Debt Collection Strategies for Your Small Business

Debt collection can be an uncomfortable topic for many small business owners.  Very few people get into business to pursue debt.  There are many ways to approach debt collection and almost all of them require some level of finesse.  If you are having issues collecting receivables, keep your cool.

Do Not Take It Personally

Too often, small business owners get upset right away when a client misses a payment.  There are tons of simple reasons why this could happen:

  • Sometimes people just forget things;
  • The client could have misunderstood the payment terms;
  • You could have forgetting to send them the invoice;
  • There could have been a technical issue for the payment.

Before you raise arms against the client, make sure you cover your bases by checking on the simple stuff.

Is Student Loan Debt Negotiable?

  • Posted On February 27, 2019
  • Categorized In Debt
  • Written By

There is a growing debate over the student loan debt problem in America.  Millions of former students struggle to keep up with their student loan payments which have a carry over effect in areas such as car loan and mortgage payments.  It is widely accepted that student loan debt repayment is as sure as death and taxes, but is that really the case?

The Student Loan Debt Problem

If you are one of the 44 million people in America that have student loan debt, you know what it feels like to be frustrated with this seemingly unforgivable burden.  Currently, the total student loan debt in this country amounts to $1.5 trillion.  The average debt for each student is $37,172.  With so many people struggling with this debt, what can be done?

Is a Short Sale the Way to Go?

A homeowner can sell their home for less than they owe if the circumstances are right.  This is called a “short” sale.  Short sales are often beneficial for the seller, the buyer, and the creditor.  A person can market the sale as a short sale to attract buyers.  This may sound like an easy out for someone who cannot make payments, but there are negative consequences to be considered when considering a short sale as a debt relief option.

So, What Is a Short Sale?

A “short” sale of a home is when the seller sells their house for less than they owe the mortgage lender.  If someone is behind on payments, they may consider this as an option to avoid foreclosure or bankruptcy.  In order to be able to utilize the short sale option, the seller (debtor) must apply for permission from the bank (creditor).  Why would a bank agree to this?  In many situations, they can recuperate more of the owed money than they might be able to if the debtor files for bankruptcy or the home is foreclosed on.

More Americans Are 90 Days Late on Their Car Payment Than Ever Before

There may be new evidence that a strong job market does not necessarily lead to financial freedom for individuals.  Over 7 million Americans are at least 90 days behind on their car payment.  A car is a necessity for most people and the idea of losing it to repossession is enough to keep them awake at night.  What can these individuals do to get back on track?

Who Is Struggling with Car Payments?

According to a recent article in the Washington Post, the majority of the people that are 3 months behind on their payments are under the age of 30.  They have low credit scores and they are finding it difficult to pay their monthly student loan bills.  A large portion of these borrowers are “subprime” meaning their credit score is under 620.  Most of the borrowers that are more than 90 days late on their payments received their loans from a “car finance” company as opposed to a traditional credit union or bank.  Less than 1% of borrowers from credit unions are 90 days late on payments.

Laws You Must Know Before Starting Your Own Business

Starting a business is an exciting and wonderful prospect for so many individuals.  It is risky, but the reward can be more than worth it.  That being said, if you do not know the legal implications of your actions as a business owner and operator, you may be shooting yourself in the foot right out of the gate.  Read on to learn more about some basic laws pertaining to businesses.

Truth-In-Advertising Rules

This should go without saying but, as a business owner, you must make sure your ads are not deceptive.  Your ads must be supported by evidence.  The FTC describes deceptive advertising material as:

  • ‘Likely to mislead consumers acting reasonably under the circumstances’;
  • Misrepresents or omits information that ‘is important to a consumer’s decision to buy or use a product’.

Is Medical Bankruptcy a Real Thing?

Medical bills are the number one reason for bankruptcy in the United States.  Multiple studies have shown the in 25% – 50% of bankruptcies, medical debt was significant.  However, the answer to the question ‘is medical bankruptcy a real thing?’ is ‘no’.  While medical bills are a heavy contributor to personal bankruptcy, it is not its own form of bankruptcy.  It is, however, an interesting topic that has reached as far as Washington D.C. and ‘medical bankruptcy’ is a term that is resurfacing as Elizabeth Warren begins her bid for Presidential election in 2020.

What is ‘Medical Bankruptcy’?

This is a concept that was first made famous by a couple of papers written by a group which included Elizabeth Warren in 2005 and in 2009.  The papers claim that at least 50% of all bankruptcies were caused by medical debt.  A ‘medical bankruptcy’ is one that is linked to substantial medical debt.  Many experts have since refuted the accuracy of the claim.  However, what cannot be refuted is that medical debt is a major contributor to many bankruptcies. 

Can You File for Personal Medical Bankruptcy?

In short, no.  There is no legal version of bankruptcy called ‘medical bankruptcy’.  In terms of personal bankruptcy, you are mostly limited to chapter 7 and chapter 13 depending on your income limitations.  That does not change the fact that debt related to medical expenses is a serious consideration when filing for any type of debt relief.  Medical debt is considered ‘unsecured’.  This means, just like credit card debt, it can be reduced or even eliminated during the bankruptcy process.

When Should You File for Bankruptcy Due to Medical Debt?

Well, there are many factors that go into the decision:

  • Are you behind on medical bill payments?
  • Are you missing payments altogether?
  • Are you receiving snail mail and phone calls from collectors day and night?
  • Are you behind on other bills such as mortgage, credit card, and car loans?

If the answer is ‘yes’ to even half of those questions, it might be time to talk to a professional.  In many cases, medical debt is valuable and debt collectors do not give up easily.  Harassment from debt collectors does not have to be a way of life for you.  Elias Dsouza is a skilled and licensed attorney that is equipped to guide you through any debt settlement process.  He can help you determine if bankruptcy or debt settlement is the right answer for you.  Contact Elias today for a free consultation.

The Largest Case of Tax Evasion in U.S. History

So, maybe you didn’t pay Uncle Sam enough in 2018 and now you have a gnarly bill.  Maybe you started a business and did not pay any taxes all year.  Paying your taxes will not feel great, but your bill is probably way less than Walter Anderson’s.  Walter decided he did not like the idea of paying taxes, so he hid most of his earnings in off shore banks.  We are not talking about a couple of thousand dollars here or there.  We are talking about hundreds of millions.

Walter the Entrepreneur

Walter Anderson made his money as an executive in telecommunications.  He invested in telecommunications companies that later sold earning him a huge profit.  He became famous when he invested in a private space venture that aimed to refurbish the Mir space station which was an old Russian space craft.  His group’s plan was to send people to the space station for “vacation”.  Some say he started the privatization of space travel or at least the idea of it.  He was one of the original supporters of the International Space University which is a multidisciplinary program focused on the study of space at MIT.

Federal Tax Evasion Charges

In 1998, Walter was managing companies with a total revenue of around $500 million.  He made just under $130 million.  In 1999, he made just under $240 million.  How much income did he report to the IRS? $67,939 and he paid $435 in income tax.  Due to the absurdly large sum of money Walter was making, the IRS took notice.  On February 26, 2005, he was arrested at the airport returning from a trip to London.  Officials spent the previous year investigating Walter’s income and found out that he was hiding money in the British Virgin Islands and Panama.  He did this using aliases, tax havens, and shell companies. 

He almost got out of having to pay $100 million to $175 million dollars of the owed taxes because the Federal government left a typo in their contract.  The court imposed a $23 million fine and told the Feds they must sue in civil court.  Well they did, and the total bill ended up being $247,482,114.  Whenever you are feeling down about your tax bill, think about Walter’s and you will no doubt feel better!

If you run into tax issues and are unsure what your options are, you need assistance.  The IRS is not an agency you want coming after you.  For over 15 years, Elias Dsouza has been working with people just like you to manage their tax burden.  Contact Elias today for a free consultation.

3 Huge Tax Breaks for the Self-employed

Starting a business is a great idea in so many ways.  Giving yourself the freedom to work whenever and wherever you want is priceless (figuratively speaking).  Especially in the beginning, it essential to give yourself and your business the best chance to survive financially.  An important piece of the puzzle?  Tax breaks.  There are tons of deductions and subtractions which were created specifically for small businesses.  Do not miss out on these breaks when filing your 2018 tax return.

Simplified Employee Pension (SEP-IRA)

One of the biggest mistakes new business owners make is forgetting to create a retirement account.  Giving up employer contributions to a retirement account is a big hit for some people.  If you have not already done so, you must consider starting a SEP-IRA because:

  • You need to save money for retirement, and you do not want the money to be stagnant. Make it work for you utilizing the stock market.
  • The money you contribute is pre-tax and you can contribute up to 25% of your net income. The maximum contribution is $49,000.  Keep in mind that the max one person can contribute to a traditional 401k is $18,500 for people under 50.
  • You can decide what to contribute at the end of the year. If your business did well, contribute more and vice versa.  This flexibility is key for many business owners.

Corporate Bankruptcy News Updates

In 2018, we saw some shocking bankruptcies and they were mostly brick and mortar retail chains.  Companies such as David’s Bridal, Mattress Firm, Brook Stone, and Nine West all filed.  Read on to get an update on a few of the companies we reported on in 2018.


In October, we covered the history and events that led to the downfall of Sears (catch up here).  A lot has happened since October.  As we reported in the previous post, CEO Eddie Lampert stepped down but kept his post as Chairmen.  Mr. Lampert is now using his hedge fund to take over the failing chain.  The bankruptcy court agreed to allow Lampert to be the sole party in the $5.2 billion dollar bid.  Creditors are livid and claim that they would get more if the court allowed liquidation of assets to take place.  Lampert plans to keep Sear’s 45,000 employees in their positions.


Everyone with television has heard of the California wildfires that took place in 2018.  Well, an investigation determined that PG&E, California’s largest utility company, was to blame.  In our previous article, we explained the faults of the utility company, California law, and plans to file for bankruptcy in anticipation of an earth-shattering lawsuit.  On January 29th, 2019, PG&E filed for chapter 11 bankruptcy in anticipation of a lawsuit and potential liabilities in excess of $30 billion.  On their website, they outline the changes they are making which include:

  • Enhanced safety inspections
  • Intense vegetation removal and infrastructure enhancements
  • Equipment replacement

PG&E fully expects to be able to restructure and make it out of chapter 11 bankruptcy while “keeping the lights on” for its customers.

Mattress Firm

On October 20th, 2018, we reported that Mattress Firm was filing for bankruptcy under chapter 11.  Just over one month later, the court agreed to allow the company to exit bankruptcy.  After filing, Mattress Firm closed about 700 stores.  The newly emerged company does not plan on slowing down.  According to the CEO, bankruptcy “significantly improved financial and operating position [and] will enable us to strategically expand our business in new as well as existing markets, while continuing to focus on enhancing our omnichannel capabilities and product offerings.”

Bankruptcy can be an essential business tool.  It often does not mean the business even has to close its doors.  Chapter 11 allows businesses to restructure debt and stay open.  If your business is struggling and you need help, contact Elias Dsouza at Dsouza and Strachan Lawgroup GroupElias has been guiding businesses through difficult financial situations for over 15 years.

3 Ways to Use Your Tax Return

Let’s be honest, if you are eagerly awaiting your tax return, you are not planning to spend it on the right things.  Too often people get a chunk of money they usually do not receive at any other time in the year and their eyes light up.  If you are really excited to get your refund this year, it is doubtful that you plan to pay off credit card debt, take care of healthcare-related expenses, or pay down your car loan.  Read on to find out why you should do exactly those things.

PLEASE Use Your Tax Refund to Pay Down Credit Card Debt

If there is one good thing you do with even a portion of your tax return, make it credit card debt annihilation.  You would be hard pressed to find a loan with a higher interest rate than that of a credit card.  Use this year’s tax refund to reduce the savage interest payments you make every month and lower the principal balance.   The average tax refund in 2017 was about $3,000.  The average credit card debt was approximately $6,375.  If you are average, you could save yourself a lot of money in interest payments by cutting that debt in half.

Medical Expenses

The most common debt on a person’s credit report is that of medical expenses.  Medical expenses are the number one cause of bankruptcy.  Medical debt is often passed around from collector to collector until something is done about it.  Every day people are hassled and sued for medical debt worth less than $1,000.  If this is you, please use your tax refund to pay it off.  Negotiate with the collector and save yourself some money, but most importantly, improve your life by stopping the phone calls and snail mail associated with this sort of debt.

Pay Down Your Car Loan

Maybe you have always had a monthly car loan payment and you do not know what is like to exist without one.  Let me tell you, it is possible, and it is SWEET.  Imagine a world where you get paid and you do not have to fork over 25% of your paycheck.  Take your tax refund and pay off even a few months of your loan term.  Down the road, you will be so happy you did.  This will save you from paying expensive interest if your rate isn’t great.

Paying off debt with your tax refund is one of the best things you can do for yourself (albeit not fun).  If you are ready to take your debt seriously but you do not know where to start, contact Elias Dsouza.  Elias can help you plan and negotiate the elimination of your outstanding debt.