Month: May 2017

NACBA Appellant Award

James Schwitalla receives NACBA Appellate Award

On May 5, 2017, James Schwitalla received the NACBA Appellate Award during the Keynote Luncheon at the 25th Annual Convention of the National Association of Consumer Bankruptcy Attorneys for his win in the Eleventh Circuit for Florida Dept of Revenue v. Gonzalez, 832 F. 3d 1251 (11th Cir. Fla. 2016).

The conference took place in Orlando at the Walt Disney World Dolphin Hotel.  The awards were presented by Matt Lewis, Senior Columnist for the Daily Beast and author of “Too Dumb to Fail.”

The Eleventh Circuit case is now pending certiorari to the U.S. Supreme Court this term. The case will be argued by Schwitalla if the case is granted certiorari.

#NACBA25

Income Based Student Loan Programs

When student loan payments in repayment become too much for your monthly budget, income based student loan programs are there to help make the payments more affordable.  These income based repayment options adjust your payment to a percentage of your discretionary income, the income difference between the household’s adjusted gross income and 150% of the poverty line.

These programs include:

  1. PAYE PLAN- Pay as you Earn Plan. This income based repayment program is also for Federal Direct Loans and requires that you be a new borrower as of October 2007 with a loan disbursement on or after October 2011. After a showing of “partial financial hardship“, a calculation showing that your standard repayment exceeds a payment based on 10% of your adjusted gross income less 150% of the poverty line. After 20 years of payments, any unpaid amounts will be forgiven. The forgiveness amount will be imputed as income by the IRS, so the there may be a few payments to the IRS after the forgiveness.
  2. REPAYE PLAN-Revised Pay as you Earn. This more generous version of the PAYE program was launched by the Department of Education in 2015. The program is available to all borrowers with Federal Direct Loans, not just new borrowers under the definition provided in the PAYE plan.
  3. IBR PLAN- Income-Based Repayment.  This program looks at your income and family size every year to adjust the payment through a re-certification where a new application is submitted each year.
  4. ICR PLAN- Income-Contingent Repayment.  This income based repayment program is only available for Federal Direct Loans. Be careful with this program because sometimes the income contingent payment could calculate to higher than the standard repayment monthly payment!

To find out whether your loans qualify for one of these programs and more detailed information about these programs, visit studentaid.ed.gov.

 

Tax Debt

IRS Tax Lien & Your Florida Homestead

It is long thought that your Florida Homestead protections under the Florida Constitution render your home untouchable to creditors. This is true for the most part, but there are exceptions, such as IRS tax liens.

The Internal Revenue Service (IRS) is given enhanced creditor powers to collected on amounts owed. These powers allow for the IRS to levy or liens. A levy is a legal seizure of property, such as a garnishment of a paycheck, bank account, seizure of a vehicle, real estate or other personal property.

An IRS tax lien is claiming the secured rights to the collateral. What happens is the IRS will file a Notice of Tax Lien when a tax bill goes unpaid. This gives notice to other creditors of its claim to the property. This IRS tax lien is something that most clients become alarmed about when they go to refinance, sell, or modify the mortgage on their home and find that they are prohibited from doing so because of the lien. There are ways to move forward with the sale/refinance closing, however you will need to provide documentation to the IRS and give some assurance to the IRS that the loan or sale will aide you in paying your outstanding IRS Tax bill.

Difference between a Levy and a IRS Tax Lien

IRS Tax Levy

  • Taking of property
  • No public recording
  • No negative reporting to credit

IRS Tax Lien

  • No taking of property
  • Asserting legal claim/ security interest in property
  • Public Records recording of Notice of Federal Tax Lien
  • Negative reporting on credit report

Will the IRS Sell my Homestead to Satisfy an IRS Tax Lien?

The technical answer is yes. Under IRS section 6334, the IRS can take principal residences to satisfy tax debts over $5,000. The IRS is given super creditor powers to access just about every asset a person owns. I have had clients where their retirement accounts were levied upon (cleaned out) to satisfy a personal income tax debt.  However, the real answer is that the IRS will not likely take anyone’s home when it is so much easier to take bank accounts, garnish wages and access other property. For the IRS to forcibly take a Florida resident’s home, the IRS is required to get approval by a District Court judge or magistrate.

How to Get Rid of an IRS Tax Lien

The easiest solution is to pay it. However, it is understandable that sometimes the balance is too large and it is hard to get on a payment plan with the IRS. A chapter 13 bankruptcy can be a good tool for dealing with IRS issues that arise when a business closes or a change in jobs leaves you with a large tax bill and seemingly no options.

Call (305) 278-0811 to schedule a free consultation with one of the bankruptcy attorneys in our office to find out your options.

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