There are numerous types of fraud that can occur. We have seen situations where another person uses your social security number to file taxes to obtain a tax refund or uses your personal information or to get a credit card in your name.
Sometimes people don’t know this has happened until the IRS notifies them that a tax return has already been filed under their social security number or they pull a credit report and notice that there are credit lines on the report that they have never taken out. In that case you would need to contact the FBI and social security office. In extreme cases, it might require you to re-issue another social security number. Other types of fraud scams occur when a party asks you to send them money or gift cards in exchange for an investment opportunity.
The same situation happens on dating websites when someone starts asking for funds. People take out credit lines of tens of thousands of dollars, then the person disappears with their money never to be heard from again.
Usually, it’s difficult to apprehend these criminals to get reimbursed which leaves no other option other than filing for bankruptcy to eliminate the debt. Fortunately, bankruptcy is an option.
However, it is recommended that you attempt to make payments to the best of your ability for several months to a year to show you made a good faith effort to pay on it prior to filing your bankruptcy case so the creditor does not object.
A common question clients ask is whether they can sell or trade in their vehicle prior to filing bankruptcy. If using the Florida exemptions your allowed to have $1,000 in equity in your car. If you rent then you would have another $4,000 in exemptions to use on a car or you other personal property. For example, if the loan payoff on your car is $15,000 and the value of your car is $20,000, you would have $5,000 in equity in your vehicle. If you rent, you would owe nothing to the trustee (we could exempt all of the equity in the vehicle).
If you owned a home you would owe $4,000 to the trustee to keep your vehicle. People often ask why they would have to pay the trustee for a car that is paid off. The exemption amounts are a protection against people spending all of their money to accumulate assets then paying nothing back to their creditors when they file for bankruptcy.
The trustee will use Kelly blue book, private party value. We generally recommend obtaining a certified appraisal if you are over the exemption amount since Kelly blue book doesn’t account for a variety of factors such as the actual condition of the vehicle, mechanical issues or whether the vehicle has ever been involved in an accident. Many times once the vehicle is evaluated by an appraiser particularly if it’s an older vehicle with high mileage, the value will often be less than the Kelly blue book value.
If you trade in your car prior to filing bankruptcy you run the risk of having to pay back that amount to the trustee. For example if you received a $6,000 credit for trading in your current vehicle for a new one, the trustee could say you converted a non-exempt asset into an exempt asset so that amount of money would have to be paid to the trustee. All transfers of either personal property including cars or homes have a two year disclosure period. Under most circumstances, unless there is a reason to get rid of the vehicle, such as an immediate emergency mechanical issue, its best to just have your vehicle appraised and not sell it until your case is concluded to avoid such issues.