BANKRUPTCY
Bankruptcy can provide relief if a diligent attorney properly advises and educates his/her clients properly. Clients must know what To Do and what Not To Do (many items on this list) prior to filing for bankruptcy. One mistake can red flag a case for fraud or even result in a case being dismissed.
Homeowners especially must be careful and make the proper decisions prior to and after filing for bankruptcy. The following are just a few issues that homeowners need to reflect upon——-
***Deficiency Judgments. Deficiency judgments by creditors are on the rise in Florida and many homeowners are finding themselves in a situation where their wages are being garnished. Keeping your address current with the courts is a way to make sure adequate notice of the garnishment judgment will be received.
***Mortgage Foreclosure Debt Relief Act of 2007. If the Mortgage Foreclosure Debt Relief Act of 2007 is allowed to expire December 2012, many homeowners could get slapped with a tax bill. This law currently prevents the cancellation of debt associated with foreclosures, short sales, and deeds in lieu of foreclosure from being considered taxable events. Once the law expires, if the lender writes off the debt and then issues a 1099-C, then the previous homeowner is looking at a possible tax bill based upon the cancelled mortgage debt.
***If you have received a 1099-C, DO NOT IGNORE IT!! ASAP–Contact a Tax Professional experienced in the exclusions/exemptions surrounding tax liability. A deed in lieu of foreclosure, short sale, and a foreclosure can result in a lender issuing a 1099-C.
***Even if The Mortgage Foreclosure Debt Relief Act of 2007 is extended, this law only protects homeowners when the debt associated with the primary residence was used to improve the home. Unfortunately, if a HELOC was cancelled by the lender and was used to purchase a wonderful new car or finance a week long trip to the Bahamas you may have to report the cancellation of the debt as “income” to the IRS. (Consult a Tax Professional)
***HOA Dues. Even after filing for bankruptcy HOA dues must be paid up until the time the home is foreclosed upon. Please continue to pay this bill. Until the bank forecloses on the property the homeowner is stuck paying post-petition HOA dues.
Bankruptcy can become complicated very quickly and a diligent attorney who offers personalized services can increase the likelihood that a “fresh start” is achieved. Contact my office if you believe you may be ready to file for bankruptcy.
STUDENT LOAN LAW
Don’t let your federal student loan debt chase you for the rest of your life. Face and manage your debt with the many tools that may be available to you.
BAD NEWS!! There is NO statute of limitations when it comes to federal or federally backed private loan obligations. This means that a borrower can expect collectors to chase them until the debt is paid. There are many tools that collectors can employ to eventually collect on debts. A collector may garnish wages (without a court order and despite State laws to the contrary), take tax refunds, or even take a portion of Social Security benefits. Yes, this means that once you have worked all your life and patiently waited to retire–You could quickly discover that your Social Security Retirement check is less because of that 20 year old student loan debt obligation you never wanted to and did not pay.
GOOD NEWS!! Federal borrowers have ways to get back on track. A federal borrower may seek a discharge (cancellation) of their student loans (without having to file for bankruptcy), object to garnishments, and challenge tax refund interceptions and Social Security offsets. There are additional ways a borrower can get back on track and ignoring and hoping the debt obligation will go away is not one of them.
A discharge can provide the most powerful relief although many will not qualify. If a discharge is granted a borrower may have voluntary and involuntary payments towards the loan returned, negative information removed from their credit report, no longer be obligated to pay the loan, and may be eligible to once again receive federal student loans.
A discharge of a student loan obligation outside of bankruptcy can be based upon:
closed school
false certification
death
disability
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
