Modesto Bankruptcy Lawyer Blog

It's tax season - that dreaded time of year when consumers must dig through earnings statements and income documents and try to figure out whether they must pay Uncle Sam or expect a check in the mail.

But, as CNNMoney is reporting, the Internal Revenue Service is warning consumers to beware of some common but problematic scams that can leave not only long-term economic stains on a person's record, but create debt problems as well.

Modesto bankruptcy lawyers understand that tax season isn't usually a fun time of year, but it's important to pay close attention to this aspect of your finances in order to ensure you don't have to deal with an IRS audit or face financial questions if victimized by a scam artist.

Also, bankruptcy in Modesto may be helpful for people who are dealing with long-term tax bankruptcy issues. While there are exceptions for what types of tax can be discharged and strict rules about how taxes and a bankruptcy filing are used.

For instance, in Chapter 7 bankruptcy in Modesto, a consumer can have income taxes wiped out through the process, but other types of taxes, such as payroll taxes, aren't eligible. There are also time limits on what will be eligible for discharge. The tax return that is in play must be due at least three years before filing for bankruptcy and the tax return had to have been filed at least two years before bankruptcy.

Taxes are eligible for bankruptcy help, but it depends on the circumstances. And there are many scams out there that can hurt consumers financially. Criminals are using any means necessary to try to rip off consumers and tax season is no different. Here are 12 scams that the government is warning consumers to look out for.

Identity theft: This one has gotten plenty of publicity in recent years and for good reason. Many thieves are intercepting income tax refund checks -- to the tune of $1.4 billion 2011.

Phishing: E-mails, text messages, social media and other mediums can be used to steal a person's identity. Once a scammer has a little bit of information about a person, they may be able to use it to ruin your finances.

Bad tax preparers: About 60 percent of consumers use professionals to prepare their taxes, but many of these workers have been found to be involved in scams. If the worker doesn't have a Preparer Tax Identification number, promises large refunds, takes a cut of the refund as a fee or encourages you include false information, it may be a scam.

Hiding offshore income: Taxpayers who hide money outside the country can end up facing major federal criminal charges. But the IRS has offered a reduction in penalties and no threat of criminal charges if people come forward and disclose their offshore accounts.

There's no free money: Some scammers have offered people to file returns with little documentation and get big returns back.

Inflating incomes and expenses: Changing income levels to get a better return is another trap that can lead to criminal charges and penalties.

Filing false forms: Fabricated information on forms or claiming deductions that aren't appropriate can get you in trouble.

Paying for argument advice: There are scam artists who will charge consumers to get advice on how to argue taxes with the IRS, even though many arguments have been discredited by judges.

Claiming zero wages: The IRS can usually spot when someone fraudulently files a "corrected" income form to lower the amount of wages.

Upping the amount of donations: If it seems as if the consumer has overstated how much they have donated, it can lead to an audit.

Disguising corporate ownership: The IRS is working with government entities to determine who are the true owners of small businesses.

Misusing trusts: Transferring money into a trust to reduce taxable income can be a scam to avoid how much liability a person has. The IRS is looking out for that.

Continue reading "Modesto Consumer Debt Could Result from Tax Scams, IRS Warns" »

CNNMoney is reporting that a new credit card could end up costing customers up to $400 per year just to use the card.

Sadly, this isn't shocking. Credit card companies continuously try everything they can to squeeze money out of their customers. The very people who keep their businesses profiting are the ones who end up suffering. Modesto bankruptcy attorneys have seen this happen many times.

And often bankruptcy in Modesto is an answer to the aggressive and predatory nature of credit card company tactics. Through bankruptcy, a consumer can eliminate large amounts of credit card debt.

This allows them to prepare for their financial future while helping them today. Filing for bankruptcy provides instant help for consumers through what's called an automatic stay. This action stops creditors and debt collectors from harassing consumers.

So, the hours of automated calls, harassing emails and letters that threaten legal action and wage garnishments come to an end. These actions are barred from happening and creditors must make a court appearance and file certain motions in order to be able to contact the debtor directly.

According to the news article, First Premier's Platinum card is aimed at consumers who have bad credit. It has a ridiculously high 36 percent APR and has some of the highest fees among all credit cards, analysts are saying.

A common myth of bankruptcy is that people who file are unable to get credit. This myth is easily disproved. Consumers who file for bankruptcy often get credit card offers as soon as they finish the process.

In some cases, these offers aren't very good, such as the First Premier Platinum card. But consumers will have the power to pick and choose whether they want to take these initial offers or leave them. They may choose to consider a secured credit card, where the consumer deposits money that will be act as a spending limit.

There are different ways to quickly build back credit after bankruptcy. Consumers shouldn't necessarily dive back into getting a credit card, unless it's with the plan of re-establishing credit and using bankruptcy protection to try to get back on track.

The news article also points out that First Premier has 2.6 million customers and solicits another 1.5 million each month. The company says that it is helping consumers who otherwise would be too risky to be offered credit. Therefore, they are balancing that risk with the higher rates.

And if a consumer seeks an increase in credit, they are charged 25 percent of the amount of the increase. So, if the consumer gets an additional $500 credit, they must pay the company $125. Between the high interest rates and the loads of fees, this card could spell trouble for consumers trying to get back on their feet. But this company isn't alone in offering high-interest, high-fee cards.

Consumers who have used bankruptcy to help their finances must be cautious about how they go about rebuilding credit. All consumers must be careful, as creditors are always looking to make a buck.

Continue reading "Cash-Strapped Modesto Consumers Targeted by Credit Card Companies" »