Todd, Barron, Thomason, Hudman & Bebout, P.C.

Serving Ector & Midland counties and the Permian Basin

3800 East 42nd Street, Suite 409, Odessa, TX 79762 | 432-363-2100

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The Duties of Creditors to Report Accurate Credit Information

Posted by Jack Najarian
Jack Najarian
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on Saturday, 06 April 2013
in Blog Post

              Credit scores have become a big part of our everyday life. I know here in West Texas if one does not have a shiny credit score, it’s hard to find a place to live. For those who have good credit, but may have been hurt by identity theft, their ability to obtain a competitive rate is difficult. Creditors that report information to a Credit Reporting Agency (CRA) have a duty under the Fair Credit Reporting Act to report credit information accurately. I imagine most of the time creditors do report accurately even though there are hundreds of complicated regulations prescribed from the Fair Credit Reporting Act that they are likely not aware of. What’s important for creditors and consumers to understand is that there are legal remedies for consumers if there has been an inaccurate reporting. However, what is even more important for creditors and consumers to understand is that the right avenue has to be taken in order to create a cause of action that can be enforced by a court.

A consumer can only bring a cause of action in court under the Fair Credit Reporting Act against a creditor for inaccurately reporting credit information by first going through a reinvestigation process with a CRA. Only after the creditor does not comply with their reinvestigation duties directed by a consumer’s complaint to a CRA can the creditor be brought into the litigation for failing to uphold their duties to accurately report. This is a nuanced rule, but one that is very clear under the current law. A consumer can dispute the furnishing of information directly with the creditor, but if the creditor does not comply, the consumer has no direct legal remedy. Many creditors do not have procedures in place for these very reasons.

Further, the consumer must make these requests in a proper way to trigger the creditors’ duties. Federal agencies may enforce these duties, but generally there needs to be a lot at stake for them to find it worthwhile to get in the fight on your behalf. The lesson for consumers who believe that they have suffered from an inaccurate reporting is to make sure to first make a complaint with a CRA. The lesson for creditors is to make sure you have the proper procedures in place to analyze a request and to know what it takes to be able to respond to a request when one is properly made. 

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Family Limited Partnerships

Posted by Jack Najarian
Jack Najarian
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on Saturday, 09 March 2013
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Family Limited Partnerships and Why They Can Be a Great Estate Planning Tool.

A Family Limited Partnership is an estate planning tool used to help manage large estates, protect assets from creditors, pass wealth to subsequent generations, and avoid estate taxes, among other benefits. Simply put, a Family Limited Partnership is a limited partnership in which all partners are family members. For many wealthy families, it is the “go to” tool to make sure wealth will be maintained in their family for future generations.

A Family Limited Partnership generally takes the form of a limited partnership. Under a common scenario, the parents contribute assets and income (land, stock, etc.) to a limited partnership. The assets contributed are assets the parents owns but they do not use for the purpose of living. In exchange, the parents receive general partnership interest and limited partnership interest. Over time, the parents (the general partners) give their children and grandchildren limited partnership interest.

Before explaining why the above scenario is beneficial, let me give you a general description of the framework of a limited partnership. A limited partnership is made up of two types of partners, general partners and limited partners. The general partner has control over the partnership and manages the partnership. The limited partners are passive owners, and have very little control over the partnership. Unless the partnership agreement provides otherwise, the profits of the partnership flow through to the partners in proportion to their ownership interest in the partnership.

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Estate Planning and the Medicaid Estate Recovery Program (M.E.R.P.)

Posted by Jack Najarian
Jack Najarian
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on Friday, 01 March 2013
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The Texas Homestead Exemption may not protect you from M.E.R.P.

Copyright (c) <a href='http://www.123rf.com'>123RF Stock Photos</a>With the Texas legislature’s adoption of The Medicaid Estate Recovery Program, estate planning has become an important aspect of opting to receive Medicaid benefits. The Medicaid Estate Recovery Program (M.E.R.P.) was created to repay the Medicaid program by requiring the seizure of property in the estates of some of the Medicaid recipients after they die. The program applies to those who started receiving Medicaid benefits after the age of 55 for nursing facility services, intermediate facilities for the mentally ill, and Home and Community-Based Services and Community Attendant Services.

There are four general categories of heirs that are exempt from a M.E.R.P. claim: (1) a surviving spouse; (2) surviving Children under 21 years of age; (3) surviving child of any age who is blind or disabled; or (4) an unmarried adult child residing continuously in the decedent’s homestead for at least one year prior to the time of the Medicaid recipient’s death. However, it is the heirs that do not fall into these four categories that run into issues.

In Texas, we have become accustomed to a tradition of having our homes protected from creditors. Generally, the Texas homestead laws prevent a creditor (except for a mortgage holder, taxing authority, etc.) from forcing the sale of the homestead to satisfy nonpayment of a debt. The Texas homestead exemption has been traditionally known as a great way to shield wealth from creditors.

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