Will I Be Stopped at the Border for My Old Student Loans?

Question:

Dear Steve,

I live in France. I have lived in France for over 20 years. Last year I did my first income tax return for the United States using the amnesty program. This year I had a tax refund of $1000.94 well I have a student loan debt I knew I would not get the thousand dollars and I did not. I was able to learn that a collection agency is in charge of my debt.

My question is being a permanent resident in France having no work or residence in the United States and having no intention of ever living again in the United States can the collection agency come after me here in France.? The information regarding my wife’s employment salary has not been given and will not be given to the collection agency. However I declare myself married filing separately and I declare my own children as my dependents I have 3. Can a collection agency go after my children who are in fact French citizens? Last and final question… Could I be arrested when I enter the United States to visit my family?

Answer:

Well you can rest assured you will not be arrested when coming back to the U.S. to visit friends and family. It’s just not in the purview of U.S. Customs and Border Protection to screen people for bad debts. If they did, imagine the lines.

I applaud you for getting back to filing your foreign tax returns. The answer to avoiding having tax refunds intercepted is to just avoid getting a refund. However, the intercept is probably a small price to pay for dealing with the absent tax filing issue.

Since the refund was intercepted your student loan debt must be federal student loans and there are programs to deal with delinquent student loans.

While we live in a modern world, there is really very little international collection activity. One hurdle for collectors would be to perfect the authority to collect a debt subject to the legal agreement of one country, in another.

There are two distinct audiences who will read this answer. One will say you should do whatever you can to honor your past agreements or you will go to hell. I’m not judging, just repeating what some people say.

The other camp are people who understand the reality of the situation and know you have nothing to worry about. Again, I’m not judging or advocating the do nothing position, just telling you what the truth is.

And the truth is your children are safe, it is very highly unlikely you will ever be the subject of any collection activity in France over this old debt, and you can enter the U.S. without any fear about the student loans.

Thank you for reaching out to me for help.

“Steve

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This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.


The IRS Is Beefing Up Security. Will Your Taxes Be Affected?

In the past several years, millions of U.S. taxpayers have experienced the frustration of attempting to file their taxes, only to find that someone beat them to it: Tax-related identity theft is a common crime, in which people use stolen information (mostly Social Security numbers) to fraudulently obtain tax refunds. Then, when the rightful owner of that Social Security number attempts to file taxes, the IRS flags the return as a duplicate, and consumers end up waiting months, sometimes years, to receive their refunds.

During tax year 2013 (the most recent data available), the Internal Revenue Service lost $5.2 billion to identity theft, despite preventing $50 billion in tax-refund fraud. The problem isn’t going away, so the IRS recently announced new plans to curb such fraud, including more complex taxpayer-authentication processes.

Given how far away tax season is, it’s unclear how these changes might affect consumers’ tax-filing experiences, but the changes seem to be geared toward the tax-preparation industry, rather than taxpayers.

“It looks to me that this is all going to be happening behind the scenes,” said Stephen W. DeFilippis, an Enrolled Agent in Wheaton, Ill. Enrolled Agents are tax practitioners federally licensed to represent taxpayers before the IRS. “If it does delay anything I’m sure we’re not going to hear about it until right before filing season.”

That’s where things are at right now: The IRS and others in the tax space are working to improve fraud prevention, but consumers may not yet notice the changes. You should keep doing what you’re (hopefully) doing by filing your taxes as early as possible, while keeping an eye on your credit scores and credit reports for signs of identity theft. Meanwhile, here’s what will be unfolding in the background when you file your taxes in 2016, according to the IRS news release on the initiative.

Information Sharing

The IRS announced it would collaborate with other groups in the thick of tax preparation in order to better detect fraud. This includes tax preparation and software firms; state tax administrators; and payroll and tax financial product processors. The idea of sharing information is to better track down fraud leads and identify patterns of fraud schemes.

“Anything that can be done to increase information sharing that doesn’t violate the privacy of consumers is a good thing,” said Adam Levin, chairman and co-founder of Identity Theft 911 and Credit.com. “It’s important for institutions to share as much knowledge of what they’re seeing out there. …The biggest problem that they’re facing is the astronomical amount of data that’s accessible by bad guys.”

Taxpayer Authentication

The collaborating institutions will analyze data like repetitive filing from a certain IP address and how much time it takes to file a return. Tax preparation software will submit this data with the return to the state and federal tax authorities to aid in fraud-detection efforts.

There aren’t many more details out there on the changes or how they’ll impact consumers.

“They’re being somewhat secretive, which I understand,” DeFilippis said of the information thus far provided by the IRS. “I would think that hopefully by fall we would get some clarity and if there are certain things that taxpayers can be doing to safeguard their information and minimize the danger of having a fraudulent return filed under their Social Security number.”

New fraud-prevention measures aside, the best thing consumers can do is file their taxes as soon as possible, but DeFilippis noted that’s often beyond individuals’ control, because tax paperwork is sent out over several weeks. Levin said it’s good to see the IRS working to increase consumer protection, but that doesn’t lessen the importance of self-protection.

“The IRS is stepping up its game, and the entire government is stepping up its game, but this is where there is no alternative: We have to step up our game,” Levin said. “We have to make absolutely sure we know who we’re communicating with, we have to monitor frequently through any number of mechanisms — credit reporting, credit scores — and we need to have a damage control program.”

As soon as you see signs of identity theft, like unexpected changes in your credit reports or scores, waste no time in investigating. You can check your credit scores for free every month on Credit.com.

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This article originally appeared on Credit.com.

This article by Christine DiGangi was distributed by the Personal Finance Syndication Network.


Can a Debt Collector Come After Me If I Never Got a Bill?

It’s bad enough to get a call from a debt collector or find a collection account on your credit reports. But it’s even worse when you didn’t even know you owed a bill in the first place. Here are just a few comments we have received on the Credit.com blog: 

  • I was never sent a bill because of the hospital was sending the bill to an address in which I never lived at. I happened to check my credit report and I had (2) two $2,500 bills sitting in collections for my daughter(s) bill 
  • So what if a collection agency reported a debt to Credit Bureau without even sending me a notice. How can I proceed then ? 
  • I received a bill from a collection agency that is over 5 years old and I was never sent a regular bill. What’s going on with this?
  • More than 3 years after getting rid of my cellphone, I all of a sudden got a call from a collections agency stating that I owe money to the cellphone company – no idea why they’d wait 3 years if I was truly delinquent. The cellphone company hasn’t been in touch with me in more than 3 years, and never sent any notices of outstanding debt.

They are all asking essentially the same question: “Can I be sent to collections if I never got a bill or a notice?” 

Some creditors “aren’t required by law to send you a statement before they send you to collections,” says consumer protection attorney Jeremy S. Golden. He’s received similar complaints, especially when medical bills are involved. 

In fact, there’s a name for this practice. It’s called “parking” the debt. Here’s how it is described in a report by the National Consumer Law Center about medical debt collection:

Many times a debt collector will furnish information about a medical debt on a credit report without actually engaging in any proactive steps to collect it, such as telephone calls or written communications. Instead, the collector will wait to collect the debt until the point in time when the consumer needs to get a mortgage or other credit. This practice is sometimes referred to as “parking” a debt. “Parking” benefits the debt collector because the collector never needs to expend the effort, time, and resources to dun the consumer, especially if the debt is a small one

The problem is that even if you pay one of these accounts as soon as you learn of it, the damage is probably already done. Paying a collection account that has already appeared on your credit reports as in collections typically doesn’t result in its removal, and under most credit-scoring models used today, and resolving it doesn’t often help boost your credit scores either.

Isn’t There a Law Against That? 

The answer often is, unfortunately, no. The Fair Credit Reporting Act requires certain lenders to send a notice before reporting negative information to credit reporting agencies. Specifically, it says: 

In general, if any financial institution that extends credit and regularly and in the ordinary course of business furnishes information to a consumer reporting agency…furnishes negative information to such an agency regarding credit extended to a customer, the financial institution shall provide a notice of such furnishing of negative information, in writing, to the customer.

However, the FCRA goes on to say that this notice “may be included on or with any notice of default, any billing statement, or any other materials provided to the customer,” though it “must be clear and conspicuous.”

Note that this requirement only applies to financial institutions that regularly extend credit, so presumably in the case of a delinquent cellphone or hospital bill that winds up in collection, it wouldn’t even apply. When it is required, a notice on a prior billing statement may suffice.

And there’s one more thing. The FCRA says this notice “shall be provided to the customer prior to, or no later than 30 days after, furnishing the negative information to a consumer reporting agency.” So it’s possible the notice could come after the damage has been done. 

It’s Not Your Fault 

But not so fast, says attorney Richard Alderman, director of the Center for Consumer Law, University of Houston Law Center. The credit report reflects your payment history, and “If you never received a bill, you haven’t defaulted or paid late.” A creditor isn’t generally required to send you a bill right away, though, he explains. They can delay billing, as long as doing so doesn’t violate any law or your agreement.

His view is this: “If they delay sending you a bill and you get the bill and you pay it immediately,” you are not in default and did not pay late. Nothing negative should appear on your credit report. He adds, however, that if you don’t receive a bill in a timely manner you always should contact the creditor to prevent any problems in the future. Avoiding negative information on your report is always easier than correcting it. 

What Can You Do?

NCLC has recommended that the CFPB “prevent parking by requiring that debt collectors provide consumers with notice before a negative item is placed on a credit report.” In the meantime, here are steps you can take if you find yourself in this position. 

The first, of course, is to review your credit reports on a regular basis. (In addition, you can keep an eye on your credit scores for free at Credit.com). If you find a collection account that you don’t recognize listed, you can dispute it with the credit bureau(s) reporting it, preferably in writing. If the credit reporting agency cannot confirm it with the source (the company reporting it), within 30 days, in most cases, it must be removed. 

“Disputing a debt directly with the debt collector does not trigger a consumer’s rights under the FCRA — only a direct dispute to the credit bureaus will do that,” says Southern California consumer law attorney Robert Brennan.

If it’s not removed, you can dispute it directly with the collection company that is reporting it. They too, have 30 days to respond. You can also request verification of the debt and if you determine the debt is valid, you can try to negotiate with them to remove it if you pay it. It is not an unreasonable request if you were never notified of the debt in the first place. (If they agree, get it in writing before you pay.) If they refuse, you may need to talk with a consumer law attorney with experience in credit reporting cases. Either way, it may be a good idea to share your experience with the Consumer Financial Protection Bureau, which discussed parked debts in a December 2014 report on debt collection, noting that it “could also harm the consumer if the tradeline is reported without his/her knowledge, and/or if the consumer did not have prior knowledge of the debt.”

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This article originally appeared on Credit.com.

This article by Gerri Detweiler was distributed by the Personal Finance Syndication Network.


I’m Worried Social Security Will Run Out Before I Retire. What Can I Do?

“Social Security is broken; it’s bankrupt; I’ll never see a dime of what I put into it.”

Chances are if you’re a millennial, a Gen-Xer, and dare I say, even a Baby Boomer, you’ve likely uttered these words, or at the very least you’ve thought about it in passing. These days it’s pretty easy to be a little skeptical about the idea of getting any type of benefit from the Social Security system. What makes it even worse is that if you look at your pay stub, you’ll notice that 6.2% of your income (up to the $118k wage base for 2015) is getting gobbled up by Social Security taxes… and if you’re really observant you’ll notice the 1.45% Medicare tax that you pay on EVERY dollar you make (there currently isn’t a cap for this tax). Talk about pouring salt on a wound.

Unfortunately, it gets worse. If you happen to be one of those entrepreneurial types and run your own business, then you’ll need to pony up the employer half of the taxes, as well. This brings the combined payment to both Social Security and Medicare to 15.3% of your income. YIKES. With current forecasts estimating that the Social Security Trust Fund will be bone dry by 2033, it’s no wonder most people roll their eyes when we bring up the idea of Social Security planning. I mean — who cares, right? We’ll never see a dime of that money.

Despite all of the doom and gloom, I’m here to tell you to take heart, my friends. The death of Social Security has been greatly exaggerated. Though don’t start planning how you are going to spend your money just yet. There are a few things that you Boomers, Gen-Xers and even… gasp… millennials need to know about Social Security.

If the Well Runs Dry

If and/or when the Trust Fund is “exhausted,” it really just means that every dollar that gets put into the Social Security system via payroll taxes will be paid out to claimants. What that means is that there aren’t excess dollars for growth, so it’s basically $1 in and $1 out. Crossing this threshold will trigger a reduction in benefits for those already drawing on the system. The reduction in benefits means that a Social Security participant will likely only receive 77% of their expected payments at that time, but here’s the interesting part. Just by triggering the benefit reduction the Social Security Administration estimates that they would be able to pay out around 70% of promised benefits to future retirees through the rest of the 21st century.

While I’m certain that current retirees aren’t exactly thrilled about the idea of taking a 23% pay cut just so future generations get to participate in Social Security, I’m hopeful getting a heads-up 18 years in advance will give those consumers enough time to plan to make up for the shortfall. For those of you who are still working and saving, the good news is that even though your benefits may be a little bit less than estimated today, it appears the system will still be around for some time to come, so you should probably learn a little about it.

Getting the Most Out of Your Payout

First, and this one is an absolute must, be sure to maximize your Social Security payout. For every year beyond the full retirement age that you delay drawing on your own work history, you can earn 8% in delayed retirement credits. This means that just by delaying your benefit from age 66 to age 70, you get an increase of 32%. This alone can help make up for the haircut you’ll take when the fund is exhausted.

While getting a guaranteed 8% a year seems like a no-brainer, it’s important to realize that maximizing your benefits isn’t always about waiting as long as you can to take them. It is almost always about how you and your spouse coordinate your filings so as to get the biggest bang for your buck. Unfortunately, the odds of the average retiree getting this right aren’t very good. MassMutual recently conducted a survey where it asked 1,500 adults 10 simple true/false questions about Social Security benefits. Only 28% received a passing grade and only one person answered all questions correctly – not very encouraging.

Now I know what you’re thinking: “Who cares? How much of a difference can the way I file really make?” Here is a quick real-world example:

A few months ago, I was working with a client who had spent the prior three months talking to representatives at the local Social Security administration office in addition to doing some Internet research. (This first point usually makes us financial planning types laugh a little since we know that Social Security reps are told not to provide guidance on claiming strategies, but I digress.) Because of this, he felt that he had figured out the best way for him and his wife to file, so we put it to the test. We compared his claiming strategy with an approach that our firm felt would be just a little more optimal. The result surprised even me. Using our approach, we were able to get them an estimated $187K in additional income over the course of their lifetimes. I think we can all agree that $187K isn’t exactly chump change, so the way you file truly does matter.

Delay Your Benefits Responsibly

Second, and this is a pretty big one, Mind the Gap. Many of the retirees who want to postpone drawing benefits to earn delayed retirement credits just can’t afford to. They fail to plan for the income gap that results from the delay of benefits. Because of this, they may be forced to go ahead and draw Social Security early, thus permanently forgoing a much larger benefit amount (remember the $187K). Some go ahead and try to fill the gap by distributing assets from other accounts in a less than ideal way. Both of these scenarios could easily set you up for failure in retirement.

Fortunately, like so many personal financial decisions, a little planning and some minor attention to detail can go a long way. One simple way to do this is to open a separate bank account or brokerage account into which you put a little extra money every month. Someone who puts an extra $100 a month into a brokerage account that grows at a 3% rate for 40 years would have around $90K. (Did you hear that, millennials?) This would give you $22,500 a year, or $1,875/month, for the four-year period (age 66-70) that you are able to earn delayed retirement credits. That’s likely pretty close to what your Social Security benefit would be, so it fills the gap nicely. Also, if you can add a little bit more money as you get older, achieve a little higher rate of return, or leverage some type of income vehicle that maximizes the distributions for you, then you could end up with a much larger balance resulting in larger monthly distributions.

Social Security claiming is definitely a tricky subject, but since we know that the system will likely survive for decades to come, it’s important to try and learn what you can. For those who want to absolutely make sure that they get it right, consider working with a Certified Financial Planner with expertise in Social Security optimization. After all, it’s pretty much a one-shot deal. With few exceptions, once you file you are locked in forever and that’s a mighty long time. So make sure that you do it right.

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This article originally appeared on Credit.com.

This article by John Fowler was distributed by the Personal Finance Syndication Network.


What Happens to My Debt If I Get a Divorce?

While you might have known that marital assets are separated during divorce, did you know that debts are as well? Yes, debt, just like any other possession, has to be divvied up and re-distributed during divorce. Unfortunately, this can make an already difficult process even more stressful. However, understanding how your debts might be split before entering your proceedings could help you better plan for your new life and give you peace of mind. Here is an easy-to-understand breakdown of what happens to your debt during a divorce.

Credit Card Debt

The responsibility of credit card debt during divorce tends to be decided by whether or not the credit card was under a joint or single account. While the rules on joint accounts vary from state to state, most cases consider marital debt to be any debt accumulated during the partnership, regardless of whose name appears on the account. This means you’ll most likely be considered partially responsible for debt on the account, whether or not you were the one to make the payment. Separate accounts, however, are just that — separate. Whomever’s name appears on the account will, more often than not, be awarded full responsibility.

Mortgage

Here’s where things get a little complicated. The division of a mortgage isn’t as straightforward as credit card debt during divorce. Because a mortgage is typically such a monumental expense, most states offer a variety of options for dealing with the situation. Ownership of the mortgage will typically be awarded to someone who makes significantly more than their former spouse or has been awarded full custody of the former couple’s children. In either of these situations, one party will be required to buy out the other’s equity in the house. Of course, the couple can decide to bypass all of these decisions and simply sell the home if they so choose.

Medical Expenses

Depending upon where you live, your state might have a different view on whether or not you and your former spouse share medical debts. “Community Property” states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin) all debt will typically be divided amongst all parties. While this might greatly simplify the process, it leaves you open to taking on debt that you had no part in acquiring. In “equal division property” states however, the court will take a variety of factors into consideration when determining the responsibility of medical debt. This will usually include whether or not you and your spouse were living together at the time the debt was acquired, whether or not you were legally separated at the time, whether or not the debt falls under the umbrella of “necessary care,” and what impact that debt might have on any children you and your former spouse might have had.

While divorce is far from an easy process, knowing how it might affect your financial situation can really help you reduce the stress and handle other expenses it brings. Take the time to sit down and look through all your financial documents: bills, credit statements, loan papers, etc. Pull your free annual credit reports to see what accounts are reported in your name, and periodically revisit them to watch for important changes. (You can also get your free credit report summary updated every month on Credit.com.) Creating a financial snapshot can help your and your attorneys determine the best course of action for you and your family.

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This article originally appeared on Credit.com.

This article by Leslie Tayne was distributed by the Personal Finance Syndication Network.


Help! My Car’s on the Fritz & My Warranty Expired

The on-board computer on Shannon Stout’s Ford Escape went on the blink. It’s out of warranty. Is she out of luck?

Q: My 2005 Escape is having on-board computer problems after seizing up while my fiance was driving it last fall.

Our local mechanic and a Ford dealership diagnosed the engine light problem and says we need a new on-board computer. The car has 57,646 miles.

I am seeing in online forums that there’s a Technical Service Bulletin (TSB) for this problem on the Escape. It is my understanding that TSBs are a precursor to recalls. Most, if not almost all, have had this problem while the car was still under warranty. But since this car has been driven so minimally, it didn’t have this problem until now.

I followed Ford’s website instructions by having the problem diagnosed at a dealership. I emailed Ford through their website today and received an email basically saying “no.” Can you help?

Shannon Stout, Haddon Township, NJ

A: If your car’s out of warranty, your car’s out of warranty. But I reviewed the form response Ford sent you and took a look at the TSB and wondered if they were missing the forest for the trees.

I mean, here’s a car that’s hardly been driven, with a known problem with its on-board computer. If you’d driven this Escape the way most normal people do, and discovered the problem sooner, then this wouldn’t be an issue.

Point is, there’s a time to stick to the warranty and a time to consider making an exception and repairing the vehicle. I agree with you, this might be one of those times.

But, to be clear, Ford was under no obligation to fix its faulty computer. It should have manufactured a car with a working on-board computer, not one that fails after 50,000 miles.

You can appeal this to an executive at Ford. I publish the names, email addresses and phone numbers of their top customer service executives on my site. But I decided to take this case.

Things didn’t work out so well for me. Ford ignored my message for a month. I contacted the company again and this time I received a somewhat defensive email from a spokeswoman.

“Ford is absolutely committed to top quality and customer satisfaction,” she wrote. “Coverage of any vehicle is determined by eligibility under the provisions of the New Vehicle Limited Warranty, a customer satisfaction program or a recall. We recommend that customers with any questions on our products either contact their dealer directly or visit Owner Support at Ford.com or call 1-800-392-3673.”

You didn’t take “no” for an answer. You contacted Ford again and appealed. The company agreed to contact your dealership to see if it would offer you a warranty price for the repair. Ford agreed to cover half of that price.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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This article originally appeared on Credit.com.

This article by Christopher Elliott was distributed by the Personal Finance Syndication Network.


Planning a Vacation is Worth the Cost

planning a vacationA vacation can do a lot to increase your happiness. Planning a vacation, it turns out, can be a lot more fun.

From relaxing on the beach to a hike in the woods or however you enjoy your time off, a vacation can be a great break from work and a time to relax. Part of the fun — as I’ve found in planning my own vacations, and from reading published studies on the topic — is in planning a vacation.

In a study on overall happiness from a vacation and how long the happiness lasts, researchers in the Netherlands found that the biggest boost comes from planning a vacation. Anticipating a vacation increased happiness for eight weeks.

After the vacation, most travelers reported that their happiness levels dropped back down to baseline levels, according to the study published in the journal Applied Research in Quality of Life in 2010.

Cost of planning a vacation

The study didn’t say if planning a vacation makes it worth the cost of the trip, but in my view, it’s a worthwhile expense.

I don’t think a vacation is worth going into debt over, but with careful planning and saving for it, a great vacation can be done on even a frugal budget. It’s something that the whole family can get involved in — from picking a place to visit to lodging, activities, travel arrangements and people and places to visit during a trip.

Even if planning a vacation does take you a little off your budget, it can be a worthwhile time together as a family that children will remember forever.

A few years ago, my family took a trip to Australia to visit my brother and his family. The trip cost a lot of money, but we pulled money out of our savings because we thought it would be a great experience for all of us. Continue reading Planning a Vacation is Worth the Cost

Door Slams Hard on Morgan Drexen Debt Settlement Company

Surely a bunch of people at Morgan Drexen are blaming the U.S. Government and Consumer Financial Protection Bureau (CFPB) today for the utter demise of Walter Ledda’s creation, Morgan Drexen, on Friday.

An insider told me over the weekend, “Just letting you know the court ordered Morgan Drexen’s trustee to seize operations immediately. Morgan Drexen was shut down today at noon and every employee was asked to leave immediately and escorted out.”

But if there ever was a good example of a slow moving train wreck, I think the demise of Morgan Drexen might just qualify. You see the troubles faced by Morgan Drexen have been going on for literally years. Want to read the soap opera, grab a coffee and click here.

But out of humor and patience, it seems the court did not find it remotely possible to take over Morgan Drexen and run it to an orderly shutdown. Court documents say Morgan Drexen was up to no good and need to be terminated post haste.

In a move that impacts good employees with unemployment and trusting consumers who hoped to get debt relief assistance, the actions of Morgan Drexen have led to a lot of people being harmed in one way or another.

The words and finding of the court capture the frustration, alleged facts, and hopelessness of allowing Morgan Drexen to live even for another 90 days.

  • “Since the hearing on June 15, 2015, the business operations of Morgan Drexen have been subjected to obstructionist tactics, interference and threats by the attorneys with whom Morgan Drexen has contracts (the “Attorneys”). The actions by the Attorneys demonstrate that any form of continuing business is unmanageable and impractical, that any potential sale transaction would be unduly expensive and/or infeasible to implement, and that the Attorneys do not intend to cooperate with the Trustee unless it means selling the Morgan Drexen business to them.”
  • “Further, the Trustee believes that the actions of the Attorneys violate this Court’s Freeze Order entered on April 30, 2015, specifically the provisions prohibiting the selling, disbursing, or transferring of assets, and the Permanent Injunction Order entered today, specifically the provisions prohibiting the collection of fees from consumers and continued representations regarding debt settlement services. In addition, the Trustee is concerned that the Attorneys’ actions, under the false heading of allegedly protecting their “clients,” are designed to allow the Attorneys to further manipulate and take advantage of consumers, putting the consumers’ funds currently held in the trust accounts in jeopardy.”
  • “The Trustee believes that substantial claims exist against the Attorneys as well as against insiders of Morgan Drexen; and the Trustee will be pursuing those claims. The Trustee further believes that the Attorneys will continue to obstruct and interfere with an orderly wind down of the business, and that as a result, the business should be closed as soon as possible to allow the Trustee to address the best interests of creditors and consumers through litigation and court orders as necessary.”
  • “The Trustee previously had been informed that approximately 14,000 consumers were on existing debt settlement plans with Morgan Drexen. Upon further investigation, the Trustee has determined that the 14,000 figure included all consumers who ever had been on a debt settlement plan, as opposed to consumers on a current and active debt settlement plan. At this time, the Trustee is informed that the number of consumers on existing debt settlement plans is approximately 9,000, not 14,000. Thus, among other problems, monthly fees may have been charged to a much larger number of consumers who are not on current debt settlement plans than the Trustee previously believed.”
  • “After the joint hearing on June 15, 2015, the Trustee has examined means to make further cuts of expense and personnel. The Trustee initiated the termination of all employees with the exception of a few key personnel,ceasing all operations and services rendered by Morgan Drexen to attorneys and consumers.” – Source
  • The Trustee also had grave concerns over the actions of “Attorneys named Vincent Howard (“Howard”) and Lawrence Williamson (“Williamson”).

    “The Trustee has reason to believe that Howard sent an email to all engagement and local counsel who receive services from Morgan Drexen, calling them to action and instructing them to immediately contact Evan Borges, counsel for the Trustee, and demand “1. that you have clients that are serviced by MD, 2. that any interference with your contracts and relationships with your clients will not be tolerated, and 3. that they consult with you first before canceling the services MD provides for your clients at your direction so that you can arrange for alternative services.” The Trustee also has reason to believe that Howard also instructed the attorneys to contact Morgan Drexen employees David Walker and Deborah Ketsdever and “1. Revoke MD’s authority and access to your client trust accounts. 2. Insist that they invoice you and you decide what bills to pay. 3. Demand an accounting to see if they even did the services. 4. And demand that they send you an electronic copy of all your clients information.” As shown in Exhibit B, many of these attorneys followed Howard’s instructions, resulting in a bombardment of harassing emails to counsel for the Trustee and employees of Morgan Drexen. [The attorneys mentioned in the exhibit included Richard Labarthe, Kimberly Pisinski, Tami Munsch, Robert Beckett, JD Hass, Luis Figueredo, Glenn Romano, and Rochelle Guznack.]

    Exhibit C contains a separate email sent late last week from Williamson alleging breach of his service contracts with Morgan Drexen and demanding an accounting, among other relief.

    The Trustee is informed that Howard, Williamson and their law firms together purport to have attorney-client relationships with approximately 10,000 consumers. Howard and Williamson, along with the other Attorneys acting in concert with them, have made continued operations impossible.”

    The shutdown occurred just one day after Judge Staton said, “The Court is not convinced that any benefit to consumers would result if the Court allows Morgan Drexen to continue to charge Affected Consumers fees, when they are the very same consumers who have already paid Morgan Drexen an illegal upfront fee. Although the Chapter 11 Trustee argues that the consumers will benefit if Morgan Drexen continues to collect a fee and service the accounts for an additional 90 days or so, the Court believes that any such benefit is speculative, at most. It is more likely that no additional benefit will inure to the Affected Consumers in the course of the next few months, and the only effect will be the continued drain on their accounts, and an additional few million dollars in Morgan Drexen’s coffers. Accordingly, the Court finds that the following permanent injunction is warranted.” – Source

    But maybe this isn’t over yet. A couple of people have told me Walter Ledda, the head honcho of Morgan Drexen, has already setup another company. If anyone has details on that company, I’m curious to know more and you can reach me here.

    This article by Steve Rhode first appeared on Get Out of Debt and was distributed by the Personal Finance Syndication Network.


Debt Collector Left Consumers Hanging on Medical Bill Disputes, Says CFPB

A debt collector with ties to one of the nation’s largest private hospital chains spent years violating basic provisions of the Fair Debt Collections Practices Act and the Fair Credit Reporting Act, federal regulators say.

Consumers who dispute a debt are entitled to a response within 30 days, according to federal law. Medical debt collector Syndicated Office Systems took, on average, more than 90 days to respond to disputes, and in some cases, took more than a year, according to the Consumer Financial Protection Bureau.

Syndicated Office Systems, which does business under the name Central Financial Control, is an “indirect subsidiary” of Conifer Health Solutions, the CFPB said. Conifer provides billing services to hundreds of hospitals nationwide; its parent company is Dallas-based Tenet Healthcare, which is one of the largest publicly traded hospital operators in the country.

“These violations are particularly egregious given the challenges many consumers already face who are attempting to navigate the medical debt maze,” said CFPB Director Richard Cordray. “We are putting a stop to these illegal practices and getting consumers the relief they deserve.”

Consumers who complain about credit reports with Central Financial Control entries sometimes describe the firm as Tenet’s debt collection arm.

While the CFPB describes Syndicated/Central Financial as an “indirect subsidiary” of Conifer, reporters who call Central Financial Control are told to call or email Conifer’s senior director of communications, Sharon Lakes.

When asked to further explain the relationship between Syndicated, Conifer and Tenet, Lakes refused, other than to say it was inaccurate to call Central Financial the collection arm of Tenet. She said she wouldn’t answer any other questions, pointing to an emailed statement instead.

“Throughout the investigative process, CFC was forthcoming and responsive to all CFPB requests for access to data and other information relating to the company’s medical debt collection policies, procedures and processes,” the statement read. “The CFPB found no unfair, deceptive, abusive acts or collection practices in its investigation.”

According to the CFPB, Syndicated failed to respond in a timely fashion to 13,713 consumer disputes.

Consumers who believe they are being billed in error, or being dinged on their credit reports in error, have the right to file what’s called a “direct dispute” with the debt holder. Federal Law requires a timely response, including documentation of the debt.

Syndicated also failed to send required debt validation notices after initial contact with consumers more than 10,000 times, the CFPB said.

“Because the company furnishes information related to past-due medical debt, the information consumers seek to dispute or validate has the potential to lower credit scores,” the CFPB said. “Consumers spent time and money attempting to follow up on unresolved disputes and experienced distress and confusion due to the delays. The CFPB found that the company had no policies or procedures in place to investigate these consumer credit report disputes.”

To settle the allegations without admitting wrongdoing, Syndicated will refund consumers $5 million — including the value of every payment made when Syndicated failed to provide notice or answer disputes. It will also pay a $500,000 civil penalty.

Consumers should check their credit reports regularly to spot errors or other issues. You’re entitled to a free credit report every year from the three major credit reporting agencies through AnnualCreditReport.com, and you can get a free credit report summary on Credit.com, updated monthly, to watch for important changes.

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This article originally appeared on Credit.com.

This article by Bob Sullivan was distributed by the Personal Finance Syndication Network.


5 Tax Credits That Can Save You a Boatload of Cash

Income taxes can feel like a money-suck on your hard earned cash. Almost no one likes to pay them and many people hire professionals (at a premium cost) for the task of taking care of their taxes for them. There are, however, several tax credits in place that can help you retain more of your earnings. If you are eligible for a tax credit, the amount you owe in income tax is lessened by the total credit amount. Before you file your next income tax return, see if you qualify for any of the below credits and work your way to a bigger tax refund.

1. Earned Income

This credit, also known as EITC, was established in 1975 to help offset the cost of Social Security taxes and to provide an incentive for people to work. The credit is determined by income and other components like marital status and number of dependents. Keep in mind that your investment income is also a factor and you must be between 25 and 65 years old to qualify for the federal program. Some states also have a similar credit. In New York, the state credit is equal to 30% of the federal EITC.

2. Child & Dependent Care

For parents who need to put their children or dependents under 13 in babysitting or daycare to enable them to work, there is the child and dependent care credit. This is also available to those with a spouse or dependent of any age who is incapable either physically or mentally to take care of themselves.

3. Energy

The government encourages people to be energy efficient with some tax incentives. If you have made qualified improvements to your home that will reduce your energy use (like by installing or updating a system), you might be able to get local, state or federal energy tax credits or breaks. Green home improvement can save you money, help you cut back on income tax – and help save the planet in the process. For example, California gives tax credits for installing solar panels on your home.

4. Tuition

The college tuition credit, which is sometimes referred to as the American Opportunity tax credit, helps families fund the costs of higher education. The income limits are higher than other education credits, but you cannot qualify for this credit if you opt to include tuition costs and other fees as a deduction. It’s a good idea to calculate the effectiveness of each option to help you decide which is more beneficial in your specific situation.

5. Saver’s Credit

The government knows how important saving for retirement is and allows you to deduct contributions to retirement plans from your income to lower your tax bill. Low- and moderate-income citizens can also file for the Saver’s Credit for up to 50% of their retirement contributions. You can use this to reduce your income tax or increase your refund.

While not every credit applies to every tax bracket and different states employ different credits, it’s a good idea to do some research to make sure you are getting the credits you deserve.

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This article originally appeared on Credit.com.

This article by AJ Smith was distributed by the Personal Finance Syndication Network.