SASHA KATZ, ESQ DAILY BLOG
There’s a few things to consider about Bankruptcy and credit:
1) Although Bankruptcy is a negative mark on your credit, many people find that because their debts have been wiped out, they are in a better credit position than they were before the bankruptcy. Since you can only declare Bankruptcy every 7 years, many creditors may feel safer extending you credit after the Bankruptcy. You may find credit extended to you at higher interest rates, as opposed to being completely denied credit before the Bankruptcy.
In additon, once you file bankruptcy, your credit is no longer weighed against the general population. Instead, your credit profile is pooled with other people that have filed bankruptcy.
2) It would take you 20 years to pay off your debts (assuming you can even pay them off), That’s 20 years of bad credit, compared with 6-7 with the Bankruptcy.
The bottom line is that the Bankruptcy is the first step to starting fresh and renewing your credit.
Questions? Call LAW OFFICES OF SASHA KATZ 954-340-5310
A child born in 2013 will cost a middle-income American family an average of $245,340 until he or she becomes an adult, with families living in the Northeast taking on a greater burden, according to a report out Monday.
Those costs — food, housing, childcare and education — rose 1.8 percent over the previous year, the Agriculture Department's new "Expenditures on Children and Families" report said. As in the past, families in the urban Northeast will spend more than families in the urban South and rural parts of the U.S., or roughly $282,480.
When adjusting for projected inflation, the report found that a child born last year could cost a middle-income family an average of about $304,480.
The USDA's annual report, based on the government's Consumer Expenditure Survey, found families were consistent in how they spent their money across all categories from 2012 to 2013. The costs associated with pregnancy or expenses accumulated after a child becomes an adult, such as college tuition, were not included.
In 1960, the first year the report was issued, a middle-income family could spend about $25,230, equivalent to $198,560 in 2013 dollars, to raise a child until the age of 18. Housing costs remain the greatest child-rearing expense, as they did in the 1960s, although current-day costs like childcare were negligible back then.
For middle-income families, the USDA found, housing expenses made up roughly 30 percent of the total cost of raising a child. Child care and education were the second-largest expenses, at 18 percent, followed by food at 16 percent.
Complaints filed against debt collectors with the Consumer Financial Protection Bureau have increased, or held steady, in all but one month since the bureau began accepting them last July, according to an analysis of monthly complaint volume.
In March, those complaints totaled 3,428.
February 2014 - 3,342
January 2014 - 3,289
December 2013 - 2,440
November 2013 - 2,441
October 2013 - 1,795
September 2013 - 2,025
August 2013 - 1,510
July 2013 - 902
"It is reasonable to expect all of these numbers to continue to grow … as the CFPB continues to populate the complaint database with older data. But the pattern should stay reasonably intact. We have probably not topped out yet in monthly complaint volume," says Jack Gordon, CEO of WebRecon LLC, a Grand Rapids, Mich.-based company that pulled the data.
"The best way to stop these calls is to hire an attorney to force the creditor/collector away from the consumer and to the firm. Not only will it stop the calls but will put the collector in a position to settle for less than the balance owed. Typically, our clients see a 75% - 80% discount on their debts within 6-12 months from default," says Florida attorney Sasha Katz.
More Than 8,000 Financially Distraught Homeowners from all 50 States Victimized in Alleged Massive, Nationwide Scam
WASHINGTON, DC - Special Inspector General for the Troubled Asset Relief Program (SIGTARP), United States Attorney for the Southern District of New York, today announced the unsealing of charges against Ped Abghari, a/k/a “Ted Allen,” Dionysius Fiumano, a/k/a “D,” and Justin Romano for engaging in a mortgage modification scheme that defrauded over 8,000 homeowners in all 50 states out of over $18.5 million, in what is believed to be the largest mortgage modification scheme ever charged.
Each defendant is charged with wire fraud and conspiracy to commit wire fraud. Abghari and Fiumano were arrested this morning in Irvine, Calif., and are expected to be presented later today in California federal court before United States Magistrate Judge Margaret Nagle. Romano was arrested this morning in Blue Point, N.Y., and is expected to be presented later today in Manhattan federal court before United States Magistrate Judge Sarah Netburn.
U.S. Attorney's Office uncovered an alleged massive, nationwide mortgage modification fraud scheme that purportedly targeted homeowners behind on their mortgage payments who simply wanted help from TARP's housing program, HAMP. The defendants are alleged to have stolen more than $18.5 million from more than 8,000 struggling homeowners by making empty promises that the homeowners would be preapproved for lower mortgage payments through HAMP. This was all a purported ruse used to trick vulnerable homeowners into paying the defendants thousands of dollars in up-front fees for which zero meaningful work was ever actually done. SIGTARP has aggressively pursued these allegations, working closely with Preet Bharara's office, to protect homeowners in New York and across our nation from becoming victims of this crime and to bring perpetrators to justice.”
According to the allegations contained in the Indictment: The Defendant’s Mortgage Modification Scheme
Ped Abghari was a co-president and owner of an Irvine, Calif., company that offered purported mortgage modification services (the “Telemarketing Firm”). Dionysius Fiumano was a senior manager of the Telemarketing Firm, and was directly responsible for training and overseeing the Firm’s
telemarketers and salespeople (the “Sales Staff”). Justin Romano held himself out as the president of two purported law firms (the “Purported Law Firms”), based in in Holbrook, New York, and Sayville, N.Y., respectively, which offered purported mortgage modification services in conjunction with the Telemarketing Firm.
From at least January 2011 through May 2014, through the Telemarketing Firm and the Purported Law Firms, Abghari, Fiumano, and Romano perpetrated a scheme to defraud homeowners in dire financial straits who were seeking relief through HAMP and other mortgage relief programs. Through a series of false and fraudulent representations, the defendants duped thousands of homeowners into paying thousands of dollars each in up-front fees in exchange for little or no service from the defendants or their companies. In total, through their scheme, the defendants obtained over $18.5 million from more than 8,000 victim-homeowners throughout the United States.
As alleged, to perpetrate the scheme, through the Telemarketing Firm, Abghari and Fiumano purchased thousands of “leads,” consisting of the name, address, and other contact information of homeowners who had fallen behind in making mortgage payments on their homes. Thereafter, Abghari and Fiumano caused the Telemarketing Firm to send, by e-mail, false and fraudulent solicitation letters to the homeowners they identified through the “leads,” misleading these homeowners into believing that their
mortgages were already under review for a HAMP modification and that new, modified rates had already been contemplated and approved by the homeowners’ lenders.
During these calls, in an effort to convince the homeowners to pay up-front fees, the defendants, through the Sales Staff, regularly caused various false and fraudulent representations to be made to homeowners, including that (a) the homeowners were retaining a “law firm” and an “attorney” who would complete the HAMP application and negotiate aggressively on the homeowners’ behalf with
banks to modify the terms of the homeowners’ mortgages; (b) the defendants would “pre-approve” the homeowners for a guaranteed modification through HAMP; (c) the defendants employed underwriters who would calculate and guarantee the homeowners a new, modified rate and monthly mortgage
payment; and (d) the defendants’ mortgage modification services were free, and the up-front fees paid by the homeowners would be paid directly to the homeowners’ lenders.
Abghari, 37, of Irvine, Calif.; Fiumano, 43, of Irvine, Calif.; and Romano, 40, of Blue Point, N.Y., are each charged with one count of conspiring to commit wire fraud and one count of wire fraud, each of which carries a maximum term of 20 years in prison.
The case is being investigated by SIGTARP and the U.S. Attorney’s Office for the Southern District of New York. The case is being prosecuted by the U.S. Attorney’s Office Complex Frauds and Cybercrime Unit.
Assistant U.S. Attorneys Edward B. Diskant and Joshua A. Naftalis are in charge of the prosecution. The maximum potential sentence in this case is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.
As... of May, more than 220,000 homeowners applying to Treasury’s Home Affordable Modification Program (HAMP) were still waiting for a decision from their servicer, according to Special Inspector General for the Troubled Asset Relief Program (SIGTARP). That’s nearly double the number of applicants who were stuck in limbo in November 2013, and the slowest mortgage companies are taking 10 to 12 months to give them an answer.
“Clients are very stressed through this time — everything is on hold for them, they don’t know whether to invest their money on this or that,” says Carmen Castro-Conroy, a Maryland-based housing counselor. “The not knowing is probably the most difficult for them.”
Homeowners who are applying for loan modifications are already having trouble making their mortgage payments, and the huge backlog makes it even more likely that they’ll fall behind. If so, they could have a harder time qualifying for a HAMP modification and avoiding foreclosure. “If Treasury does not take strong action to stop this growing trend immediately, it will be homeowners who suffer the consequences,” the SIGTARP report said.
As part of the 2008-2009 bank bailout, Washington set aside billions to help troubled homeowners make their mortgage payments and avoid losing their homes to foreclosure. But HAMP is being administered through private mortgage companies, and a slew of problems have made it difficult for ordinary Americans to get assistance from the program. HAMP was originally supposed to last through December 2013, but the White House extended it for another two years. As of June 2014, Treasury has expended only 33% of the $38.5 billion in TARP funds for the program.
The report singled out two mortgage giants for poor performance over the last six months. “Chase and Select Portfolio Servicing stood out as the least effective large servicers in keeping up with demand for HAMP,” the watchdog said. “During this period Chase processed an average of 35% of the applications it received each month, while SPS processed an average of 42% of the applications it received.”
The slowest servicers were Citimortgage, a subsidiary of Citigroup, which took an average of 12 months to process HAMP applications; Select Portfolio Servicing, which took an average of 10.5 months; and JPMorgan Chase, which took 7.6 months on average.
Special Inspector General Christy Romero blames the Obama administration for failing to notice the problem in the first place, given that its own data made it clear. “When Treasury is holding data and not doing anything with it, and homeowners aren’t being treated fairly, there’s something wrong with that,” said Romero, who heads SIGTARP. “Homeowners don’t have the luxury of time, of waiting for seven months or 10 months.”
That characterization is disputed by the Treasury Department’s Tim Bowler, acting assistant secretary for financial stability. “We have been working with servicers and other stakeholders over the last several months to get a better understanding of underlying causes of trends noted in our monthly program data,” Bowler told msnbc. “Treasury remains committed to maintaining the standards HAMP has set while the industry implements new servicing regulations so that those households facing a hardship receive the best and most timely outcome.”
“It’s not ever an acceptable excuse to blame it on the homeowners and say they didn’t have their package complete,” said Romero.
The watchdog previously criticized the administration for failing to ensure that HAMP money was dispersed quickly, as participating mortgage servicers failed to communicate clearly with homeowners, lost their paperwork, and otherwise prolonged the process. SIGTARP, which is also a law enforcement agency, reached a $320 million settlement with Suntrust after alleging that the company misled HAMP borrowers, falsely reported them as delinquent, and was slow to process HAMP applications.
“So significant was SunTrust’s failure in this regard, that the floor of the room in which the bank dumped the voluminous unopened HAMP applications actually buckled under
the packages’ sheer weight,” SIGTARP said.
The watchdog also said that Treasury should be doing more to ensure that those who do ultimately qualify for HAMP are able to stay afloat. About 30% of the homeowners in the program have already defaulted again, costing taxpayers about $1.3 billion, the report says, and that number could increase as HAMP mortgage rates automatically rise after five years. SIGTARP suggests that Treasury use other bailout-funded housing programs to help HARP participants remain current.
While the housing market and broader economy have shown signs of healing, the redefault rates and the steady demand for foreclosure-prevention assistance indicate that many homeowners are still struggling.
When lawmakers originally passed TARP, “it was all about getting money out to banks immediately. The same level of effort and immediacy have not applied to TARP housing programs,” says Romero. “Will they eventually get all the money out? Maybe. The question is, when did the homeowners need it? It’s always yesterday.”
So, you’re looking to rebuild your credit but nobody will lend to you. Hmm, how about adding fresh accounts using your own dollar? A secured credit card is a type of credit card secured by a deposit owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down $1,000, they will be given credit in the range of $500–1,000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this because they have noticed that delinquencies were notably reduced when the customer perceives something to lose if the balance is not repaid.
The cardholder of a secured credit card is still expected to make regular payments, as with a regular credit card, but should they default on a payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows building a positive credit history.
Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency (150 to 180 days). This means that an account which is less than 150 days delinquent will continue to accrue interest and fees, and could result in a balance which is much higher than the actual credit limit on the card. In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt.
QUESTION: Can I discarge my IRS taxes in a bankruptcy?
You can discharge (wipe out) debts for federal income taxes in Chapter 7 bankruptcy only if all of the following conditions are true:
1 - The taxes are income taxes. Taxes other than income, such as payroll taxes or fraud penalties, can never be eliminated in bankruptcy.
2 - You did not commit fraud or willful evasion. If you filed a fraudulent tax return or otherwise willfully attempted to evade paying taxes, such as using a false Social Security number on your tax return, bankruptcy can't help.
3- The debt is at least three years old. To eliminate a tax debt, the tax return must have been originally due at least three years before you filed for bankruptcy.
4- You filed a tax return. You must have filed a tax return for the debt you wish to discharge at least two years before filing for bankruptcy.
5- You pass the "240-day rule." The income tax debt must have been assessed by the IRS at least 240 days before you file your bankruptcy petition, or must not have been assessed yet. (This time limit may be extended if the IRS suspended collection activity because of an offer in compromise or a previous bankruptcy filing.)
Bank of America routinely denied qualified borrowers a chance to modify their loans to more affordable terms and paid cash bonuses to bank staffers for pushing homeowners into foreclosure, according to affidavits filed last week in a Massachusetts lawsuit.
"We were told to lie to customers," said Simone Gordon, who worked in the bank's loss mitigation department until February 2012. "Site leaders regularly told us that the more we delayed the HAMP [loan] modification process, the more fees Bank of America would collect."
In sworn testimony, six former employees describe what they saw behind the scenes of an often opaque process that has frustrated homeowners, their attorneys and housing counselors.
They describe systematic efforts to undermine the program by routinely denying loan modifications to qualified applicants, withholding reviews of completed applications, steering applicants to costlier "in-house" loans and paying bonuses to employees based on the number of new foreclosures they initiated.
The employees' sworn testimony goes a long way to explain why the government's Home Affordable Modification Program, launched in 2008 during the depths of the housing collapse, has fallen so far short of the original targets to save millions of Americans from being tossed from their homes.
ANSWER: Thank you for your question. It depends on the debt and for what purpose it was borrowed. If you borrow money from a unsecured credit card and the lender later settles or forgives the debt, you may have to include the cancelled amount in income for tax purposes. When you borrowed the money you were not required to include the loan proceeds in income because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.
Let's take a look at a very simplified example.You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.
Call you CPA or tax professional. If you live in South Florida, feel free to call our office (954) 340-5310 for a referral.
If you do not pay your homeowner premium, your lender will obtain a forced place policy. The policy may or may not cover contents. If the lender obtains the policy, you will be passed the bill; the forced placed policy will be more expensive than a policy you may shop for. Most homeowner's concern is that they will pay for insurance and it if does not work out to stay in the home, the money is lost. On the other hand, if you modify and are current with the premium, you will not have to pay back any hefty amounts to the lender. The short answer is that if you plan to keep your home, paying for insurance out of pocket may be a good idea. Please note that if you have an escrow account for insurance with your lender, it may be hard to obtain insurance independently.
Mr. Obama insisted the government should help only responsible borrowers, and his administration offered aid to fewer than half of those facing foreclosure, excluding landlords, owners of big-ticket homes and those judged to have excessive debts.
He decided to rely on mortgage companies to modify unaffordable loans rather than have the government take control by purchasing the loans, the approach advocated by his chief political rivals in the 2008 presidential race, Hillary Rodham Clinton and John McCain.
The administration did not push for legislation to make mortgage companies help borrowers. The financial incentives it offered were often insufficient. And it responded slowly to warnings, including those in letters homeowners sent to Mr. Obama, that companies were not cooperating.
The result was a plan that failed to meet even its own modest goals, data shows. Mr. Obama said in Arizona a few weeks after taking office that the government would help “as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.” As of May, 4.3 million people had applied for aid, but only one million had received government-sponsored modifications, according the the most recent data. About a third of those turned away lost their homes, were facing foreclosure or filed for bankruptcy.
In June 2011, Mr. Obama conceded that his administration had not done enough. And so, we are going back to the drawing board.
Many clients come to us after they have accepted a modification, but they can't keep up with the payments. If you have a Fannie Mae or Freddie Mac loan and you default within the first twelve months of the modification, you are likely barred from obtaining another HAMP modification for some period of time. If you have obtained an in-house mod from your lender, it will be up to the lender whether they will consider a new modification.
Review your financial condition and weigh your options with a legal represenative. This can be done in the office ot over the phone (954) 340-5310. We'll schedule a 15-minute review of your financial so we can better assess your financial position.
There are good answers to your negative equity problem. The first question to ask is . . . Can you chip away at your loan balances?
Second Lien or Line of Credit Negotiation: If you are in a position to make a one-time lump sum payment, then you may consider settling a second mortgage or line of credit. Often times, eradicating the second lien through paying a lump sum in exchange for release of the mortgage and waiver of deficiency is the answer. If you can wipe out the second lien for less than the full balance due, you may get back to equity or at least a breakeven point.
Loan Modification: Another option to chip away the underwater amount is to request a principal balance “reduction” through a loan modification. I quotate the word reduction because the most common programs do not reduce the principal balance, but recapitalize the loan over 40 years so that you can enjoy a lower payment with a lower, fixed interest rate. So, how does that chip away at a loan balance? Well, if you are committed to over paying and reducing the term, you actually have created for yourself the ability to pay down principal.
Short Sale: If you don’t have a lump sum to settle a second mortgage or line or credit and you don’t want to go through the long, tedious process of modification, there is yet another powerful answer to eradicating negative equity. The answer is short sale. Short sale is a fairly quick and painless means to eliminate, not just the negative equity, but the entire loan. If your sights are set on waiver of deficiency and the price tag associated with walking away debt fee, short sale is an intelligent alternative. For over ten years, Sasha Katz, Esq. has been working out client’s debt and real estate matters. Short sale is one of the most active practice areas at the law firm. If you are thinking about resolving your negative equity issues, be sure to call me at (954) 340-5310 to schedule a free consultation. There is no better way to fight the Elephant in the Room, than to address it full on.
The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and U.S. Attorney for the Western District of New York William J. Hochul, Jr., today announced that Lori J. Macakanja, 35, of Dunkirk, New York, who was convicted of mail fraud and theft of government money, was sentenced to 72 months in prison and three years supervised release by U.S. District Court Judge Richard J. Arcara. Judge Arcara also ordered the defendant to pay $298,639 in restitution to the victims.
Assistant U.S. Attorney Trini E. Ross, who handled the case, stated that Macakanja, in her capacity as a housing counselor employed by HomeFront, Inc., inappropriately requested money from clients. The defendant told HomeFront clients that the money would be used toward loan modifications to prevent foreclosure on their homes. However, after receiving the funds, Macakanja used the money for her own personal use, including gambling, and failed to obtain the loan modifications for the victims.
A total of 136 HomeFront clients were defrauded with losses totaling approximately $300,000. In addition, Macakanja also obtained federal grant monies from the Buffalo Urban Renewal Agency (BURA) for HomeFront clients. On two occasions, she diverted $2,000 worth of BURA money to pay her own personal mortgage.
According to the experts, the average American will go into debt $750 this holiday season. This does not tell us how much each American will likely spend in TOTAL. This tells us approximately how much debt each of us will incur - - $750.
Given the housing market, state of unemployment and reduced incomes, I am puzzled by these statistics. From time to time, we all incur debt. A new tire after a nail punctures the old one . . . Air conditioner replacement in the heat of a Florida summer. It is one thing to incur debt for an unexpected necessity. It is another matter entirely to willingly charge it up for gifts.
Why do I say this? Not because your kids would not be thrilled by a new IPad or guitar lessons. I say this because, come Spring time, American Express and CitiBank (and the other creditors) are going to blast you with rates that even the Mafia doesn't charge. You probably already know that you are going to spend about $4,100 in interest to pay off your holiday shopping. Why do it? Save the interest for Disney World next summer.
I am not a grinch. Please CELEBRATE with your family this season. Set out to be creative with your holiday giving. Carve a plan that does not include paying Capital One and Discover five times the price of the holiday gift. Don't get me wrong, our office has a strategy for dealing with greedy creditors, but we'd much rather see you with the money in your pocket in the first place.