Mail Scam

From time to time, I run across a new for of fraudulent activity, otherwise known as a Scam, and when I do, I try to disseminate it by posting it here. I know this is not directly bankruptcy related, but any time I come across something that could end up costing one of my clients money, or their identity to be stolen, I consider it relevant.

Recently in Palm Beach, Lee County, Florida, the news media reported a scam involving the United States Postal Service. The report is as follows:

If you're planning on shipping holiday packages this season, beware. The Lee County Sheriff's Office wants to warn you about bogus emails claiming to be from the post office or other shipping companies.

Fraud specialist, Beth Schell, with the sheriff's office, says the emails contain false information about a package that could not be delivered.

How to tell it's not real?

"Some of the grammar and the spelling was incorrect. On the top it said USPS. But inside the label they forgot one of the 'S's," explained Schell.

Here's the most important thing: the USPS says it will never send an email regarding packages it cannot deliver. "Basically the consumer needs to be aware of receiving any emails they don't solicit with instructions to click," Schell said.

If you do click, it could activate a virus that can steal your personal information.

Can I Go To Jail For Filing Bankruptcy?

File bankruptcy and go to jail? I know what you are thinking, “You kidding, right?”.  Whenever you ask someone about this, you hear there is no way you could end up in jail; after all, there is no Debtor's Prison in the United States.  

Well, the simple filing of the bankruptcy is not what can put one in jail, however, the circumstances surrounding the filing could. For example, if you make a false statement on the papers filed with the court which are signed under penalty of perjury (which is almost everything that is filed), one of the penalties for doing so in bankruptcy is not only having the case dismissed, but referred to the U.S. Attorney for prosecution. That's right, this becomes a criminal offense.

Next, you are probably thinking this never happens. If it did, then you would have heard about it, right?

Well, think again. The following is a short article of a high profile case involving bankruptcy fraud:

Federal prosecutors in Los Angeles are asking that former All-Star outfielder Lenny Dykstra serve a 2½-year prison sentence for pleading guilty to bankruptcy fraud and money laundering.

Prosecutors said in court documents filed Thursday that a 30-month sentence is appropriate for Dykstra because he has acted as if he was above the law for years.

Dykstra could face 20 years in prison after pleading guilty in July to charges that he hid and sold sports memorabilia and other items which were supposed to be part of his bankruptcy filing.

Dykstra is currently serving a three-year prison sentence after pleading no contest to grand theft auto and providing a false financial statement.

He is scheduled to be sentenced Dec. 3.

Homestead Exemption: Should I Claim?

So, you are in Florida, need to file bankruptcy, and your house is upside down.  Well, not literally; upside down means your house is worth less than what is owed on it.  In Florida, if you do not claim a homestead exemption in your bankruptcy, you are eligible for a $4,000 wild card exemption.  This means you will be able to keep $4,000 of property that would otherwise be property of the bankruptcy estate, and sold by the trustee (usually sold back to the debtor).

So, what is the problem?  The problem arises when you do not claim the household exemption, you expose your property to being administered by the Trustee.  That is, the trustee could sell your house.  Of course, if you claim the homestead exemption, the property is protected, though the creditor may continue to hold a secured lien.

In the past, the practice has been to simply not claim the homestead exemption when the home is upside down, thereby entitling the debtor to the wildcard exemption.  After all, the property has negative equity, and who would want to purchase property for more than what it is worth.  Also, the trustee could only administer the estate (sell the property) if there is money to distribute to unsecured creditors.

Well, there are some Trustees in Florida currently administering property that is upside down.  Apparently, the Trustees have found investors willing to pay a small sum to acquire parcels of real property.  The investors acquire property with a low monthly mortgage payment, with financing in place, and rent the property for enough to hopefully show a positive return on their investment.  This is happening despite the property be acquired blindly, that is, the investor has no idea how much money will need to be spent on the property in order to put it into rentable condition.

In the specific case I am thinking of, as of today, an investor may be acquiring property in one of my cases, only having to bring the electric up to code, and repairing the roof.  There may be, of course, unknown problem, such as termite damage, mold, and possible plumbing problems.  After all, this property is owned by a debtor that is filing bankruptcy.  They have not had money necessary to properly maintain the property.

It will be interesting to see if this trend continues as investors acquire these properties with increased risk.