Maximizing Tax Refunds in a Chapter 13 Bankruptcy Case

While Chapter 13 gives you more flexibility about what you can do with your current income tax refund, Chapter 13 does impact your future years’ refunds. If one files for Chapter 7 bankruptcy after the beginning of the year, and you’re still due a tax refund on the year that just passed, the trustee is going to be interested in that refund. It’s your money that the government is simply holding for you until you claim it, even if you haven’t yet filed your tax return, or don’t even know the amount of the refund.  Whatever the amount, it’s still considered your asset—you just haven’t yet claimed it or calculated the amount by filing the tax return. So unless that refund fits within an exemption, or is small enough to not be worth the trustee’s trouble, the trustee is going to get that refund.

In a Chapter 7 case, non-exempt assets simply go to the trustee to be distributed to creditors according to a very rigid formula.  By contrast, In Chapter 13, you may be able to use that refund in two very beneficial ways.

First, you may be able to get permission to use the refund, or a part of it, for a necessary, one-time expense. A standard example is a critical vehicle repair needed to be able to commute to work. The expense usually needs to be an extraordinary one, over and beyond what would be included in your standard monthly budget.

Second, to the extent that you are required to pay the refund over to the trustee, in a Chapter 13 case you usually have somewhat greater control over where that money will go. Your attorney might be able to explicitly earmark, through a specific provision in your Chapter 13 plan, where the trustee pay some or all of that refund. More likely, in certain cases, with careful wording of your plan, your attorney may be able to nudge that money in a particular direction that may be more favorable to you. For example, a vehicle that you need to keep could be paid off faster than otherwise, thus taking away from that creditor any grounds for objecting.    

One positive aspect of Chapter 7 is that it’s heavily focused on what assets you have a right to as of the moment your case is filed. Chapter 13, however, is by its nature also interested in your future income, and in many instances, future tax refunds are considered future income. Thus, your Chapter 13 plan has to account for the tax refunds that you would be receiving during the years that you are in the case. In general, this means that you must turn over your tax refunds to the trustee to be paid out according to the terms of your plan.

If you usually receive large tax refunds, your withholdings could be adjusted so that you can put that money to use for your regular living expenses. This is particularly helpful if your budget is tight. Doing so would reduce the size of the refunds going to the trustee, thereby minimizing this problem.

• In some situations, you may be allowed to use that year’s tax refund for a new special expense, such as or a new vehicle repair.
•  Even if the refunds go to the trustee during the course of your case, sometimes the extra funds being put towards your Chapter 13 plan finishes the case faster, in other cases it may result in important creditors being paid more quickly, and sometimes the refunds may enable you to pay off the plan within the mandatory maximum deadline.

If you’re still paying off your plan, remember to send your case trustee a copy of your tax returns along with any refunds that may be due in April. Neglecting to do so may jeopardize your bankruptcy. Consult an experienced Bankruptcy attorney for proper instructions if you haven’t already done so.

The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents

WASHINGTON – The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents. Immigration and Customs Enforcement (ICE) officials trained local officers around the country to act as their agencies' immigration officers, whereby working either in jails or in the field, officers can check the immigration status of suspects and place immigration related holds on them. The program, known as 287(g), reached its peak under President George W. Bush, when 60 local agencies signed contracts with ICE to implement it. But that trend slowed significantly under President Obama, as only eight agencies have signed up since he took office, and none since August 2010. In their new proposed budget for the upcoming year, Department of Homeland Security (DHS) officials say they will not sign new contracts for 287(g) officers working in the field, resulting in an estimated savings of $17 million. In its budget request, DHS officials instead will focus on expanding Secure Communities, a program that checks the fingerprints of all people booked into local jails against federal immigration databases, whereby the followup work in such cases, if required, is done by ICE agents, rather than local police. 

Source: http://www.examiner.com/border-and-immigration-in-los-angeles/dhs-cutting-287-g-to-favor-secure-communities

US Consulate in Mumbai to process visa applications of South Indians form Jan 9, 2012 onwards

The newly designed complex brings in all the US Government offices in the city to one location. The workload of processing US visa applications have now become centralized in Mumbai. South Indians will have to send in their visa applications to Mumbai, and not to Chennai. With President Barack Obama signing an Executive Order to boost tourism in the US from emerging countries like India and China, American Embassys recently annouced that streamlining of the visa application process will be its priority. "We want to make it easier for travelers to apply for a  visa to visit the United States," James Herman, Minister-Counselor for Consular Affairs in New Dehli, said, adding that over the last five years, the US mission increased staffing by over sixty percent and opened two new consulates in Hyderabad (in 2009) and Mumbai (in 2011). Noting the importance of Indian travelers to the US, Herman said Indians represent the highest volume of work visa travelers to his country and the second highest number of foreign students there. He said 2011 was a record year for H1B work visas—over 68,000 processed by Consular Team India alone and"we continue to support the people-to-people ties which define the growing partnership between our nations."

Source: http://news.brunei.fm/2012/01/21/india-getting-visa-to-us-to-be-made-easier/

How New Yorker Homeowners Are Impacted by the $26 Billion Settlement Signed by the NY Attorney General

The long-awaited joint federal-state settlement with the major banks for their alleged fraudulent documentation and processing of mortgages and foreclosures was announced on Thursday, February 9. Will it help you, and if so, how?

1. Who is included in this settlement?

• The five big banks are currently signed on: Bank of America, Wells Fargo, J.P. Morgan Chase, Ally Financial and Citigroup.  Only mortgages owned and held by them are directly affected.  Negotiations continue with nine other mortgage servicers, which if successful could bring the total amount of money involved to $30 billion.
• 49 states joined in the settlement; only Oklahoma did not. New York was the last to sign on because Attorney General, Eric Schneiderman, wanted to ensure that his office could continue their investigation into fraudulent/criminal mortgage practices.
• Mortgages held by Fannie Mae and Freddie Mac—consisting of the majority of U.S. mortgages—are NOT covered. This maybe upsetting to some, but not surprising. The U.S. Congress may be the most realistic avenue for holding them accountable for betting against homeowner mortgages.

2. What does this settlement resolve and what is open for further negotiation and litigation? In other words, what liabilities are the banks escaping from for their $26 billion?

• The claims against the banks that are released in this settlement are limited to mortgage servicing and foreclosure claims. Claims for a variety of other alleged wrongdoing are not covered and so remain open to being pursued by the federal and state regulators, investors, and homeowners. Claims related to the securitization of mortgage-backed securities are NOT covered, and those against or involving MERS (Mortgage Electronic Registration Systems).
• Individuals’ rights to bring their own lawsuits or to be part of a class action against any banks for any claims are not affected by this settlement. This could be very important for New York homeowners, because this State has ample legislation and case law encouraging homeowners to defend against foreclosure as individuals.
• The settlement does not limit any potential criminal liability for individuals or financial institutions, and provides no immunity from prosecution.

3. How does the settlement help you if your mortgage is held by one of these five banks?

• If you need a mortgage loan modification, these servicers will be required to offer principal reductions, for first and second mortgages, to a value of up to $17 billion. This is where the bulk of the settlement funds are earmarked.
• If you’re current on your mortgage but your home is worth less than the mortgage, $3 billion of the settlement is to provide refinancing relief.
• If your home has already been foreclosed, $1.5 billion will be paid out by the banks as a penalty against them–around  $2,000 per homeowner–without you needing to show any damages or releasing any claims against the bank.

4. Where do you go for more information and to find out whether you will be helped in any of these ways?

• Go to the new settlement website for current and upcoming information about it:

http://www.nationalmortgagesettlement.com