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Friday, February 21, 2014

Your Credit Report: How Long Do Negative Entries Hang Around?

Your Credit Report: How Long do Negative Entries Hang Around?


As attorneys who often represent borrowers who are involved in mortgage loan disputes or other types of loan disputes, we are frequently asked how long certain types of negative credit report entries will impact their credit score. Of course credit scores and credit reports can be influenced by a variety of factors, and the same negative entries will not necessarily impact every one the same. Generally, this is how long key items will remain on your credit report and impact your credit score unless something is done which causes such entries to be amended or removed:


Credit score challenges1. Late payments. Late payments may remain on your report for up to seven (7) years. Late payment entries often include details regarding how late the payments were.
2. Collections. Accounts which were classified as being in “collection” will often stay on your record for seven (7) years, depending on age of the account.
3. Legal judgments and other items of public record.  A legal judgment against an individual is typically reflected on the credit report for seven (7) years. However some items of public record, such as unpaid tax liens, may remain on a credit report up to ten (10) years or even longer.
4. Foreclosures. Foreclosures, unfortunately for the many persons who have suffered the same in recent years, remain on the credit report for seven (7) years. Persons should be mindful that foreclosures can also preclude the foreclosed-upon individual from obtaining certain types of credit for years, independent of how the foreclosure itself directly impacts the individual’s credit score now and going forward.
5. Bankruptcies. A completed Chapter 13 bankruptcy will remain on your credit report for (7) seven years, and certainly has an extensively negative impact. With regard to a Chapter 7 bankruptcy,  you can expect your credit report to reflect the same for ten (10) years. 


Given how incredibly influential your credit report and score can be, it’s important for you to monitor both and try to improve them whenever possible. Knowledge like this is a good place to start.

Friday, February 14, 2014

Is your Worker an Independent Contractor? (The IRS Cares!)

How to Determine if your Worker is an Independent Contractor? (The IRS Cares!)


This article contains the factors the IRS uses to decide - which you need to know


[caption id="attachment_7597" align="alignleft" width="250"]Don't Get Audited! Don't Get Audited![/caption]

As attorneys who represent small and medium-sized businesses in both transactional matters and disputes, we do our best to have a good idea of which issues are commonly encountered by our business clients. One situation which has become even more frequent over the last few years is the hiring of persons to work for the business in a non-traditional arrangement. Two reasons for this are the economic depression and how technological advances allow individuals to perform business tasks, often traditional ones, in new ways and in different settings. (As an example, I am dictating a draft of this article, to be transcribed by someone who does not work “in” my office. She will transcribe my dictation at her own location, using her own equipment and her own skills, and she will email it back to me more or less on her own schedule.)


While my example above does reflect an independent contractor relationship, many businesses mistakenly classify workers as independent contractors who are not, and the IRS is cracking down on these misclassifications. While filing your personal and business tax returns is necessary, you generally want to limit your interactions with the IRS and keep it as far away from your business as possible. Thankfully, our friends at the IRS have published plenty of material to help us mere mortals understand who is an independent contractor, and who isn’t. In fact, you can even make an inquiry of the Internal Revenue Service to ask them to make that determination for you (Form SS-8)! In case you don’t want to go quite that far, though, we’re glad to summarize below for you the factors the IRS focuses on in deciding if your worker is an independent contractor or an employee.


The IRS describes three categories of information it considers in making the I.C. vs. employee decision: behavioral control, financial control, and the relationship of the parties. Here are some of the key details the IRS analyzes in each category:


Behavioral control:



  1. when and where to do the work

  2. what tools or equipment to use

  3. what workers to hire or assist with the work

  4. where to purchase supplies and services

  5. what work must be performed by a specified individual

  6. what order or sequence to follow


Financial control:



  1. the extent of the worker’s non-reimbursed business expenses

  2. the extent to which the worker remains otherwise available for outside work

  3. how regular / guaranteed the worker’s pay from the business is

  4. the extent to which the work can realize a profit or a loss


Type of relationship:



  1. what any written contracts say about the nature of the relationship

  2. whether the business provides the worker with employee-type benefits

  3. how long / ongoing the relationship is

  4. the extent to which the worker is providing one of the business’ fundamental services


 The bottom line is that the more control a business can exercise – or even more importantly – does exercise over a worker, the more likely it is that the worker is actually an employee as far as the IRS is concerned. Properly classifying your workers helps to keep the IRS where it should be – out of your way!


Disclaimers: the above is not legal advice, nor is it tax advice.

Tuesday, February 11, 2014

Venue Clauses in Contracts - Beware Listing Only the County and State

Venue Clauses in Contracts - Beware Listing Only the County and State



Our law firm regularly works on business law disputes, contested real estate / mortgage loan matters, and other cases involving actual or alleged breaches of contract. We also prepare contracts for clients, of course. We know very well that a poorly drafted or inadequately considered contract increases the chances of litigation; if a party to a contract thinks the contract gives him an inch, he may very well try to take the proverbial mile.

Beware the generic venue clause! One extremely important aspect of a contract which is often overlooked as being “basic” or “boilerplate” is the designation of venue. It’s easy, right, the contract just needs to say something like (A) “Any and all claims shall be litigated in Mecklenburg County, North Carolina.” or (B) “Unless the Parties otherwise agree in writing, any lawsuit or legal claim over the subject matter of this Agreement shall be instituted and prosecuted in Charleston County, South Carolina.” Well, not so fast, my friends.[1]

I suspect that most lawyers have never considered this exact issue. Let’s take the above two examples, which use fairly ‘standard’ language with regard to venue.

(A)  “Any and all claims shall be litigated in Mecklenburg County, North Carolina.” If I’ve got a contractual dispute and the contract at issue states that venue shall be in Mecklenburg County, NC, maybe I decide to shake up the opposition by doing something unexpected . . . instead of filing in Superior Court, I file in the United States District Court for the Western District of North Carolina (Charlotte Division). After all, both courts are “in Mecklenburg County, North Carolina” even if one is a state court and the other a federal court.

(B)  “Unless the Parties otherwise agree in writing, any lawsuit or legal claim over the subject matter of this Agreement shall be instituted and prosecuted in Charleston County, South Carolina.” If my partner Jim Spielberger (who is located in Mount Pleasant, SC) is asked to advise a business owner who is expecting to be sued over an alleged breach of contract, can he, with any confidence, assure the client that the case will be in state court based on the venue clause? Could not the plaintiff, with a straight face, argue that the very language of the contract’s venue clause allows the case to be filed and litigated in the USDC for South Carolina (Charleston Federal Courthouse)? Again, this generic venue language does not specify state court or federal court.

Those of you who are dealing with venues that lack a federal courthouse may think this cannot pertain to you – and you’d be wrong, or at least potentially wrong. Some appellate decisions have held that a venue clause similar to those above would allow the case to be litigated in the federal court district which includes the named county, even if that county doesn’t have a federal courthouse / the actual federal courthouse is located in a different county.

Obviously there are other factors which influence where a case can be filed, where it should be filed, where it must be filed, etc., just as there are various elements to be considered when interpreting the language and intent of a contract. This venue designation issue can be a pit-fall for the unwary lawyer as well as the unknowing client. We have a professional obligation to be mindful of such potential problem areas and also to know when our clients may ethically and legally benefit from such loose language.



 





[1] Common attribution for this expression goes to Lee “Scooter” Corso, ESPN announcer and former honorable mention All-American football player for Florida State University.


Thursday, February 6, 2014

Foreclosure Hearing Residential Credit Solutions Union County NC

The following is a summary of a foreclosure hearing that McGrath & Spielberger assisted a borrower with, and is provided for informational purposes only.



Mortgage Loan Servicer / Foreclosing Bank: Residential Credit Solutions as loan servicer for Bank of NY Mellon

Distressed Property Address (City): Waxhaw, North Carolina

Type of Distressed Property: Primary residence

Date of Foreclosure Hearing: January 28, 2014

Location of Foreclosure Hearing: Union County, NC

Bank’s Foreclosure Trustee: Cornish Law Firm / Shapiro & Ingle as attorney for the substitute trustee

Borrower’s Attorney: Jason A. McGrath

Actions Taken by McGrath & Spielberger on Behalf of Borrower (Specifically in Relation to the Foreclosure Hearing): Motion to Continue Foreclosure Hearing heard, Attorney McGrath attended hearing for client. Further, Attorney McGrath requested that the hearing officer order that the substitute trustee / substitute trustee attorney confirm and clarify to the loan servicer and all other interested parties that there is no foreclosure sale date, and thus loss mitigation consideration should not be refused on the basis of a pending sale.

Foreclosure Hearing Outcome: Borrower’s Motions granted; foreclosure avoided.