Texas Bankruptcy Blog : Texas Bankruptcy Lawyer & Attorney : Fears Nachawati law Firm : Chapter 7, Chapter 13, Consumer Bankrutpcy : Dallas, Fort Worth, Austin, Houston, San Antonio

 On July 21, 2011, the United States Consumer Financial Protection Bureau (CFPB) quietly opened its doors for business. Most Americans do not know about this new agency; however the CFPB is a powerful ally for consumers and represents an important step in restoring balance between big business and the consumer. The CFPB is a federal agency tasked with the primary responsibility for regulating consumer protections in the United States.

The CFPB was born from the financial turmoil that our country has recently witnessed, and is charged with promoting "fairness and transparency for mortgages, credit cards, and other consumer financial products and services." According to the CFPB website, "The central mission of the Consumer Financial Protection Bureau is to make markets for consumer financial products and services work for Americans—whether they are applying for a mortgage, choosing among credit cards, or using any number of other consumer financial products."

The point of the CFPB is to have a central agency serve as a watchdog over consumer financial bureaus such as banks, credit unions, securities firms, payday lenders, mortgage-servicing operations, foreclosure relief services, debt collectors and other financial companies. The CFPB creates and enforces bank rules, conducts bank examinations, monitors and reports on financial markets, and collects and tracks consumer complaints. These tasks were previously divided among various federal agencies.

According to its new director, former Ohio attorney general Richard Cordray, the immediate concerns for the Consumer Financial Protection Bureau are mortgages, credit cards and student loans. The CFPB website at http://www.consumerfinance.gov/ provides a wealth of consumer financial information. The site also takes complaints regarding credit card companies on issues such as unfair practices such as hidden fees, interest rate changes, payment increases or other issues.

If you are in financial distress, consult with an experienced bankruptcy attorney and discuss how the law and your government can help you. There are many consumer protections available under the federal and state laws; some of the most powerful are part of the federal Bankruptcy Code. Call today and get the help you need, or schedule a consultation using  our 24 Hour bankruptcy chat.

Any bankruptcy analysis includes an investigation into the debtor’s individual tax status.  The date that you file bankruptcy can have an important impact on how your tax refund or tax debt is affected.

When a Chapter 13 debtor expects to owe taxes

If you expect to owe taxes for tax year 2010, now may be a good time to file your bankruptcy.  A tax debt is not owed until the end of the tax year.  If your tax year ended on December 31, 2010, your 2011 Chapter 13 bankruptcy case will include the 2010 tax debt as a pre-petition debt.

When a Chapter 7 debtor expects to owe taxes

A recent tax debt is non-dischargeable – which means that your bankruptcy case will not eliminate the tax debt.  If you owe taxes, speak with your attorney regarding your best strategy for dealing with this debt.  You will have some temporary relief during the bankruptcy as the IRS is prohibited from collecting.  After your bankruptcy case ends, there are IRS programs that allow repayment over time or even forgiveness of the debt.

Older tax debts may be dischargeable under certain circumstances and should be discussed with an experienced bankruptcy attorney. 

When a Chapter 13 or 7 debtor expects to receive an income tax refund

Speak with your bankruptcy attorney about your refund.  The general rule is, before you file bankruptcy: file your taxes ASAP, receive the refund ASAP, and spend the money appropriately ASAP.  Your bankruptcy attorney can instruct you as to how much cash money you can have at the time of your filing and what bills or debts you are allowed to pay from your tax refund.

Every year debtors spend their refund money without first consulting with an attorney and every year it creates problems.  In some cases paying a debt may delay your bankruptcy filing.  In other cases a payment may cause a turn-over issue.  These are problems that can be easily avoided if you consult with an attorney before spending your tax refund.

If you need to file Chapter 7 bankruptcy and cannot wait until you receive your income tax refund, there may be options to keep your refund.  You may be able to use personal exemptions to protect your anticipated refund.  Your attorney can also discuss other legal options for avoiding turn-over of the refund, including applying the amount to your future taxes.  See In re Graves, No. 08-1462 (10th Cir.2010.

In many respects this is the best time of year to speak with a bankruptcy attorney.  Your attorney is in the best position right now to discuss your options for filing bankruptcy and avoid any unnecessary tax problems.

There is an old saying in the bankruptcy world, “Pigs get fat, hogs get slaughtered.”  It means the honest, but unfortunate bankruptcy debtor will keep enough property to live comfortably and then some.  On the other hand, when the debtor conceals assets, hides income, or attempts to keep more than legally entitled, the bankruptcy process may serve up the hoggish debtor on a silver platter. 

We may be witnessing a good old fashioned hog roast in the media.  Teresa Giudice, star of the Bravo television show The Real Housewives of New Jersey, is embroiled in a fight with a New Jersey bankruptcy trustee.  Teresa and her husband Joe filed for Chapter 7 protection in late October, 2009, but have yet to receive a discharge from the bankruptcy court.   

On June 30, trustee John W. Sywilok filed an adversary complaint seeking to deny the Giudice’s bankruptcy discharge.  The trustee alleges that the Guidices “concealed documents, records and papers from which the Defendant's financial condition or business transactions could be ascertained.”  The trustee also complains that the Guidices failed to disclose financial or ownership interests in several businesses, including a pizza parlor and a Laundromat, as well as a book written prior to the bankruptcy.   

Recently the trustee produced documents showing that the Giudices when on a $60,000 shopping spree before and after filing bankruptcy.  During court testimony reported by the New York Post, Sywilok claimed that over $45,000 worth of furniture was purchased, and $11,000 of that just two days before filing bankruptcy.  

The trouble the Giudices face with the bankruptcy court is very real and very serious.  If the court determines that assets or income were intentionally concealed, the debtors may be denied a discharge.  An auction of assets has been ordered by the bankruptcy court, so a denial of discharge will mean that the Giudices lose their property, creditors will receive the proceeds of the auction (including a substantial payment to the trustee as compensation), and any remaining debt will survive the Chapter 7 case.  Consequently, the Giudices may face additional state court litigation on their debts and garnishment of future earnings.  If the case is egregious enough, the bankruptcy court may refer the case to the Department of Justice to investigate possible bankruptcy fraud, a federal criminal act.   

Regardless of the outcome, the Giudice case is an excellent example of how not to act before and during your bankruptcy case.  If you need relief from your debts and are willing to deal honestly and fairly with the trustee and your creditors, bankruptcy can discharge your debts and give you a fresh financial start.  Consult with an experienced bankruptcy attorney today and discover how the federal bankruptcy laws can help you and your family.