pilotonline.com
Norfolk woman set up her own debt-collection firm to help steal $300,000 from her employer
Scott Daugherty

A Norfolk woman pleaded guilty Tuesday to stealing more than $300,000 from the women’s clinic in Suffolk where she worked, according to prosecutors. . . .


Prosecutors said Gregory made $250,000 in unauthorized purchases, including concert and airline tickets, car rentals and vehicle repairs. She also received cash advances. . . .

In 2015, Gregory started a debt collection company to which she referred debts owed by some of the clinic’s patients – again without her bosses’ knowledge.

According to prosecutors, Gregory and her son ran the company, collecting nearly $50,000 owed to the clinic.
But Gregory did not use that money to satisfy the patients’ debts. Instead, she deposited it into her personal accounts, then wiped the debt off the clinic’s books.

PEOPLE ARE TAKING EQUIFAX TO SMALL CLAIMS COURT AND WINNING
 
https://www.wsbradio.com/business/personal-finance/people-are-taking-equifax-small-claims-court-and-winning/MQCH4iCylDb3AoJGVDhxCM/
 
Months after the Equifax data breach, consumers are taking the Atlanta-based company to small claims court — and winning. . . .


One of the plaintiffs, Christian Haigh, decided to document his case against the company because, like around 148 million other Americans, he was affected by the breach. Haigh, who is co-founder of litigation finance startup Legalist, wrote a couple of blog posts about the experience.


He said that although he had a business interest (his company was offering to pay the court fees for small claims litigants on a contingency basis) he was also acting as a duped consumer.


“I also filed my own lawsuit against Equifax, half expecting to have my case dismissed, and half expecting Equifax to not even show up. In fact, Equifax did appear,” he writes. Going toe to toe with Equifax’s representative in front of a judge, Haigh won $8,000.


He said that Equifax successfully filed to delay the lawsuit in an attempt to get similar cases lumped into one court session. On court day, 12 of them were supposed to present their respective cases during the one-hour session, but seven of them were no-shows.


Haigh, who admitted that he had never set foot in a courtroom before, despite having a law-oriented company, said that he came to court that day prepared to do battle. . . .
 

End of story, right? Not so fast. Equifax filed an appeal, according to a second blog post Haigh wrote. This time, they brought high-powered lawyers. Not only was the vice president of Equifax’s legal department there, but among the suits was an attorney from big-time law firm King & Spalding, known to charge clients more than $1,000 an hour. . . .

Unpaid Taxes Owed to the IRS: Consumer Debt Advice from NCLC
by Elizabeth Maresca


Advice for families in financial difficulty. (The other articles are Dealing with Medical Debt, A Reverse Mortgage Primer, and Motor Vehicle Repossessions.)

This article outlines consumer rights and options when a consumer is having difficulty paying the IRS for federal income taxes that are past due:

1.       * Why you should always file your tax return even if you are unable to pay the taxes that are due.
   
2.       * Three options to reduce or pay your tax debt over time.
3.       * Whether a spouse is obligated on taxes the other spouse owes.

The article also outlines steps the IRS takes to enforce tax debt, the implications of the taxpayer’s bankruptcy filing, and where to seek help dealing with the IRS.

You must give special consideration to your federal income tax obligations. If you can afford to pay the outstanding tax bill, you should do so in order to avoid accruing further interest and penalties.

When you owe taxes to the Internal Revenue Service (IRS), the IRS will not ignore this debt, but instead, the IRS will press collection and seek penalties and interest. Outstanding federal taxes may be collected for ten years from the date assessed—a debt to the IRS can have a long life. The IRS also has far reaching authority to collect taxes—it can place a lien on property and levy (seize) property including bank accounts, wages, Social Security, and even pension payments.


FILE THE RETURN ON TIME
EVEN IF YOU DO NOT PAY THE TAXES OWED

One of the worst things you can do if you cannot afford to pay your taxes is to not file your tax return. You must file an income tax return, in general, if you are a U.S. citizen or resident alien, and your taxable income exceeds certain amounts.
For the tax year 2018 (taxes due April 15, 2019), you have to file your return if:

• • You are single and your taxable income exceeds $12,000.
• • You are the head of a household and your taxable income exceeds $18,000.
• • You are joint filers and your taxable income exceeds $24,000.
• • You are self-employed and earn over $400.

These dollar amounts go up each year.


April 15th is the deadline for most people to file individual income tax returns and pay any taxes owed. Filing extensions are available, but this does not extend your time to pay.


If you fail to file either an extension or your tax returns by April 15, and you owe taxes, the IRS will prepare a proposed tax return, called a “substitute for return,” which shows how much the IRS thinks you owe. You can dispute that determination by responding to the letter or filing a late return.


If you file late, the IRS will assess a late-filing penalty. If you owe taxes and are late in filing by sixty days, the penalty for late-filing is 5% of the taxes owed for each month or part of a month that your return is late, with a maximum penalty of up to 25% of the taxes owed. If your return is over sixty days late, the minimum penalty is the smaller of $135 or 100% of the tax owed.


Totally separate from any fee for filing late is the late-payment penalty. If you pay late, the IRS will assess a late-payment penalty. The penalty for late-payment is only a fraction of the larger penalty for not filing a return—it starts at only one half of 1% of the tax owed for each month late, up to a maximum of 25% of the taxes owed. You will also be assessed interest on the unpaid tax and penalty.


Getting an extension to file is also not the solution it might seem to be. Although the IRS will automatically give you a six-month extension if you request it with payment of the taxes you are likely to owe, keep in mind that this is only an extension of time to file. It does not give you more time to pay the taxes you owe, and you will be charged both interest and probably a late-payment penalty during the time of the extension if you have not paid in full by April 15. As noted above, if you can’t pay the taxes due, it is a better idea to file the return, pay as much as you can, if anything, and then consider negotiating a payment option with the IRS (discussed below).


OPTIONS FOR PAYING TAX DEBTIf you cannot afford to pay your taxes, the solution is not to put the taxes on your credit card which you also will have trouble repaying. As described below, the IRS will give you a better deal than putting the tax payment on your credit card. Interest rates will be lower, there will not be a processing fee to pay, and you may even get the IRS to reduce your obligation.


When you file a return but cannot afford to pay the taxes due, you will generally have three options in dealing with the IRS:

• • Enter into a monthly installment agreement;
• • Negotiate for a smaller tax bill by seeking an “offer-in-compromise”; or
• • Request a hardship determination, called “currently not collectible” status.

All of these options require IRS approval, although the IRS allows almost every taxpayer that owes less than $50,000 to enter into an installment agreement through a streamlined process available on their website. If IRS does not grant approval for any one of the three options, you then have the right to seek an appeal or ask for a review of your case. These actions often require you to submit IRS forms, that are available at www.irs.gov.


The Installment Agreement. The IRS allows you to pay taxes you owe in monthly installments over a period of up to six years. The IRS imposes a “user fee” of $149 ($43 for low-income taxpayers) to set up an installment agreement, the fee is reduced to $31 if you set up the agreement through the IRS website and you agree to pay using direct debit from your bank account.

Penalties and interest will continue to accrue until the balance is paid in full. The interest rate will be the federal short-term rate (presently a little over 1%) plus 3%, which is a lower rate than most rates for unsecured loans and credit cards. If you have an installment plan, the penalty for late payment is only one-quarter of 1% for each month. The IRS will waive penalties if you qualify under its First Time Penalty Abatement policy, or if you have a valid reason for your late payment or late filing. Use a Form 843 to request penalty abatement.


If you owe less than $50,000 and have already filed your return, you can complete an online application at the IRS website to apply for a monthly payment plan. You can also file IRS Form 9465: Installment Agreement Request, which you can mail in or attach to your return if you haven’t filed it yet. You may also call the IRS at the phone number on your bill or notice. Be sure to ask for written confirmation of the installment plan you negotiated. The IRS charges a higher fee for requesting an installment agreement by mail (Form 9465) or by phone.


Generally, if you owe less than $25,000 and your installment agreement will fully pay the debt in six years or less, the IRS will not file lien against you. The IRS cannot execute a levy while the installment plan is in effect. (See “Steps the IRS Can Take to Force Payment,” below.)


Offer-in-Compromise. The IRS may accept payment for less than what you actually owe through its “offer-in-compromise” program. Reduced payment is permitted when the IRS determines that, under established financial guidelines, the taxpayer cannot afford to pay the full amount of taxes owed or where an exceptional circumstance exists such that collection of the tax would create an economic hardship or would be unfair and inequitable, (i.e., the assets that could be used to pay the tax debt are needed to pay for the long-term care of a seriously ill person).

There are special IRS forms you must fill out to request an “offer-in-compromise” (Form 656 and Form 433-A). You will also need to pay an application or “user” fee (presently $186) plus make a first payment of 20% of your offer amount (or the first payment of a proposed payment plan), unless your income is below a certain amount and you complete Form 656-A. Generally, an offer will only be accepted when the amount offered equals or exceeds your net equity in assets, plus your ability to make installment payments from future income.


It takes about six to twelve months for the IRS to review an offer-in-compromise. During that period, you will not be expected to make any payments on your tax debt. However, interest and penalties will continue to add up, so if your offer-in-compromise is rejected, you tax bill will grow during the time the IRS has your offer-in-compromise under review.


Non-Collectible Status. You may be eligible for a temporary hardship determination from the IRS, called “currently not collectible” (CNC) status. The IRS will only grant you this status if you do not have any assets you could use to pay your tax debt and you do not have any income left after “allowable expenses.”

Allowable expense are listed on the IRS website (use the search box to find, “Collection Financial Standards”) and are used by the IRS to determine allowable monthly living expenses. If your monthly income is less than the allowable living expenses, you will be eligible for the non-collectible status and the IRS will put your account on hold.


CNC status is not permanent, and does not mean the tax debt is forgiven or reduced. This status can change if your financial circumstances improve, if you file another return with a balance due, or if you do not file a tax return when you are required to do so. The IRS will monitor your tax returns and remove the hardship status if your returns suggest a significant financial improvement. Also, interest and penalties will continue to add up during this time.


To apply for CNC status, you should call the IRS at 800-829-7650 and specifically ask to be placed into “currently non-collectible status.” If you do not ask for the status, the agent will generally ask you to set up a payment plan. When you ask for non-collectible status, the agent may send a Form 433-F: Collection Information Statement, for you to fill out, but in most cases, the agent will simply ask you questions in order to gather the relevant information to make the “currently not collectible” determination during the phone call.


If the IRS grants CNC status, it may file a lien with the county recorder’s office (or similar agency) if you owe more than $10,000 even if you do not own any property. Generally, the lien will not appear on your credit report.


SPOUSAL DEFENSES

In certain limited cases, your responsibility to pay a tax may be cancelled when the tax is owed entirely by your spouse or ex-spouse. This cancellation may be available when your spouse or ex-spouse was solely responsible for failure to pay the taxes, the taxes are entirely attributable to your spouse’s separate business, or if you were the victim of domestic abuse. This is true even if you filed a joint return. If you believe you are entitled to the IRS’s “innocent spouse relief,” you can file a Form 8857, but help from a tax professional is recommended. Resources for getting help are listed at the end of this article.


STEPS THE IRS CAN TAKE TO FORCE PAYMENT

If you do not set up a payment plan, negotiate an offer-of-compromise, or secure “currently not collectible status,” the IRS can force payment. Before the IRS actually forces payment, it will generally send you a series of threatening letters, for instance a Notice of Tax Due and Demand for Payment or Final Notice of Intent to Levy.


These notices inform you that the IRS intends to seize or “levy” your property. The IRS can take any or all of your property, such as bank accounts, paychecks, and even homes, with the exception of certain exempt types of income and possessions.


Part of your wages are protected from being seized by the IRS—they are exempt from levy. A single filer can protect $230 per week, while a married couple filing jointly can protect $461.50 a week, meaning all of your salary will be seized except for the protected amount. Also exempt from levy are unemployment benefits, workers’ compensation benefits, certain public assistance benefits, income needed to pay court-ordered child support, and certain pension benefits. Other protected property includes certain amounts of clothing, furniture, personal effects, and job-related tools. A state homestead exemption will not protect your home from an IRS tax lien or seizure. The IRS will not know about exemptions or defenses unless you or your advocate informs the IRS.


The IRS can also recover past-due taxes by seizing certain federal benefits and other payments, including Social Security payments (but not Supplemental Security Income payments). The IRS can levy 15% of your entire Social Security benefit. Unlike other forms of federal government seizures of benefit payments, the first $750 of your monthly income is not protected. In some cases, the IRS will levy even more than 15% of Social Security benefits.


Generally, the IRS will exempt low-income taxpayers from a levy on Social Security benefits. If your Social Security benefits are being seized, you should call the IRS at 800-829-7650 and specifically ask for them to remove the levy and place you in “currently not collectible” status or ask for a payment plan in a lower amount than the levy. Generally, the IRS will remove a Social Security levy if you are low-income. Resources for getting help are listed in at the end of this article.


When you receive a notice that your property is being levied or a lien is being placed on it, you can request a review of your case called a “Collection Due Process” hearing on Form 12153. You have thirty days from the date of the notice to request a hearing. The hearing request will result in a suspension of collection activities, including any levy, during the appeals process. During the hearing, you can request one of the payment options discussed earlier in this article—an installment agreement, an offer-in-compromise, or non-collectible status. In certain situations, you can dispute that you owe the tax.


Unless most or all of your assets and income are exempt from levy, it makes sense to negotiate for one of the three options for paying your tax debt to avoid seizure of personal property and income. Make sure any agreement is in writing. A good source for information about taxes is the IRS website at www.irs.gov.


EFFECT OF BANKRUPTCY ON YOUR TAX DEBT

Bankruptcy is not as effective a remedy when dealing with taxes as with other debts. In general, only old taxes debts can be discharged in a chapter 7 bankruptcy, for example, where the debt stems from a timely filed return that is more than three years old. Existing tax liens are likely to remain on your property even after a bankruptcy. In a chapter 13 bankruptcy, the full amount of the taxes owed can be paid in installments over a three-year to five-year period.


SEEKING HELP

You may be able to get help with your tax problems from a Low-Income Taxpayer Clinic. These are legal clinics based at law schools and legal services offices that help low-income taxpayers who have disputes with the IRS. Clinic locations are listed in IRS Publication 4134: Low Income Taxpayer Clinic List, and can be searched online at www.irs.gov/advocate/low-income-taxpayer-clinics/low-income-taxpayer-clinics-map. Another option may be your local legal services office, which can be located using http://lsc.gov/find-legal-aid.


In some cases, you can get assistance from the IRS Taxpayer Advocate Service, an independent organization within the IRS that helps taxpayers who have not been able to resolve tax problems through normal channels. You should fill out Form 911 or call 1-877-777-4778 to request Taxpayer Advocate Service assistance. IRS forms can be found at www.irs.gov.

Motor Vehicle Repossessions: Consumer Debt Advice from NCLC
 by Carolyn Carter, National Consumer Law Center (NCLC)

This is the third in a series of articles from NCLC that provide advice for families in financial difficulty.

The focus of this article is on motor vehicle repossession including

* limits on self-help repossessions
* ten strategies to prevent repossessions
* six steps to take after your car is repossessed, and
* advice on responding to the creditor’s demand for additional payment even after the repossession.

OVERVIEW

When buying a car on credit, you almost always must put up the car as collateral for the loan. Sometimes consumers also use their cars as collateral for an unrelated small loan. Most of these are high-cost auto title or “auto pawn” loans, which are legal in some states but illegal in others.


If your car is collateral for a loan and you get behind on your payments or violate other loan terms, you risk the immediate repossession of your car. Miss one or two payments and your car may be gone.


A repossession agent may break into your car and drive or tow it away. The process is called “self-help” because the creditor is not required to go to court to get permission from a judge to repossess your car. In most states, the creditor does not even have to notify you that a repossession is about to take place.


There are important exceptions to a creditor’s right to use “self-help” repossession:

• • The creditor must have taken the car as collateral or the car must have been leased to you. For example, if you do not pay a medical debt or a credit card debt, the medical provider or card issuer cannot repossess your car.
• • In some states, the creditor must first give you notice of the right to catch up on delinquent payments. (See Curing a Default below.)
• • A self-help repossession cannot breach the peace.
• • Self-help repossession is generally illegal on certain American Indian reservations. In Louisiana, self-help repossession is illegal unless the creditor is a licensed financial institution or bank that has a state or U.S. charter and the repossession agent has a state license. In Wisconsin, the consumer can object to self-help repossession if the consumer does so within 15 days of receiving notice of a pending repossession. Self-help repossession is legal in Maryland only if the credit agreement allows it.
• • A creditor cannot use self-help to repossess a car owned by active duty military personnel if the debt was incurred before the individual entered active duty. Children, spouses, and other dependents of active duty military personnel are similarly protected, but only if they apply to a court for an order prohibiting repossession.

After the creditor repossesses your car, the creditor will then sell it, typically for much less than it is worth. If so, you may find yourself being sued for the amount of money that the creditor claims remains to be paid on the loan after deducting the proceeds of the sale. This can be thousands of dollars.


STRATEGIES TO PREVENT REPOSSESSION


Keeping Current on Car Payments. Do not pay credit card debts, medical bills, or other low-priority debts ahead of car payments. If you skip payments on low-priority debts, you will not be in immediate danger of losing your property. Skip one or two car payments and you risk losing your car. If you find it necessary to miss payments on low-priority debts, try to get caught up on your back-payments as soon as possible.


Keep Your Car’s Damage Insurance Current. If your damage insurance lapses, the creditor is likely to add replacement insurance to your car payments that is much more expensive and offers much less protection than insurance you could purchase yourself. You will have even more trouble keeping up your now higher-cost car payments.


Consider Cancelling Other Insurance and Add-ons. Often, as part of a car sale, the dealer has sold you add-on products—a service contract, credit life insurance, credit accident and health (or disability) insurance, credit unemployment insurance, GAP insurance, theft protection, tire protection, key fob replacement, or an auto club membership. These add-ons are often overpriced or even worth very little. Find out whether you can cancel these add-ons and get a rebate of the unused part of their cost. The rebate may help you make one or more of your payments on the car and may make future payments lower.


Negotiate with the Creditor. Some creditors may be willing to allow you to skip a payment or make a payment late. If you get an agreement, confirm it in writing. Make sure the agreement is one that you can comply with. For example, if the creditor allows you to make a payment ten days late, make sure before you agree to this that you really can make the payment then.


Curing a Default. The following states give consumers a right to cure—a second chance to make up late car payments before repossession: California, Colorado, Connecticut, the District of Columbia, Iowa, Kansas, Maine, Massachusetts, Missouri, Nebraska, New Hampshire, Puerto Rico, Rhode Island, South Carolina, South Dakota, Virginia, West Virginia, and Wisconsin. Pay attention to the notice you will get telling you how many days you have to pay the amount past due to avoid repossession. Rights to cure auto leases are available in Connecticut, the District of Columbia, Illinois, Iowa, Kansas, Maine, New Hampshire, New Jersey, New York, Rhode Island, West Virginia, and Wisconsin.


Sell the Car. If you cannot afford your car loan payments, insurance, and maintenance costs, you are generally better off selling the car than having it repossessed. Selling the car yourself before it is repossessed will bring in a much higher price than a repossession sale would, you will not have to pay the creditor for the creditor’s repossession, storage, and sales expenses, and you can obtain a larger rebate on any service contract, automobile insurance, or credit insurance that you cancel along with the sale. Your credit rating will also be higher than if the car is repossessed.

Because the creditor has a lien on your car, you can only sell it with clear title if you use the sale proceeds to pay the creditor the full outstanding balance. If you cannot sell the car for as much as is owed on the loan, you will have to pay the creditor the difference, unless you convince the creditor to take less.

Avoid anyone who offers to “broker” a sale or lease of your car to another consumer. In many states car brokerage is illegal. A scammer may take money from both you and the new “purchaser,” but not complete the paperwork for a real transfer in ownership or forward payments to your lessor or creditor. Instead, you will lose the use of your car but still owe the creditor or lessor the full amount.


Return the Car to the Creditor, but Make Sure You Get a Fair Deal. Done incorrectly, voluntarily turning the car in to the creditor will not help you much. You will still owe the creditor if the repossession sales proceeds are less than what you owe and you will have waived your claims and defenses. Voluntarily turning the car in might make sense if you obtain a written agreement from the creditor that you do not owe anything else on the loan. Also try to have the creditor state in the agreement that it will not report the default to a credit reporting bureau.

The situation is similar when you turn in a leased car. It is a common mistake to believe that you will have no further obligation after you turn the car in early. You will have no further obligation (except excess mileage or unusual wear) if you turn the car in at the scheduled termination of the lease. Your liability at early termination may be thousands of dollars. Before turning in a leased car early, negotiate to reduce or eliminate your early termination liability. Make sure to get this agreement in writing.


Thwarting a Self-Help Repossession. Self-help repossession can take place on the street or even in your driveway. But a repossessor cannot legally break into a locked garage. Repossessors also cannot seize a car they cannot find, but most states make it a criminal offense to conceal collateral (such as your car) or to move it out of state. It is also becoming more and more difficult to hide a car because of technological advancements in tracking cars.

Most courts say that if you or a family member is present during the repossession and objects, the repossession should not continue. But your objection should not involve force. Politely and firmly tell the repossessor not to take the car. Do not be swayed by any legal advice offered by the repossessor.

Never resort to force. Never meet force with force. If the repossessor uses force or threats, or otherwise breaches the peace, call the police. Do not take matters into your own hands. After the fact, consult an attorney. There are significant legal remedies available to challenge an illegal repossession.

Never resist government officials in the performance of their duties, but make sure the person is not just impersonating a government official. Government officials should only operate pursuant to written court orders and should not assist self-help repossessions. Ask for the official’s identity and the reason why the official is there. Inspect any documents the official waives around claiming to be a court order.

When you are delinquent on a car loan, it is risky to bring your car in for repairs to the dealer or anyone else the creditor would know. Do not drive the car to the creditor’s place of business to discuss a work-out agreement. You may have to walk home if you fail to reach a satisfactory arrangement.


File for Bankruptcy Protection. Once you file for either a chapter 7 or 13 bankruptcy, no one can take any action against your property, including repossessors. Although a lender may later ask the bankruptcy court for permission to take the car, there can be no repossession before obtaining that permission. A chapter 13 bankruptcy also can help you keep the car in the long run because you can spread out your payments (both past-due and new payments) over three to five years. Keeping the car will be more difficult if you file under chapter 7, because at some point you will have to pay the creditor either the lesser of the car’s value or the total amount that remains owed on the car loan.


Minimize the Loss of Personal Property Inside the Car. Property left in a car has a way of disappearing after the car is seized. If you anticipate a repossession, remove your personal property such as tools, GPS devices, media players, clothes, and sporting equipment from your car. Remove any important records from the glove compartment. There are some items, however, such as children’s car seats and a spare tire, that should be left in the car while you use it. Make a list of these items and photograph them so that you will be in a better position to claim them if the car is repossessed.


WHAT TO DO AFTER YOUR CAR IS REPOSSESSED

Get Back Personal Property Left in the Car. Creditors cannot keep your personal property that was left in your car after it has been repossessed. The lender can only keep the car itself. As soon as possible, demand both by phone and in writing any property left in the car specifying each item. Make the request quickly before the property disappears.


In Some States You Can Reinstate the Contract and Get the Car Back. The following states allow a consumer to reinstate the contract after repossession in at least some circumstances: California, Connecticut, the District of Columbia, Illinois, Maryland, Mississippi, New York, Ohio, Rhode Island (although the phrasing of the law is not completely clear), and Wisconsin. Reinstating the contract allows you to recover the repossessed car by paying only the back-due payments, not the full amount of the debt. You may also have to pay the costs of the repossession and any storage charges, plus possibly one or two payments in advance. You must act quickly. In most states where it is allowed, you have only a few weeks to reinstate after repossession.


You Can Redeem the Car. In every state, after a repossession, you can redeem the car. This means that you can get the car back by paying the full remaining amount due plus expenses (redemption does not apply to leases). The creditor must notify you of the date of the car’s sale or a date after which the car will be sold and the creditor must include a telephone number to call to find out how much you have to pay to redeem the car. You can redeem the car up until the very moment before the car is sold.

If you are having trouble keeping up with monthly payments, you are unlikely to be able to pay off the whole debt at once. If a car is important to you and worth more than the debt, consider borrowing from friends, relatives, or elsewhere. Don’t mortgage your house to get your car back because defaulting on that loan may result in your losing your home.


Try to Negotiate with the Creditor. If your car has just been repossessed, you might be able to negotiate to get the car back. You are in a particularly strong position if you have significant claims or defenses relating to the car, its credit terms, or its repossession. If a car has minimal resale value, the creditor should also prefer a workout agreement to a worthless asset.


Get the Car Back by Filing Bankruptcy. You can get your car back by filing bankruptcy, even after it has been repossessed, as long as you do so before the creditor sells it. Once you get the car back, if you want to keep it for the long term, you must make payment arrangements, which as explained below, will vary depending on whether you file a chapter 7 or 13 bankruptcy.

In a chapter 7 bankruptcy, you must pay the creditor the lesser of the full remaining balance of the debt or the car’s value. Some creditors let you make this payment in installments, but other creditors will require you to pay the full amount in one lump sum.

In a chapter 13 bankruptcy, you have several ways of keeping the car. Probably the best one is to set up a plan to pay off the car loan in monthly installments over a period as long as five years. The interest rate charged in a chapter 13 plan can, in some instances, be lower than what you are paying on the car loan. You may even reduce the amount owed to the current value of the car, if the car’s value is less than the amount you owe, particularly if you bought the car over 910 days before your bankruptcy filing.


When the Repossession Was Wrongful. You can file a lawsuit to get the car back and receive damages if the car was taken improperly, but this will require the help of an attorney.


CREDITORS’ COLLECTION EFFORTS AFTER THE REPOSSESSION SALE—THE DEFICIENCY ACTION

After repossession, the creditor will sell your car and apply the sale price (after deducting all repossession and sale expenses) against the amount you owe. If the net sales proceeds are more than the amount you owe, the creditor must pay you the “surplus.” Far more commonly, however, the net sale proceeds will be less than the amount you owe. When the net sale proceeds is less than the amount you owe, it is called a “deficiency.” If there is a remaining amount due, creditors will then come after you for the deficiency. When a lessor repossesses a leased vehicle, the result is the same. The car is sold and the lessor seeks a further amount called “an early termination charge.”


Once your car has been repossessed, your deficiency obligation is no longer backed up by any collateral, and should be treated as a low priority debt just like a hospital bill or a credit card debt. You should not pay it ahead of more pressing obligations, such as rent or utility bills. With a repossession already indicated on your credit record, an unpaid deficiency amount will not do much more to hurt your credit score.


Many defenses may be available to you if a creditor attempts to collect this deficiency through a lawsuit. The flip side of creditors being able to seize and sell your car without court supervision is that they have to strictly follow certain rules, and they often do not. Your legal rights are strong where the creditor or lessor trips up and you may be able to eliminate the amount demanded, or even end up with a positive recovery for yourself. But you will need help from a lawyer to effectively defend a lawsuit seeking a deficiency or early termination charge. Here are some defenses to look for (see NCLC’s Repossessions for more detail):

• 1. Claims concerning the car or the credit terms. Was the car a lemon, or did the dealer misrepresent the car’s quality or the credit terms?


• 2. Is the car collateral on the loan? Sometimes the creditor trips up on a technical requirement to make the car collateral for the debt. Does one spouse own the car and the other spouse is obligated on the loan? Is the car collateral for an earlier loan but not listed as collateral in a refinancing of the original car loan? If the creditor has not taken the car as collateral, it cannot repossess the car, even if you defaulted on a loan used to purchase the car.


• 3. Were you in “default” when the car was seized? If a creditor routinely accepts your late payments, the creditor may be prohibited from seizing the car just because a payment is late. It may have to notify you first that it will no longer accept late payments. You may not be in default if you gave the creditor notice you were withholding payments because the car was a lemon. Did the creditor repossess before your right to cure period had expired?


• 4. Did the car’s repossession breach the peace? When a seizure is wrongful, the creditor generally should not keep the car or collect a deficiency. The creditor may owe you money instead.


• 5. Improper repossession sale or miscalculation of the deficiency. If the creditor does not sell your car, but instead keeps it, the creditor cannot seek a deficiency. If the creditor sells the car, it must strictly follow correct procedures as to notices and the sale. Failure to follow the procedures exactly often can eliminate the deficiency.You must be notified that the creditor will sell your car, describing the car, the nature of the sale, the time and place of a public auction or the date after which the car will be sold privately, and other important information. The sale cannot be too rushed and it cannot be overly delayed. Every aspect of the sale, including the advertising, the manner, the time, the place, and the terms must be “commercially reasonable.” Look out for low-price sales to insiders.
• 
  Check to see if the creditor correctly calculated the amount of its claimed deficiency. If the creditor asks you to pay a deficiency after the car has been sold, in most states the creditor must send you a summary of its calculations, along with an address or phone number where you can get additional information.


• 6. Auto leases. Your defenses will be different if the car you leased is repossessed. The amount the creditor (also known as “the lessor”) claims you owe must follow the complex formula stated in the lease and must also be reasonable. The terms of the lease also must be properly disclosed and not misrepresented.

Transparency Oregon

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Initiative Petition 25 requires publicly traded corporations to provide to the Secretary of State a public report of their Oregon taxes.

Corporations make billions of dollars here in Oregon, but pay fewer taxes here than in any other state. The result? Oregon’s families and small businesses pay more than their fair share in taxes, and our schools and basic family services are underfunded.

For years, advocates have worked to make Oregon’s tax system more fair, but corporations have proven willing to spend tens of millions of dollars to avoid even small increases in the taxes they pay. Year after year, corporations and large business associations make wild claims that local businesses will pay the price for any new tax increase — ignoring the fact that small and local businesses currently pay a higher tax rate in Oregon than some of the world’s biggest corporations.
IP 25 brings truth to the debate about corporate taxes. It requires that publicly traded corporations in Oregon reveal the same tax information about their Oregon taxes that corporations do for their federal taxes.

Key provisions of the measure:

• Requires companies that must publicly report their taxes nationally to report their state taxes to the Secretary of State
• The reports would be made public on a website, similar to ORESTAR
• The required information would mirror the required information these companies provide to the federal government, and would not require companies to gather additional data
• The report goes to the Secretary of State to avoid conflict with privacy laws around taxes
• There would be a penalty, limited by the size of the company and capped at $1 million, for not reporting
  
• The reports would not just include taxes owed, but also tax credits
• The information would be delayed by three years to make sure that “company secrets” are not revealed by tax decisions
  

Oregon Needs Corporate Tax Transparency

Oregon can’t wait for investments in schools and services, and those investments rely on corporations paying their fair share in taxes. If Oregon lawmakers better understood who paid taxes and who did not, they could more fairly design a tax package that would benefit Oregon families and boost Oregon’s economy.


IP 25 provides transparency and honesty to a tax discussion that badly needs it. With an understanding of the taxes corporations pay, we can take an important step in making Oregon’s schools and services as good as families deserve.

29 May 2018

Monica Jackson
Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street NW
Washington, DC 20552

Submitted VIA: https://www.regulations.gov/comment?D=CFPB_FRDOC_0001-0603 (link is external)

Re: Consumer complaints, Docket ID: CFPB-2018-0006

Dear Ms. Jackson:

As you can probably tell, I am here to leave a comment in response to an effort by those opposed to hiding consumer complaint data. It's astonishing and depressing that the CFPB would even consider such a counterproductive idea. I hope CFPB will come to its senses and KEEP the complaints database accessible and doing what it does -- helping consumers identify the businesses to scrutinize extra closely.

Barely a day goes by when we don't find yet another major consumer-facing business that has abused its customers in one way or another. The CFPB database is invaluable to helping those consumers and to the competing businesses.

Thank you for the opportunity to comment on the Consumer Financial Protection Bureau’s (CFPB or bureau) Request for Information regarding consumer complaints.

Since it opened its doors, the CFPB has worked hard to make sure that banks, lenders, and other financial companies follow the law and are punished when they are caught cheating and ripping off consumers. The CFPB should keep up its good work to protect consumers from illegal fees and charges, fraud, deception, and other bad behavior.

I urge the CFPB not to make changes that would weaken the bureau’s ability to do its job. For example, the CFPB is reviewing many of its important functions, but it looks like an attempt to change how the agency works. Do not hurt the CFPB’s role as a watchdog for consumers like me in our dealings with banks, lenders (of mortgages, student loans, payday loans, car loans, etc.), debt collectors, and credit reporting agencies.

I am very concerned about the CFPB’s future plans for how it will treat consumer complaints. The CFPB has built a dynamic online complaint database that helps millions of us across the country who have encountered problems with financial companies. Currently, we can file complaints with the CFPB against financial companies, and the companies have the opportunity to respond to each complaint. Banks, lenders, and others have fixed problems with their products and services because of complaints sent to the CFPB.

People who file complaints can also choose to make their disputes available on the public online database, while it shields and protects their private information. This option has allowed other members of the public to go online to review complaints and learn whether a company has a good record of fixing problems.

I strongly support the CFPB’s public consumer complaint database. It is one of few options available for consumers to address problems with financial companies. I urge the CFPB to keep this tool available for the public to share our experiences with unfair and illegal financial practices. The complaint database should remain open and available for us to go online to review other complaints. The bureau should: make the database more user-friendly for consumers; make it possible for consumers to see how individual companies handle complaints; and require timely, tailored responses from the companies that are complained about.

Individual consumers like me have little power against bad actors in the financial industry, but the complaint database gives us some power because we can report and receive important information that helps us in our daily financial lives.

Thank you for considering my views.

Sincerely,
John Gear

A Reverse Mortgage Primer: Consumer Advice from NCLC
Sarah Bolling Mancini

This is the second in a series of articles from NCLC that provide advice for families in financial difficulty. (The first article was “Dealing with Medical Debt.”) 

This article focuses on reverse mortgages, including:
* who should consider a reverse mortgage;
* how reverse mortgages work;
* the foreclosure risks;
* the impact on spouses, partners, and heirs; and
* whether taking out a reverse mortgage is a good idea.

Reverse Mortgages Overview

For households struggling to pay all their bills, and where at least one of the homeowner’s is 62 years old or older, one option to consider is a reverse mortgage. A reverse mortgage differs from a traditional mortgage because the borrower receives a lump sum or a stream of payments, but does not make monthly payments on the loan. Instead, over time the balance due on the reverse mortgage grows, as the monthly interest and other fees are added to the loan balance. The loan is called a “reverse” mortgage because the balance goes up over time, instead of going down. No payment is due on the reverse mortgage until the borrower dies or moves out of the home, at which time the full loan balance becomes due.


A reverse mortgage can provide cash to the homeowner, eliminate payments on a preexisting mortgage, and allow the homeowner to remain in the home (as long as the homeowner can pay for property taxes, insurance, and necessary repairs). Contrary to some misconceptions, the borrower on a reverse mortgage is still the owner of their home, although the lender will be permitted to foreclose if the loan is not paid off within a period of time after the borrower’s death.
Reverse mortgages are not for most homeowners. They are expensive—high closing costs and interest rates higher than standard prime mortgages. Once the equity has been drawn down through a reverse mortgage, it may not be possible to draw against the home again to pay for necessary expenses, such as home health care. Worst of all, some reverse mortgages are scams, so borrowers should get all the information up front and seek independent advice before signing on the dotted line.


Who Should Consider a Reverse Mortgage?Most reverse mortgages are insured by the Federal Housing Administration (FHA) under its Home Equity Conversion Mortgage (HECM) program. There are only a very small number of reverse mortgage loans made by private lenders outside of the HECM program. You are only eligible for a HECM (government insured) reverse mortgage on your home if you meet all of these requirements:

• • You are at least 62 years old;
• • Your home is worth significantly more than any outstanding mortgages on the home.
• • Your home must be your principal residence, where you reside the majority of the year.
• • You are not delinquent on any federal student loans or other federal debt.
• • You have the financial resources to make timely payments on property taxes, insurance, homeowner association fees, and the like.
• • You have a counseling session with an independent HUD-approved counselor.

The home itself must be one of the following:

• • A single family home.
• • A manufactured home meeting FHA requirements.
• • A HUD-approved condominium project.
• • A two-to-four unit home and you occupy one of the units.
  

Even if you meet all these requirements, a reverse mortgage may not be right for you—depending on your financial situation, it may actually be the wrong choice. If after reading this article, you are still interested in a reverse mortgage, the first step is to meet a reverse mortgage counselor approved by the U.S. Department of Housing and Urban Development (HUD). This counseling is required before moving forward with a loan application with any lender participating in the HECM program.

Find a counselor by calling 800-569-4287 or by going to https://www.hud.gov/program_offices/housing/sfh/hecm/hecmlenders.


Counseling is required, but it is also important to help you understand the reverse mortgage product. A counselor will help you weigh other financial and loan options, the costs and benefits of a reverse mortgage, its impact on your eligibility for federal and state benefits, and how the reverse mortgage affects others in the household and your heirs. If you do not fully explore all these issues with the HUD-approved counselor, you should seek alternative counseling sources, because the reverse mortgage decision can be very complex and will have a significant effect on your future.


You should be highly skeptical of any reverse mortgage offered you that is not in the HECM program or that does not involve a HUD-approved counselor. In fact, California and a few other states require counseling prior to obtaining any reverse mortgage.


You also should be very wary of any reverse mortgage lender that is aggressively pitching to you through advertising or over the telephone. Lenders sometimes push reverse mortgages on borrowers without accurately describing all of the downsides of the loan. After talking to a HUD-approved counselor, reach out to a lender participating in the HECM program. A list of such lenders is available on https://www.hud.gov/program_offices/housing/sfh/lender/lenderlist.


How a Reverse Mortgage WorksA reverse mortgage loan is secured by your home, like any mortgage, meaning the lender can foreclose if the loan terms are violated. Unlike most mortgages, there are no monthly payments on the reverse mortgage loan. Instead the loan comes due (with interest) upon a triggering event, typically the borrower passing away or permanently moving out of the home.


There is a limit to how much you can borrow on your home, called the “principal limit.” Your principal limit will be higher the older you are, the higher the value of your home (after subtracting current mortgage balances), and the lower current interest rates are. If you are married or own the home with another person, the principal limit is based on the younger of the two of you.


Your ability to obtain a reverse mortgage is much less tied to your credit score than a traditional mortgage, and you should not be refused a reverse mortgage or pay higher interest because you have low income or a blemished credit rating. Since there are no monthly payments on the loan itself, the lender is not concerned about your ability to make such mortgage payments.


The lender will be checking to see that you have the resources (either on your own or through the reverse mortgage loan) to keep up with certain “property charges”—your property taxes, homeowner’s insurance, any homeowner association (HOA) dues, and necessary home repairs. You are required to pay these property charges during the term of the reverse mortgage. Failure to pay them will result in foreclosure and loss of the home. Many people have gotten into trouble on their reverse mortgage loan because they’re not used to paying the property taxes or insurance once a year when they come due, especially if they had a standard mortgage previously that collected the money through an escrow. It is important to understand this obligation to pay the taxes and insurance yourself, and to set aside the necessary funds.


There are a number of ways you can receive the proceeds from a reverse mortgage loan. If you have a preexisting mortgage on your home, the reverse mortgage loan proceeds first will be used to pay off that mortgage. If your present mortgage balance is high, paying off this mortgage will significantly reduce what is available to you from your reverse mortgage loan. On the other hand, the reverse mortgage will free up your cash since you will no longer have to make mortgage payments on the preexisting mortgage. Remember, you will still have to pay property taxes, homeowner’s insurance, necessary repairs, and other home-related expenses.


After paying off any existing mortgage and any other liens on the house, the rest of your reverse mortgage loan can be paid to you in any of the following ways:

• • One large payment of the full principal limit given to you in cash. This almost never makes sense. Instead, delay receiving as much of your reverse mortgage proceeds as possible to help you pay for future expenses—such as unexpected home repairs, health care expenses, and other emergencies.
  
• • A fixed monthly payment paid to you for a set period of time. This is called a “term” plan.
  
• • A fixed monthly payment (smaller than the “term plan” amount) that will be paid to you like an annuity for as long as you survive and live in the home (called a “tenure” plan).
  
• • As a line of credit to be drawn at your convenience. Only draw down what you need, and then interest and fees will only accrue on what you draw on. Not only will the remaining principal limit be available for you for future use, but that limit will increase over time. The line of credit option may also be combined with a term or tenure plan.
  

Your reverse mortgage loan balance (how much you owe) is based on how much the reverse mortgage lender pays you, including paying off your mortgage and any other loans. Also added to the loan balance are any upfront closing costs similar to a regular mortgage—origination fees, real estate closing costs, and an initial mortgage insurance premium. As the lender gives you more money, your loan balance with the lender goes up. The balance also goes up each month with interest charges, mortgage insurance premiums, and servicing fees being added to the balance.


The loan balance eventually must be repaid either when you pass away or when you move out of the house. The balance can be paid off by selling your home, by refinancing, or by letting the lender foreclose. If it is sold at foreclosure for more than the reverse mortgage loan balance, your heirs get to keep the difference. If it is sold for less, your heirs will not have to pay anything, because the difference is covered by mortgage insurance.


You can also sell your home before you pass away or move out, and if you do, you would be able to keep the difference if the sale price is greater than the reverse mortgage loan balance at the time of sale. If the house is sold through a foreclosure or short sale for less than the loan balance, you will not owe anything, again because of the mortgage insurance.


Reverse Mortgages Are Still Subject to Early Foreclosure


A reverse mortgage lender may foreclose on your home if you do not keep up with property taxes, homeowner’s insurance, homeowner association fees, and the like. If you fail to pay these charges, the lender may pay them for you and, if you can’t repay the lender in a relatively short time period, may foreclose. At the time you take out the reverse mortgage, if the lender determines that you do not have the ability or willingness to pay these property charges, they may require you to set aside funds from the available reverse mortgage’s principal limit to pay these expenses during your expected loan term.


You must keep your home well maintained or risk foreclosure. At the time you take out your reverse mortgage, the lender will tell you which repairs you must make. The lender may even set aside some of your borrowing limit to ensure the repairs are made. The lender may then foreclose if you do not make the required repairs. You also later may have to keep the home up to standard if the home deteriorates over time or is later damaged. Where the needed repairs are caused by a fire or other covered incident, your homeowner’s insurance should help pay.


If you are absent from your home for the majority of the year, your loan may become due and the lender may foreclose . If your absence is health-related, you can be absent for a full year before foreclosure can begin. For example, the loan will become due if you move to another home or permanently move to a nursing home.


In a foreclosure, the lender will sell your home. If it is sold for less than your current loan balance, you will not owe the difference. If it is sold for more than the loan balance, you or your heirs will get the surplus funds.


What About My Spouse or Partner?


Usually you should add your spouse or partner as a co-borrower on the reverse mortgage. Then you both are responsible for the loan and both receive the benefits. As a co-borrower, your spouse or partner will be able to live in the home even if you no longer live there, such as if you have to move to a nursing facility. Even after you pass away, the co-borrower will be able to draw funds from an available line of credit (if the reverse mortgage is structured that way), as long as he or she remains in the house.


According to HUD rules (after August 2014), a spouse who is not a co-borrower on the reverse mortgage is still protected and can remain in the home after the borrower leaves the house or passes on. The spouse has to be living with you continuously from when you took out the loan until when you pass on or leave the home. Also you have to have been married before you took out the loan. Even then, a non-borrowing spouse cannot receive loan proceeds after the borrower dies, which is a problem if you have been relying on such payments to make ends meet.


Is a Reverse Mortgage a Good Idea?


A reverse mortgage is not a good idea for most people, and much depends on why you need the money. Reverse mortgages do not make sense to just pay off old credit card bills or medical debt, that may no longer even be charging interest and where the collector may never even sue you for the money.


On the other hand, the inability to pay your car loan, utility bills, or your regular mortgage can have devastating consequences, and the costs of a reverse mortgage may make sense if these risks are at play. But even then, the NCLC Consumer Debt Advice series will provide you with other advice on dealing with these obligations, often making resort to a reverse mortgage unnecessary. You might also consider a reverse mortgage if you are in a cycle of paying enormous amounts of interest (hundreds of percent interest) on a series of small loans that add up to thousands of dollars of interest being paid every year—a reverse mortgage is usually a far cheaper alternative.


Proceed with caution. Once you take out a reverse mortgage, you may not be able to borrow on that value again (depending on whether home values go up), when in the future you might need that home equity to pay for home health care, for example. Other potential drawbacks to a reverse mortgage include:

• • Reverse mortgage closing costs can be very high. Shop around for the loan with the smallest total fees. A reverse mortgage will be most costly, relatively speaking, if you continue to live in your home for only a few more years after taking out the loan.
  
• • The amount of cash you get may not meet your needs. A 65-year-old whose home is worth $50,000 after deducing the outstanding mortgages may get only around $150 per month on a tenure mortgage. (This calculation depends on a variety of factors, including interest rates, home value, and the amount of the closing costs.) You are still responsible for paying the property taxes, insurance, general up-keep of the property, homeowner association fees, utilities, and other home-related expenses.
  
• • You are paying interest, insurance, and servicing fees on a reverse mortgage loan, so that even if you do not draw down a lot of money, over time this loan obligation will grow. Then if you want to sell your home, you have to pay off a surprisingly large loan balance. It may mean that when you decide to sell, you have almost no remaining equity.
  
• • A monthly reverse mortgage payment is not considered income. But if the loan proceeds are taken as a lump sum, while that money is in the debtor’s hands it can be treated as an asset that could affect eligibility for means-tested government benefits like Supplemental Social Security Income, Medicaid, or food stamps. (Social Security payments are not affected.) Check with your benefits provider before taking out a reverse mortgage loan.
  
• • Some shady lenders offer very unfair reverse mortgages or conventional mortgages that look like reverse mortgages. Only work with a reputable lender in an established program. As a rule, only sign up for a HECM reverse mortgage.
  
• • A reverse mortgage may make it difficult to pass your home on to your heirs after your death. If your heirs want to keep the home they will need to pay off the amount due on the reverse mortgage. This is different from a regular mortgage, for which your heirs could simply keep making the monthly payments. At the time of your passing, the balance of the reverse mortgage may have grown to the point where there is little or no equity left to leave to your heirs. Using your home equity now and leaving less for your heirs may be the right decision if you need money now, but be aware of what it may mean for the future.
  

How Does a Reverse Mortgage Stack Up Against a Traditional Mortgage, Refinancing, or Home Equity Loan


There are other options beside a reverse mortgage to use your home as collateral to obtain loans to pay off your obligations—refinancing a first mortgage, a first or second mortgage, or a home equity line of credit. A reverse mortgage’s advantage is that there is no monthly payment and the underwriting is looser as far as your income and creditworthiness. The lender is not concerned whether you can make mortgage payments, and just wants to ensure you can pay for property taxes and insurance, either out of the reverse mortgage loan proceeds or otherwise. Also, upon foreclosure, with a reverse mortgage there is no risk of you or your heirs being required to pay a deficiency if the home is worth less than the mortgage’s outstanding balance.


Interest rates and mortgage insurance for a reverse mortgage are generally higher than for other types of mortgages. With the exception of your spouse or your co-borrower, once you pass on or leave the house, those remaining in the house cannot stay—the house will be sold.