Bankruptcy and your delinquent tax liabilities

Lately, we are meeting lots of debtors who have lots of tax liabilities and owe money to IRS. We like to stress that everyone should pay their taxes, and file the tax returns every year. This is a continuous obligation and also we advise to seek a professional in this regard. However, we still come across clients with significant tax liabilities.
As you may know, the IRS has a number of programs available to individuals who have incurred significant tax liabilities. Two of the most common programs are the “installment agreement” program in which the taxpayer pays 100% of his delinquent tax over several years, and the “offer in compromise” program in which the taxpayer settles his account for less than 100 cents on the dollar.

Interestingly, Congress looked to these IRS programs when designing the means test elements of the BAPCPA changes to the bankruptcy laws. The budget expense categories used in means test calculations are derived in part from the approved expense categories that the IRS uses in both installment agreements and in offers in compromise.
Despite what you may have heard tax debt can be dealt with in a bankruptcy. Chapter 7 can discharge “stale” tax debt and Chapter 13 can be used to pay recent tax debt (called priority debt), secured tax debt (when a tax lien has been filed) and unsecured (stale) tax debt.
Bankruptcy is definitely a better tool for dealing with tax liabilities and old tax bills, as there is set procedure for discharged in bankruptcy. So, if you have tax liabilities which you owe more than 3 years, please contact our office for better consultation.

What is the new mortgage settlement? Are you included?

Who are these five big banks?

-Ally Financial
-Bank of America,
-Citibank,
-JPMorgan Chase and
-Wells Fargo
How much they are willing to pay? Terms:
-a total of $5 billion in cash.

They will also help homeowners who are underwater on their mortgages by reducing the principal on their loans by a combined $17 billion over the next three years.

How about refinancing?

Borrowers who qualify will get $3 billion in refinancing arrangements.

Improper foreclosure?

Those who were improperly foreclosed on will get a combined $1.5 billion. That probably nets out to less than $2,000 a person.

Impact?

Of course, this would have a sizable impact. Afterall, bank were not the only one to be blamed. The homeowners should except some responsibility (if not a lion’s share) and part of the blame as well. This would rejuvenate the economy but the banks have to be serious with this and not play game as usual and as they had continuously done before. Let the complainants suffers and naysayers should see the light of the day. Pay your mortgages folks on time. Enough is enough, let the good time roll. Everyone is suffering because few of us are not paying their mortgages regardless of the low interest. Lots of us are savings these mortgage payments. The result most of us suffering who are current on their payments and on commitments. It is a contract. Because of many non payers, the economy cannot progress. Like Ross Perot used to say, “if you don’t like the heat in the kitchen, move out”. People who do not like to pay, they would object if this is zero percent interest. Most of them are looking for free money. Yes, it is true. Produce the note was nonsense which was spread by paralegals and crooks. Most of them are languishing in jails. Initially, there was some fiasco when banks were rapidly purchases and notes were not produced. Now, they have solved this ‘storage” problem. Banks have notes, and they can produce. Most of the notes and promissory notes have run out their statutory limitations. We should learn how to be responsible again and accept where the blame lies. The banks have done their job, it is the homeowners who needed to take their part of the responsibility and help improve the economy. Stay in your homes, pays the bills, cut the chase, and be a proud homeowners.

Here comes the revised Means Test Figures

Revised Means Test Figures, effective May 1st, 2012

The Census Bureau figures, IRS Data and Administrative Expenses Multipliers for Form 22 are revised effective May 1st, 2012. After updating Best Case Bankruptcy, users can view the new figures in the program by changing the expected filing date to May 1st, 2012 or later on the General tab in Form 22. Visit the U.S. Trustee’s Means Testing website for more information regarding the revisions. This update is available for immediate download. For a comparison of the old numbers to the revised numbers, please see the following table.

NV Means Test Tables – Effective 05/01/2012 – with change from 11/01/2011 State: NV Nevada (32)

Median Income – Living Allowance – Health Allowance – Transportation Allowance – Administrative Multiplier
Nevada Census Median Income Effective 05/01/2012

Period 1 Person 2 People 3 People 4 People 5 People 6 People 7 People 8 People Add’l
Year $44,508 $57,327 $62,776 $67,236 $74,736 $82,236 $89,736 $97,236 $7,500
6 Months $22,254 $28,664 $31,388 $33,618 $37,368 $41,118 $44,868 $48,618 $3,750
Month $3,709 $4,777 $5,231 $5,603 $6,228 $6,853 $7,478 $8,103 $625
SemiMth $1,855 $2,389 $2,616 $2,802 $3,114 $3,427 $3,739 $4,052 $313
BiWeek $1,712 $2,205 $2,414 $2,586 $2,874 $3,163 $3,451 $3,740 $288
Week $856 $1,102 $1,207 $1,293 $1,437 $1,581 $1,726 $1,870 $144
Median Income Change Between 05/01/2012 and 11/01/2011

Period 1 Person 2 People 3 People 4 People 5 People 6 People 7 People 8 People Add’l
Year +1,362 3% +1,754 3% +1,921 3% +2,057 3% +2,057 3% +2,057 3% +2,057 2% +2,057 2% 0 0%
6 Months +681 3% +877 3% +960 3% +1,028 3% +1,028 3% +1,028 3% +1,028 2% +1,028 2% 0 0%
Month +113 3% +146 3% +160 3% +171 3% +171 3% +171 3% +171 2% +171 2% 0 0%
SemiMth +57 3% +73 3% +80 3% +86 3% +86 3% +86 3% +86 2% +86 2% 0 0%
BiWeek +53 3% +68 3% +73 3% +79 3% +79 3% +79 3% +79 2% +79 2% 0 0%
Week +26 3% +33 3% +37 3% +40 3% +39 3% +39 3% +40 2% +40 2% 0 0%

National Living Allowance Effective 05/01/2012

Type 1 Person 2 People 3 People 4 People 5 People 6 People 7 People 8 People Add’l
Food $301 $537 $639 $765 $913 $1,062 $1,210 $1,359 $196
Housekeeping $30 $66 $65 $74 $88 $102 $116 $131 $0
Apparel $86 $162 $209 $244 $292 $339 $387 $434 $0
Personal Care $32 $55 $63 $67 $79 $92 $105 $118 $0
Miscellaneous $116 $209 $251 $300 $359 $417 $475 $532 $85
Total $565 $1,029 $1,227 $1,450 $1,731 $2,012 $2,293 $2,574 $281

National Living Change Between 05/01/2012 and 11/01/2011

Type 1 Person 2 People 3 People 4 People 5 People 6 People 7 People 8 People Add’l
Food +1 0% 0 0% 0 0% +8 1% +13 1% +18 2% +22 2% +28 2% +6 3%
Housekeeping +1 3% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0% +1 1% 0 0%
Apparel 0 0% 0 0% 0 0% 0 0% +1 0% +2 1% +4 1% +4 1% 0 0%
Personal Care 0 0% 0 0% +2 3% 0 0% 0 0% 0 0% 0 0% 0 0% 0 0%
Miscellaneous +29 33% +44 27% +54 27% +65 28% +78 28% +91 28% +104 28% +116 28% +13 18%
Total +31 6% +44 4% +56 5% +73 5% +92 6% +111 6% +130 6% +149 6% +19 7%

National Health Allowance Effective 05/01/2012

Allowance Change from 11/01/2011
Under Age 65 Age 65 & Over Under Age 65 Age 65 & Over
$60 $144 0 0% 0 0%

Local Housing Allowance Effective 05/01/2012

Allowance Change from 11/01/2011
County FIPS Type 1 Person 2 people 3 people 4 people 5 people 1 Prs 2 Ppl 3 Ppl 4 Ppl 5 Ppl
Carson City 32510 Utility $426 $501 $528 $588 $598 +33 8% +40 9% +42 9% +46 8% +47 9%
Mortgage $1,141 $1,340 $1,412 $1,575 $1,600 +52 5% +60 5% +64 5% +72 5% +73 5%
Total $1,567 $1,841 $1,940 $2,163 $2,198 +85 6% +100 6% +106 6% +118 6% +120 6%
Churchill 32001 Utility $423 $497 $524 $584 $594 +1 0% +2 0% +2 0% +2 0% +3 1%
Mortgage $872 $1,024 $1,079 $1,203 $1,222 +64 8% +75 8% +79 8% +88 8% +89 8%
Total $1,295 $1,521 $1,603 $1,787 $1,816 +65 5% +77 5% +81 5% +90 5% +92 5%
Clark 32003 Utility $431 $506 $533 $594 $604 +15 4% +18 4% +19 4% +21 4% +21 4%
Mortgage $1,299 $1,526 $1,608 $1,793 $1,822 +66 5% +78 5% +82 5% +91 5% +93 5%
Total $1,730 $2,032 $2,141 $2,387 $2,426 +81 5% +96 5% +101 5% +112 5% +114 5%
Douglas 32005 Utility $446 $524 $552 $616 $625 +19 4% +23 5% +24 5% +27 5% +26 4%
Mortgage $1,375 $1,615 $1,701 $1,897 $1,928 +101 8% +118 8% +124 8% +139 8% +142 8%
Total $1,821 $2,139 $2,253 $2,513 $2,553 +120 7% +141 7% +148 7% +166 7% +168 7%
Elko 32007 Utility $479 $563 $594 $662 $672 +2 0% +3 1% +4 1% +4 1% +4 1%
Mortgage $887 $1,041 $1,097 $1,223 $1,243 +44 5% +50 5% +53 5% +59 5% +60 5%
Total $1,366 $1,604 $1,691 $1,885 $1,915 +46 3% +53 3% +57 3% +63 3% +64 3%
Esmeralda 32009 Utility $580 $681 $718 $800 $813 +71 14% +83 14% +88 14% +98 14% +100 14%
Mortgage $469 $551 $580 $647 $657 -71 -13% -83 -13% -88 -13% -98 -13% -100 -13%
Total $1,049 $1,232 $1,298 $1,447 $1,470 0 0% 0 0% 0 0% 0 0% 0 0%
Eureka 32011 Utility $442 $518 $546 $609 $619 +14 3% +15 3% +16 3% +18 3% +19 3%
Mortgage $659 $775 $816 $910 $924 -14 -2% -15 -2% -16 -2% -18 -2% -19 -2%
Total $1,101 $1,293 $1,362 $1,519 $1,543 0 0% 0 0% 0 0% 0 0% 0 0%
Humboldt 32013 Utility $497 $583 $615 $685 $696 -16 -3% -20 -3% -21 -3% -24 -3% -24 -3%
Mortgage $796 $936 $986 $1,100 $1,117 +16 2% +20 2% +21 2% +24 2% +24 2%
Total $1,293 $1,519 $1,601 $1,785 $1,813 0 0% 0 0% 0 0% 0 0% 0 0%
Lander 32015 Utility $493 $579 $610 $680 $691 +23 5% +27 5% +28 5% +31 5% +32 5%
Mortgage $692 $812 $856 $955 $970 -23 -3% -27 -3% -28 -3% -31 -3% -32 -3%
Total $1,185 $1,391 $1,466 $1,635 $1,661 0 0% 0 0% 0 0% 0 0% 0 0%
Lincoln 32017 Utility $363 $426 $449 $501 $509 +31 9% +36 9% +38 9% +43 9% +43 9%
Mortgage $744 $874 $921 $1,026 $1,043 +96 15% +113 15% +120 15% +132 15% +135 15%
Total $1,107 $1,300 $1,370 $1,527 $1,552 +127 13% +149 13% +158 13% +175 13% +178 13%
Lyon 32019 Utility $441 $518 $546 $608 $618 +11 3% +13 3% +14 3% +14 2% +15 2%
Mortgage $967 $1,136 $1,197 $1,335 $1,356 +82 9% +96 9% +101 9% +114 9% +115 9%
Total $1,408 $1,654 $1,743 $1,943 $1,974 +93 7% +109 7% +115 7% +128 7% +130 7%
Mineral 32021 Utility $400 $470 $495 $552 $561 +32 9% +37 9% +39 9% +44 9% +45 9%
Mortgage $598 $702 $740 $825 $838 +117 24% +138 24% +146 25% +162 24% +164 24%
Total $998 $1,172 $1,235 $1,377 $1,399 +149 18% +175 18% +185 18% +206 18% +209 18%
Nye 32023 Utility $425 $499 $526 $586 $596 +6 1% +7 1% +8 2% +8 1% +9 2%
Mortgage $814 $956 $1,007 $1,123 $1,141 +57 8% +66 7% +69 7% +78 7% +78 7%
Total $1,239 $1,455 $1,533 $1,709 $1,737 +63 5% +73 5% +77 5% +86 5% +87 5%
Pershing 32027 Utility $429 $504 $531 $592 $602 -30 -7% -35 -6% -37 -7% -41 -6% -41 -6%
Mortgage $715 $840 $885 $987 $1,003 +30 4% +36 4% +37 4% +42 4% +42 4%
Total $1,144 $1,344 $1,416 $1,579 $1,605 0 0% +1 0% 0 0% +1 0% +1 0%
Storey 32029 Utility $432 $507 $535 $596 $606 +32 8% +37 8% +40 8% +44 8% +45 8%
Mortgage $1,018 $1,196 $1,260 $1,405 $1,428 +1 0% +1 0% +1 0% +1 0% +1 0%
Total $1,450 $1,703 $1,795 $2,001 $2,034 +33 2% +38 2% +41 2% +45 2% +46 2%
Washoe 32031 Utility $452 $531 $559 $624 $633 +17 4% +20 4% +21 4% +24 4% +23 4%
Mortgage $1,327 $1,558 $1,642 $1,831 $1,861 +69 5% +81 5% +85 5% +95 5% +97 5%
Total $1,779 $2,089 $2,201 $2,455 $2,494 +86 5% +101 5% +106 5% +119 5% +120 5%
White Pine 32033 Utility $378 $444 $467 $521 $530 +1 0% +2 0% +1 0% +1 0% +2 0%
Mortgage $740 $869 $916 $1,021 $1,037 +47 7% +54 7% +57 7% +64 7% +64 7%
Total $1,118 $1,313 $1,383 $1,542 $1,567 +48 4% +56 4% +58 4% +65 4% +66 4%

National Ownership and Local Operating Transportation Allowance Effective 05/01/2012

Allowance Change from 11/01/2011
County Region Type No Car 1 Car 2 Cars No Car 1 Car 2 Cars
All NV Counties WE Operating $182 $236 $472 0 0% 0 0% 0 0%
Ownership $0 $517 $1,034 0 0% +21 4% +42 4%
Total $182 $753 $1,506 0 0% +21 3% +42 3%

Administrative Expenses Multiplier Effective 05/01/2012

Judicial District Code Admin Multiplier Change from 11/01/2011
Nevada – All NV-A 6.50% -2.10

Inside a Foreclosure Factory of a Bank

This is an interesting article which shows the inner, in-house of a bank where non stop documentation is prepared to increase more foreclosure, which of course is avoidable. All credit of this articles goes to the writer of this article and not to me.

http://economywatch.msnbc.msn.com/_news/2012/04/19/11269115-inside-the-foreclosure-factory-theyre-working-overtime?lite

The automatic stay and its wider implications.

We have been asked many times from our clients about automatic stay, and we had discussed this matter in our blog also, But the questions are coming so often and the law has been changing, that we feel obligations to revisit this issue again.
The filing of a petition either voluntary or involuntary invokes the automatic stay. This as you may know is an umbrella against all kinds of collections and activities, and stops them right in their making. The automatic stay applies to all entities and is intended to protect the debtor and the estate.The stay acts to enjoin all efforts to collect on any debts, to take possession of collateral, to enforce or create a line, or to set off a debt against the debtor.
Bankruptcy Code Section 362(a) is very inclusive and provides that the filing of a voluntary or involuntary petition acts as a stay applicable to all entities and prohibits the following types of acts:

1. The commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under the Bankruptcy Code.
2. The enforcement, against the debtor or against the property of the estate;
3. Any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.
4. Any act to create, perfect, or enforce any line against property of the estate;
5. Any act to create, perfect, or enforce against property of the debtor any line to the extent that such lien secures a claim that arose before the commencement of the case under the Bankruptcy Code;
6. Any act to collect, assess, or recover a claim against the debtor that arose before the commencement of the case under the Code;
7. The setoff of any debt owing to the debtor that arose before the commencement of the case under this title against any claim against the debtor.
8. Any proceeding before the US Tax Court.

What actions are not stayed?
1. Criminal proceedings;
2. Enforcement of domestic support obligations;
3. Action to perfect or maintain a purchase money security interest;
4. Enforcement of governmental regulatory and police power;
5. Setoff of mutual debts by certain creditors;
6. Eviction
(a) a landlord may continue any eviction or unlawful detainer action against the debtor if the landlord had already obtained judgment for possession of the debtor’s rented residence before the bankruptcy petition is filed.
(b) the landlord may continue any eviction action against the debtor seeking possession of the debtor’s residence if that action is based on “endangermerment” of the real estate property.

What are the penalties for violation of the stay?

-Punitive damag4es, fees, costs and contempt of court

Are Federal Owed Taxes Dischargeable in Your Bankruptcy?

How to Get Rid of Back Federal Taxes in Bankruptcy?
We have been asked this question many times. As a matter of fact, Congress has already provided this important tool in the Bankruptcy Code but the important thing is that one should carefully use it without any collateral impact on the bankruptcy case. Let us visit them one more time. In order for those taxes to be discharged, the following conditions must be met.

1. First of all, the tax at issue must be of the dischargeable kind (income taxes for instance) and the tax must have been due and owing for a period of more than 3 years from the most recent date the tax return was due.

2. The tax return for the tax delinquent debt must have been filed more than 2 years before the current bankruptcy case was filed.

3. The tax debt relief at issue has been assessed by the taxing authority for more than 240 days prior to the filing of the bankruptcy case (federal taxes are usually assessed within 6 weeks of the filing of the return, the States vary).

4. The debtor, in filing the return must not have attempted to evade the paying of the tax nor can the return filed by the debtor be a willfully “fraudulent” return.

Effect of Offer in Compromise
An extension of the time period and offer in compromise stops any action from the IRS. Tax Return Must be Prepared Properly. Again, the “tax return” filed must actually be an acceptable tax return and not just a mere ruse of filing.

What kind of execution order required for garnishment in Nevada

Below you will find what an execution or order for garnishment in Nevada looks somewhat like.

NOTICE OF EXECUTION

YOUR PROPERTY IS BEING ATTACHED OR

YOUR WAGES ARE BEING GARNISHED

Plaintiff, ……………….. (name of person, filing garnishment or attachment), alleges that you owe the plaintiff money. The plaintiff has begun the procedure to collect that money. To secure satisfaction of judgment, the court has ordered the garnishment of your wages, bank account or other personal property held by third persons or the taking of money or other property in your possession.

Certain benefits and property owned by you may be exempt from execution and may not be taken from you. The following is a partial list of exemptions:

1. Payments received pursuant to the federal Social Security Act, including, without limitation, retirement and survivors’ benefits, supplemental security income benefits and disability insurance benefits.

2. Payments for benefits or the return of contributions under the Public Employees’ Retirement System.

3. Payments for public assistance granted through the Division of Welfare and Supportive Services of the Department of Health and Human Services or a local governmental entity.

4. Proceeds from a policy of life insurance.

5. Payments of benefits under a program of industrial insurance.

6. Payments received as disability, illness or unemployment benefits.

7. Payments received as unemployment compensation.

8. Veteran’s benefits.

9. A homestead in a dwelling or a mobile home, not to exceed $550,000, unless:

(a) The judgment is for a medical bill, in which case all of the primary dwelling, including a mobile or manufactured home, may be exempt.

(b) Allodial title has been established and not relinquished for the dwelling or mobile home, in which case all of the dwelling or mobile home and its appurtenances are exempt, including the land on which they are located, unless a valid waiver executed pursuant to NRS 115.010 is applicable to the judgment.

10. All money reasonably deposited with a landlord by you to secure an agreement to rent or lease a dwelling that is used by you as your primary residence, except that such money is not exempt with respect to a landlord or the landlord’s successor in interest who seeks to enforce the terms of the agreement to rent or lease the dwelling.

11. A vehicle, if your equity in the vehicle is less than $15,000.

12. Seventy-five percent of the take-home pay for any workweek, unless the weekly take-home pay is less than 50 times the federal minimum hourly wage, in which case the entire amount may be exempt.

13. Money, not to exceed $500,000 in present value, held in:

(a) An individual retirement arrangement which conforms with the applicable limitations and requirements of section 408 or 408A of the Internal Revenue Code, 26 U.S.C. §§ 408 and 408A;

(b) A written simplified employee pension plan which conforms with the applicable limitations and requirements of section 408 of the Internal Revenue Code, 26 U.S.C. § 408;

(c) A cash or deferred arrangement that is a qualified plan pursuant to the Internal Revenue Code;

(d) A trust forming part of a stock bonus, pension or profit-sharing plan that is a qualified plan pursuant to sections 401 et seq. of the Internal Revenue Code, 26 U.S.C. §§ 401 et seq.; and

(e) A trust forming part of a qualified tuition program pursuant to chapter 353B of NRS, any applicable regulations adopted pursuant to chapter 353B of NRS and section 529 of the Internal Revenue Code, 26 U.S.C. § 529, unless the money is deposited after the entry of a judgment against the purchaser or account owner or the money will not be used by any beneficiary to attend a college or university.

14. All money and other benefits paid pursuant to the order of a court of competent jurisdiction for the support, education and maintenance of a child, whether collected by the judgment debtor or the State.

15. All money and other benefits paid pursuant to the order of a court of competent jurisdiction for the support and maintenance of a former spouse, including the amount of any arrearages in the payment of such support and maintenance to which the former spouse may be entitled.

16. Regardless of whether a trust contains a spendthrift provision:

(a) A present or future interest in the income or principal of a trust that is a contingent interest, if the interest has not been satisfied or removed;

(b) A present or future interest in the income or principal of a trust for which discretionary power is held by a trustee to determine whether to make a distribution from the trust, if the interest has not been distributed from the trust;

(c) The power to direct dispositions of property in the trust, other than such a power held by a trustee to distribute property to a beneficiary of the trust;

(d) Certain powers held by a trust protector or certain other persons; and

(e) Any power held by the person who created the trust.

17. If a trust contains a spendthrift provision:

(a) A present or future interest in the income or principal of a trust that is a mandatory interest in which the trustee does not have discretion concerning whether to make the distribution from the trust, if the interest has not been distributed from the trust; and

(b) A present or future interest in the income or principal of a trust that is a support interest in which the standard for distribution may be interpreted by the trustee or a court, if the interest has not been distributed from the trust.

18. A vehicle for use by you or your dependent which is specially equipped or modified to provide mobility for a person with a permanent disability.

19. A prosthesis or any equipment prescribed by a physician or dentist for you or your dependent.

20. Payments, in an amount not to exceed $16,150, received as compensation for personal injury, not including compensation for pain and suffering or actual pecuniary loss, by the judgment debtor or by a person upon whom the judgment debtor is dependent at the time the payment is received.

21. Payments received as compensation for the wrongful death of a person upon whom the judgment debtor was dependent at the time of the wrongful death, to the extent reasonably necessary for the support of the judgment debtor and any dependent of the judgment debtor.

22. Payments received as compensation for the loss of future earnings of the judgment debtor or of a person upon whom the judgment debtor is dependent at the time the payment is received, to the extent reasonably necessary for the support of the judgment debtor and any dependent of the judgment debtor.

23. Payments received as restitution for a criminal act.

24. Personal property, not to exceed $1,000 in total value, if the property is not otherwise exempt from execution.

25. A tax refund received from the earned income credit provided by federal law or a similar state law.

26. Stock of a corporation described in subsection 2 of NRS 78.746 except as set forth in that section.

Ê These exemptions may not apply in certain cases such as proceedings to enforce a judgment for support of a child or a judgment of foreclosure on a mechanic’s lien. You should consult an attorney immediately to assist you in determining whether your property or money is exempt from execution. If you cannot afford an attorney, you may be eligible for assistance through ……………….. (name of organization in county providing legal services to the indigent or elderly persons). If you do not wish to consult an attorney or receive legal services from an organization that provides assistance to persons who qualify, you may obtain the form to be used to claim an exemption from the clerk of the court.