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The attorneys in our firm have over 100 combined years of practicing law in the arena of bankruptcy. We’ve heard different stories from prospective clients and we have met with some disturbing proposals. These disturbing proposals likely come from a mis-perception that many people have about the relationship between a client and their attorney. We’ve all heard about client confidentiality, but how many people really know what that means?

There is a perception by some folks that the purpose of an attorney is to advise them on how to break the law without getting caught. This concept has, no doubt, been something that has come about as a result of some unscrupulous television show lawyers. Your attorney is there to provide you with legal advice, provide you with options, and help guide you through your legitimate course of action in any given area of law. Your attorney is not permitted to advise you to break the law. Your attorney is not permitted to assist you in breaking the law, or to conspire with you in breaking the law.

When you meet with an attorney, it’s important to tell the truth, the whole truth, and nothing but the truth. Your attorney will be able to guide you through many important aspects and plan to take actions which you are not necessarily aware of. These are legal actions which, if taken appropriately, can protect you, your family, and your assets. Your attorney may advise you take a variety of actions to protect your interests. These may include a variety of things that you, as a lay person, were unaware of. This might be something as simple as making sure you legitimately spend your bank account down below $ 300.00 before you file bankruptcy. It might mean that you need to wait a while to file your bankruptcy in order to avoid a preference issue.

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Perhaps you have heard the commercials. Some insurance company offers to put your money into an annuity and give you monthly pay-outs at some point in the future. An annuity contract may be entered into in order to save for the future – for expenses like college or retirement.

The definition of annuity, according to investopedia.com, is as follows:

“An annuity is a contractual financial product sold by financial institutions that is designed to accept and grow funds from an individual and then, upon annuitization, pay out a stream of payments to the individual at a later point in time. The period of time when an annuity is being funded and before payouts begin is referred to as the accumulation phase. Once payments commence, the contract is in the annuitization phase.”

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The primary purpose for filing a bankruptcy is to obtain a “fresh start”. That is, to be in a position to move forward without the weight of old unsecured debt dragging down ones ability to move forward.

Often, the question is asked, How long do I have to wait to qualify for a new mortgage after filing bankruptcy? The general rule of thumb is as follows:

FOR CHAPTER 7

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When a debtor petitions for bankruptcy protection, the Court automatically issues a protective order sometimes referred to as an “automatic stay.” The automatic stay prohibits creditors from continuing collection activities such as calling debtors, mailing debtors or proceeding with lawsuits against debtors. In fact, creditors are required to stop all forms of contact with debtors after a bankruptcy petition has been filed.

At the conclusion of a bankruptcy proceeding and after a debtor has received a discharge of his or her debts, the Court orders a discharge injunction. This means that creditors that were listed and noticed in the bankruptcy proceeding are forever barred from collecting the discharged debt. If a creditor violates the discharge injunction, the bankruptcy court has jurisdiction to hear the matter and issue sanctions against the offending creditor if warranted.

Wells Fargo Bank N.A. was ordered to pay $69,500 to a debtor for repeated violations of the discharge injunction in April, 2015. Sometime after the debtor received a discharge in his Chapter 7 bankruptcy, Wells Fargo began calling the debtor regarding a debt that was included in the debtor’s bankruptcy. Wells Fargo made 139 attempts to collect the discharged debt. The debtor’s attorney contacted Wells Fargo regarding the debtor’s bankruptcy and discharge and followed up with a letter outlining Wells Fargo’s collection efforts over a period of two years. Wells Fargo acknowledged the attorney’s letter through a letter sent directly to the debtor stating that “as you were the only person who signed the Note, Wells Fargo holds you financially responsible for repayment of the loan.”

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If you are in trouble with the IRS it is very scary, and now you hear many advertisements on the radio and television from companies that claim they can resolve the problems for pennies on the dollar. Of course, sometimes, that is possible, but in the vast majority of cases, the IRS demands its pound of flesh.

We see many people in our office who owe back taxes to the IRS. If you ignore the IRS, they will levy your wages or bank accounts, leaving you with no money. There are several options available to you to deal with this situation.

1. Installment agreement – You can enter into an installment agreement with IRS to pay off the tax. Interest will still accrue so this may take a very long time, but at least you know that there will be no levies as long as you are current on your payments. This is the least attractive option. Our office can help you in obtaining an installment agreement. However, this is not the promised “Pennies on the Dollar” you heard about in the ads.

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Your bankruptcy is over and now you want to start rebuilding your credit. What to do.

One of the implications of getting a discharge in bankruptcy is that all of your unsecured debt is gone. Therefore, your debt to income ratio is dramatically reduced. In the eyes of a potential lender, you may actually be a better risk than you were before the bankruptcy.

After filing a chapter 7 bankruptcy and getting a discharge, potential creditors know three things about you.

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This is a question we do not get very often, but it is something people like to know. In days gone past federal employees were not paid very well in comparison to other people in the nation’s economy. This has changed over the years. Take a look at this chart courtesy of The Federal Judicial Center:

Judicial Salaries U.S. Bankruptcy Judges

Date Effective Annual Salary

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In February 2015, a healthy and able bodied debtor was able to discharge approximately $119,000.00 in student loans in Nebraska. The Court looked at the totality of the circumstances in the case and specifically at the fact that the only repayment option offered by the lenders was the suggestion that the debtor “find more money”. Typically,

discharging student loans in bankruptcy is next to impossible and normally requires the debtor to be in extremely poor health with no prospect to earn an income. The lenders were particularly outrageous in this case stating in its defense that the debtor could simply relocate and find a better paying job. The Court quickly dismissed the lenders argument and found that the debtor made a “good faith effort to maximize her income.

images.jpg President Barack Obama recently signed a “student aid bill of rights” to make it easier for people with student loans to pay back their debt. This so-called bill of rights will require that businesses that service student loans provide clear information about how much a borrower owes, what options exist for repayment and if a borrower falls behind,

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The IRS offer in compromise program has been around for decades. In theory, the program serves the best interests of all concerned, enabling the government to collect what it can from the taxpayer, and relieving the taxpayer a tax burden he cannot pay.

To qualify for an OIC, you must prove that you can’t pay the total balances owed before the collection statute expires, using net equity in assets plus any future income. The IRS calculates future income as the amount it can collect on a monthly basis (monthly disposable income) before the collection statute expires. While the number of OICs accepted by the IRS is small compared with the number of taxpayers who have outstanding balances, more taxpayers are qualifying for and obtaining OICs due to the 2011 IRS Fresh Start Initiative, which softened qualification criteria and allowed for lower offer amounts.

In 2004, the IRS issued a consumer alert warning of promoters’ claims to settle debts for “pennies on the dollar” through the OIC program. The warning addressed companies charging high fees to consumers who may not be eligible for the program; all other payment means would have to be exhausted, including installment payments. It is highly recommended to all that are seeking guidance for tax relief to consult with a qualified attorney such as the attorneys at Campbell & Coombs, P.C.

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These days you hear many advertisements on the radio and television from companies that claim they can resolve your tax problems for pennies on the dollar. These ads refer to “brand new IRS programs” or something called the “Fresh Start Initiative”. What they are really referring to is a program run and administered by the Internal Revenue Service called an Offer in Compromise. The Offer and Compromise (“OIC”) is not a new program and has been around since the 1990s. It is driven by a rather unrealistic formula the IRS uses. According to the IRS, an offer in compromise will be accepted if the amount offered by the taxpayer is equal to or greater than the reasonable collection potential.

IRS records show a dismal success rate for the Offer in Compromise, just a shade under 25%. Why is this? The problem is that many of the companies touting their services as “tax specialists” are anything but, and file Offers in Compromise that have no chance of succeeding from the beginning. These companies are basically scamming you as the taxpayer by taking your money for something that has no chance of success. Here is how the scam works. IRS often files a lien against you when you owe back taxes. These companies get a list of these filings and start sending you letters. They claim that for a huge fee, they can resolve your problems. Typically, the initial fee will be upwards of $6,000 with no end in sight.

Here is all they really do. They are all out of state and there is never a face to face meeting. The never look at your entire situation to see if the Offer in Compromise could ever work. Generally speaking, a successful offer in compromise will come from a taxpayer who has liabilities in excess of his or her assets and little to no disposable monthly income after allowing for basic expenses. Regardless of whether this fits your situation, they will prepare a Form 656 for you. The form will require extensive financial data from you. You will actually do most of the work. When the company files the form, the IRS is supposed to stop all collection activity. The IRS will consider the form for about eight months during which time, your problems magically seem to disappear. After about eight months, the IRS will most likely send a rejection letter or make a counter offer for thousands of dollars more. The company then may request many thousands of dollars more to write an appeal. The entire time, you are out of the IRS collection loop, but interest is still accruing. You don’t know what is happening and you are basically held hostage to the company. If the offer in compromise is accepted you will, quite likely, have to make payments that you cannot afford, and if the offer in compromise is ultimately rejected, you will be right back to square one and you will have extended the statutes governing the bankruptcy and collection of taxes. You end up right back where you started and you will have wasted all the money you paid to the company.

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