By Christopher C. Carr, Esq. Chester County bankruptcy attorney.

Most people are aware that filing bankruptcy can hurt their credit and it is well known that this can take its toll for up to ten years. But then why is it that the credit card apps start arriving again just a few weeks after a discharge in bankruptcy? Is it really true that a bankrupt is doomed to being deemed uncreditworthy for ten years? We will explore these questions below but first a bit of background.

The information contained within your credit report is generally governed by the Fair Credit Reporting Act. This federal law specifies how long a bankruptcy can appear on your credit report. This in turn varies based on type of bankruptcy as well as disposition of the case. Chapter 7 and 11 bankruptcies will appear on the report for up to 10 years from the filing date. Non-discharged or dismissed Chapter 13 and 12 bankruptcies also appear on a credit report for up to 10 years. Discharged Chapter 12 and 13 bankruptcies can remain on the report for up to seven years.

Does this mean that your credit will be impaired for 7 or 10 years? Does it mean you will not be able to purchase critical items on credit?    Certainly not, at least for the debtor who learns from past errors.

Note that the period starts running from the date of filing not discharge so, for example, if you filed a a Chapter 13 bankruptcy petition 4 years ago and completed a 3 year plan 6 months ago, you only have three years to go. And during this time, you will, with persistence, be able to get credit for the things you really need (see below.)

You can begin to rebuild your credit rating immediately upon the date of your discharge order.  In a Chapter 7 this will be granted 3-4 months after your petition is filed, typically.   If you are in a Chapter 13 your plan payments will be reported even while still in bankruptcy.

Don’t even think about hiring a “Credit repair” agency. The money you might pay them can actually be used directly to repair your credit in the one way the experts agree really works.  The crucial thing you can do to rebuild your credit quickly and at no added cost is to pay all your bills on time. No exceptions.  It is not uncommon to see former clients who have rebuilt their ratings within 2 to 3 years after a bankruptcy. Their secret?  They paid their mortgage and car loans ON TIME and didn’t miss a payment. Some ideas: Send the checks EARLY in case the mail is delayed. Set up an emergency fund, perhaps in a short term CD, say with your tax refund to give yourself the “float” needed to make the payments in case you are short one month and then replenish it in flush months. Have the mental discipline to reserve it just for this purpose! If worse comes to worse, borrow against your IRA, 401K at work, life insurance policy  or pension.

As an example, a recent Chapter 7 client finished his case; obtained his discharge order and exactly 30 months later (2 years and 6 months), purchased a new home and obtained a competitive mortgage rate for a 30 year fixed mortgage.

You will be able to get a new credit card after your bankruptcy case has been completed.   It is true that you are likely to be rejected once or twice, but you should be able to obtain approval for a small credit card as long as you are persistent. Your best bet may be to talk to that friendly bank manager you have known for years. And you may need to ask more than once.

There are also ways to surrender that car you are driving now and its high rate loan and purchase a new car even while in bankruptcy, believe it or not.  You will pay a somewhat higher interest rate but rates are at historically low levels now anyway.

You will also be able to obtain student loans, for yourself or for a child, the Bankruptcy Code (11 U.S.C. Section 525) specifically prevents the government from discriminating against individuals on the grounds that they have filed for bankruptcy relief.  I have yet to hear of anyone being denied a student loan on bankruptcy grounds.

There are in addition certain “tricks of the trade” that a competent and compassionate bankruptcy attorney can impart to you once you have retained him or her which will speed up the process of restoring your credit even further.   Be sure to ask!

In conclusion, your payment history will be crucial after (and in a Chapter 13 even during) a bankruptcy discharge, because prospective lenders really will  be looking  to see that you have paid attention to the mandatory debtor counseling sessions and have well and truly learned the lesson of how to use credit responsibly. It often will be easier to rebuild credit after a bankruptcy discharge because you will no longer have debts that hopelessly exceed your credit limits.  In this way and in general (certainly, not in every individual case) over the long haul, the consumer bankruptcy laws prove their worth. This writ large then is why the “fresh start” offered to debtors by our system of bankruptcy is a necessity to a healthy capitalistic system.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality Chester County Bankruptcy Practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Carr, who has over 30 years if diversified experience as an attorney, concentrates his practice on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!


I also provide Mortgage Modification Services.

©Christopher C. Carr, Attorney at Law, 2011, 2012, All Rights Reserved.

Other Bankruptcy Lawyers writing on the letter N include:

California Northern Bankruptcy Court  Marin County Bankrupttcy Lawyer, Cate Eranthe http://marin-bankruptcy-law.com/803/bankruptcy-a-to-z-n-is-for-california-northern-bankruptcy-court/ NACBA Wisconsin Bankruptcy Lawyer, Bret Nason http://nasonlawfirm.com/archives/813 Naked New York Bankruptcy Lawyer, Jay S. Fleischman http://www.consumerhelpcentral.com/bankruptcy-alphabet-naked/ Negative Notice Jacksonville Bankruptcy Attorney J. Dinkins G. Grange http://jacksonville-bankruptcy-grange.blogspot.com/2012/02/n-is-for-negative-notice-local-rule.html Never Cleveland Bankruptcy Attorney William Balena http://ohiobankruptcysource.com/?p=2418 No Asset Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein http://www.morethanbankruptcy.com/bankruptcy-a-z-n-is-for-no-asset-case.html No Asset Report Honolulu Bankruptcy Lawyer, Stuart T. Ing http://www.bankruptcyhi.com/2012/01/n-is-for-no-asset-report/ Non-exempt Property Miami Bankruptcy Attorney, Dorota Trzeciecka http://dorotatrzeciecka.com/2012/02/05/bankruptcy-a-z-n-is-for-non-exempt-property/ Nondischargeable Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein http://www.morethanbankruptcy.com/bankruptcy-a-z-n-is-for-nondischargeable.html Nondischargeable Northern California Bankruptcy Lawyer, Cathy Moran http://www.bankruptcysoapbox.com/bankruptcy-alphabet-n-for-nondischargeable/ Nondischargeable Debt Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell http://bankruptcyblog.caldwell-lawfirm.com/2011/11/16/bankruptcy-alphabet-n-is-for-nondischargeable-debt.aspx Notice Colorado Springs Bankruptcy Attorney Bob Doig http://springsbankruptcylaw.com/?p=1227 Notice San Francisco Bankruptcy Attorney, Jeff Curl http://www.jclawgroup.com/blog/bankruptcy-alphabet-n-is-for-notice/ Notice Taylor, Michigan Bankruptcy Attorney, Chris McAvoy http://downriverbankruptcy.com/n-for-notice-creditors/#axzz1mtGwtQjh Notice of Rights to Claim Exemptions Charlotte Bankruptcy Attorneys, Collum & Perry http://www.collumperry.com/firm-news/notice-of-rights-to-claim-exemptions Numbers and New Bankruptcy Laws Los Angeles Bankruptcy Attorney, Mark J. Markus http://www.bklaw.com/bankruptcy-blog/2012/03/numbers-and-new-bankruptcy-laws/ Non-Attorney Bankruptcy Livonia Michigan Bankruptcy Attorney, Peter Behrmann http://www.livoniamichiganbankruptcy.com/n-is-for-non-attorney-bankruptcy-livonia-michigan/

“R” in Bankruptcy is for Rental vs. Chapter 13 Home Retention: A Tax Benefit Analysis

  r^36 by mag3737 is for Rental vs. Home Retention

By Christopher C. Carr, Esq. Chester County bankruptcy attorney. Tel: 610-380-7969 Email: cccarresq@aol.com Web: westchesterbankruptcyattorney.org

Deciding whether to keep your home or not  is not always a simple “Rent/bankruptcy vs. “Keep/no bankruptcy” decision: if you have regular income  and otherwise are eligible to file a Chapter 13 Bankruptcy you should also consider keeping the property in a 13. In a  13 you still have to pay principal and interest and escrows, if any but the 13 Plan, once confirmed by the Court, will allow you to hang on to this most precious of assets and pay the arrears in the plan over a 3-5 year period instead of selling at a loss and in many cases owing the deficiency to the lender.

The decision is not an easy one and there are almost always emotional ties to a home as well.  But one thing is for certain: you have to pay taxes and anything that saves you a dollar in taxes is like a dollar in your pocket right?

Some lawyers and others will, in “knee jerk” fashion, tell you that since your house is under water you should short sell and “find another place to rent”.  However, any analysis which does not “add back” into the equation the net present value of the tax advantages of home ownership at your marginal tax rate is telling you only half the story.  Renting has little or no tax advantage, mortgage payments do. (Same for state and local taxes that you pay or are escrowed by your lender)  Let’s say your mortgage is $950 a month you are in the 25% bracket for example and your property taxes are $3,600 a year or $300 a month, then the ownership “savings”  is computed as follows:  ($950 + $300) x .25 or $312.50. Another way to say it is that the government is subsidizing 25% of your ownership cost under these assumptions (not quite because as I explain below, we also have to consider insurance in the computation).

The pragmatic way to analyze this as they taught us in MBA School, is to compute  your net after tax cost of home ownership and ask yourself the question: CAN YOU REALLY FIND EQUIVALENT RENTAL HOUSING FOR A PRICE AS GOOD  or BETTER THAN YOU ARE PAYING NOW?  Let’s look again at the example I have been exploring above.  To get the full cost of ownership you have to add in home insurance (which is not tax deductible). Let’s say that is another $75 a month. So your fully loaded cost (assuming you live in a place with no association fees) is (950 + 300 + 75)-312.50 = $1012.50.  Note when you figure in the tax savings in it brings the overall cost of home ownership down to only a few dollars more than the amount of your  mortgage payment.  So ask yourself, using your actual costs and tax bracket instead, can I find adequate rental housing for that net figure (in my example $1012.50 a month)?  If not, you might want to consider a Chapter 13 to allow you to keep your current residence.

Of course, the above analysis while a good starting point, it is just one of the factors to be considered. A couple of examples: if you can strip out your second mortgage in a Chapter 13 because your home is completely under water as to the second (meaning that there is not enough equity coverage for the second and any homestead or other exemptions that are applicable in your jurisdiction), that will further reduce your ownership costs by the amount of the monthly payment you make on the second now. And if you can get rid of your credit card debt to boot, you are that much more ahead (assuming you are still paying on them).  In a 13 keep decision, these things also have to be weighed against the rental advantages. Also consider any costs of sale and the effects of the deficiency judgment (see above) that you might incur!  See my article in this series called: J is for “Judgment” Lien and its Impact upon Homeowners for more information.

One factor that may seem to favor renting is the negative impact that a decision to go bankrupt will have on your credit.  Financial advisers warn that foreclosure will leave a “strong negative” on a credit report for as long as seven years from the date of discharge (which can be longer than 5 years from the date of filing in a Chapter 13), though the impact on a borrower’s rating declines over time. But remember that if you are far behind on you payments and/or your credit cards your credit has already been affected… and, a good bankruptcy lawyer can show you ways to rebuild credit even while in a Chapter 13 bankruptcy plan period (3-5 years).

Whatever your decision may be, I wish you luck.

Law Offices of Christopher C. Carr, MBA,  P.C., is a quality bankruptcy and debt relief practice, located in  Valley Township, west of Coatesville, Pennsylvania, where Attorney Christopher Carr, a Chester County bankruptcy attorney, who has over 30 years if diversified ;egal experience, concentrates on serving the residents of and businesses located within Western Chester County and Eastern Lancaster County, Pennsylvania, including the communities in and around Atglen, Bird in Hand, Caln, Christiana, Coatesville, Downingtown, Eagle, Exton, Fallowfield Gap, Honeybrook, Lancaster, Lincoln University, Modena, New Holland, Parkesburg, Paradise, Ronks, Sadsbury, Thorndale, Valley Township, Wagontown & West Chester,  Pennsylvania. If you reside or do business in the area and need assistance with a legal issue, please call Mr. Carr at (610)380-7969 or write him at cccarresq@aol.com today!  

I also provide Mortgage Modification Services.

Other Attorneys Blogging on the Letter R Include: .

  • New York Bankruptcy Lawyer, Jay S. Fleischman on R is for Redemptions.
  • Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell on R is for Reaffirmation Agreements
  • Bay Area Bankruptcy Lawyer Cathy Moran on Retirement.
  • Colorado Springs Bankruptcy Lawyer Bob Doig on Repossession.
  • Kona Bankruptcy Lawyer, Stuart T. Ing also on Repossession

©Christopher C. Carr, Attorney at Law, 2012, All Rights Reserved.  See Disclaimers.

Photo by mag3737.