BANKRUPTCY PART 6—-Can you eliminate delinquent taxes in a Chapter 7 bankruptcy?

The answer is: It depends.

Here are the three rules that qualify you for having them discharged.

The Three-Year Rule simply states that anyone wishing to discharge his or her back tax debt in a bankruptcy cannot file for bankruptcy until at least three years have passed since the taxes in question became due. For example, if Debtor A owes back taxes from the year 2013, he would not be able to file for bankruptcy until 2016. As tax day is almost always April 15 of any given year, Debtor A’s 2013 taxes would have come due on April 15, 2013 and therefore, he would not be able to file for bankruptcy until April 15, 2016.

 The Two-Year Rule sets out that a debtor must have filed the taxes in question at least two years prior to filing for bankruptcy. This rule applies even to debtors who filed their taxes late, as long as they were filed. For example, if Debtor B owed income taxes on April 15, 2014 but did not actually file her taxes until March 15, 2015, she will not be able to file for bankruptcy until May 15, 2017. This date puts her two years out from when she actually filed her taxes and also meets the Three-Year Rule as stated above.

The 240 Day Rule states that any tax assessment that is completed must take place at least 240 days before the date of any bankruptcy filing to discharge income taxes. This is usually only an issue if a debtor files a correction or is audited. For example, Debtor C files her taxes on time on April 15, 2012 but is audited by the IRS and is determined to have made an error in her tax paperwork. The date of the IRS’s new assessment of how much she owes didn’t take place until March 15, 2015. Because of this assessment and Debtor C’s error, she will now be unable to file for bankruptcy until October 12, 2015 (March 15 + 240 days), which meets all three of the 3 – 2 – 240 rules.

If you need further info, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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BANKRUPTCY –PART 5 Bankruptcy and Servicemembers

Servicemembers’ Civil Relief Act (SCRA)

The Servicemembers’ Civil Relief Act applies in bankruptcy cases. It provides protection to members of the military against the entry of default judgments and gives the court the ability to stay proceedings against military debtors.

Background

The Servicemembers’ Civil Relief Act (“SCRA”) is found at 50 U.S.C. app. §§ 501 et seq. The purpose of the SCRA is strengthen and expedite national defense by giving servicemembers certain protections in civil actions. By providing for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect servicemembers during their military service, the SCRA enables servicemembers to focus their energy on the defense of the United States. Among other things, the SCRA allows for forbearance and reduced interest on certain obligations incurred prior to military service, and it restricts default judgments against servicemembers and rental evictions of servicemembers and all their dependents. The SCRA applies to all members of the United States military on active duty, and to U.S. citizens serving in the military of United States allies in the prosecution of a war or military action. The provisions of the SCRA generally end when a servicemember is discharged from active duty or within 90 days of discharge, or when the servicemember dies. Portions of the SCRA also apply to reservists and inductees who have received orders but not yet reported to active duty or induction into the military service.

General Provisions

There are three primary areas of coverage under the SCRA: (1) protection against the entry of default judgments; (2) stay of proceedings where the servicemember has notice of the proceeding; and (3) stay or vacation of execution of judgments, attachments and garnishments. 50 U.S.C. app. §§ 521, 522 and 524.

Protection Against Default Judgements

Section 521 of the SCRA establishes certain procedures that must be followed in all civil proceedings in order to protect servicemember defendants against the entry of default judgements. These procedures are outlined below:

  • If a defendant is in default for failure to appear in the action filed by the plaintiff, the plaintiff must file an affidavit (1) with the court before a default judgment may be entered. The affidavit must state whether the defendant is in the military, or that the plaintiff was unable to determine whether the defendant is in the military.
  • If, based on the filed affidavits, the court cannot determine whether the defendant is in the military, it may condition entry of judgment against the defendant upon the plaintiff’s filing of a bond. The bond would indemnify the defendant against any loss or damage incurred because of the judgment if the judgment is later set aside in whole or in part.
  • The court may not order entry of judgment against the defendant if the defendant is in the military until after the court appoints an attorney to represent the defendant.
  • If requested by counsel for a servicemember defendant, or upon the court’s own motion, the court will grant a stay of proceedings for no less than 90 days if it determines that (1) there may be a defense and the defense cannot be presented without the defendant’s presence; or (2) after due diligence the defendant’s attorney has not been able to contact the defendant or otherwise determine if a meritorious defense exists.
  • The court may, in its discretion, make further orders or enter further judgments to protect the rights of the defendant under the SCRA.
  • If a judgment is entered against the defendant while he or she is in military service or within 60 days of discharge from military service, and the defendant was prejudiced in making his or her defense because of his or her military service, the judgment may, upon application by the defendant, be opened by the court and the defendant may then provide a defense. Before the judgment may be opened, however, the defendant must show that he or she has a meritorious or legal defense to some or all of the action.

Stay of Proceedings Where Servicemember Has Notice

Outside the default context, and at any time before final judgement in a civil action, a person covered by the SCRA who has received notice of a proceeding may ask the court to stay the proceeding. 50 U.S.C. app. § 522. The court may also order a stay on its own motion. Id. The court will grant the servicemember’s stay application and will stay the proceeding for at least 90 days if the application includes: (1) a letter or other communication setting forth facts demonstrating that the individual’s current military duty requirements materially affect the servicemember’s ability to appear along with a date when the servicemember will be able to appear; and (2) a letter or other communication from the servicemember’s commanding officer stating that the servicemember’s current military duty prevents his or her appearance and that military leave is not authorized for the servicemember at the time of the letter. The court has discretion to grant additional stays upon further application.

Stay or Vacation of Execution of Judgements, Attachments and Garnishments

In addition to the court’s ability to regulate default judgments and stay proceedings, the court may on its own motion and must upon application: (1) stay the execution of any judgment or order entered against a servicemember; and (2) vacate or stay any attachment or garnishment of the servicemember’s property or assets, whether before or after judgment if it finds that the servicemember’s ability to comply with the judgment or garnishment is materially affected by military service. 50 U.S.C. app. § 524. The stay of execution may be ordered for any part of the servicemember’s military service plus 90 days after discharge from the service. The court may also order the servicemember to make installment payments during any stay ordered.

Additional Protections

Several additional rights are available under the SCRA. For example, when an action for compliance with a contract is stayed under the SCRA, contractual penalties do not accrue during the period of the stay. 50 U.S.C. app. § 523. The SCRA also provides in most instances that a landlord cannot evict a servicemember or dependants from a primary residence without a court order. In an eviction proceeding, the court may also adjust the lease obligations to protect the interests of the parties. 50 U.S.C. app. § 531. If the court stay the eviction proceeding, it may provide equitable relief to the landlord by ordering garnishment of a portion of the servicemember’s pay. Id. Under the SCRA a servicemember may terminate residential and automotive leases if he or she is transferred after the lease is made. 50 U.S.C. app. § 535. A court may also extend some of the protections afforded a servicemember under the SCRA to persons co-liable or secondarily liable on the servicemember’s obligation. 50 U.S.C. app. § 513.

Applicability to Bankruptcy Proceedings

The language of the SCRA states that it is generally applicable in any action or proceeding commenced in any court. 50 U.S.C. app. §§ 521, 522 and 524. Therefore, absent contravening language with respect to bankruptcy proceedings, the SCRA applies to all actions or proceedings before a bankruptcy court.

The applicability of the SCRA in bankruptcy proceedings is also evident in the Federal Rules of Civil Procedure and the Federal Rules of Bankruptcy Procedure. For example, the advisory committee note to Federal Rule for default judgments, Fed. R. Civ. P. 55(b), states that it is directly affected by the SCRA. (2) Under Fed. R. Bankr. P. 7055 and 9014 of the Federal Rules of Bankruptcy Procedure, Fed. R. Civ. P. 55 is applicable in bankruptcy adversary proceedings and contested matters. Thus, the default judgment protections of the SCRA clearly apply in bankruptcy cases.

The bankruptcy court clerk’s office is aware of the requirement that the plaintiff must provide an affidavit stating whether the defendant is in the military before default may be entered against the defendant. Bankruptcy Procedural Forms B260, B261A, and B261B, and their accompanying instructions, provide additional guidance concerning the applicability of the SCRA to default judgments and related procedural requirements.

 

If you need further info, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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BANKRUPTCY– PART 4


Credit Counseling and Debtor Education Courses

All individual bankruptcy filers are required to complete pre-bankruptcy credit counseling and pre-discharge debtor education. These may not be provided at the same time. Credit counseling must take place before you file for bankruptcy; debtor education must take place after you file.

Certificate of completion for both credit counseling and debtor education are required before the filer’s debts can be discharged. Only credit counseling organizations and debtor education course providers that have been approved by the U.S. Trustee Program may issue these certificates for filers in all states and territories except for Alabama and North Carolina.

 

If you need more info, call Attorney Linda Fessler at 213-446-6766 for a free consultation.

 

 

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BANKRUPTCY — PART 3

BANKRUPTCY PART 3  

How Chapter 7 Works

A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. (3) In addition to the petition, the debtor must also file with the court: (1) schedules of assets and liabilities; (2) a schedule of current income and expenditures; (3) a statement of financial affairs; and (4) a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007(b). Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case (including tax returns for prior years that had not been filed when the case began). 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling; evidence of payment from employers, if any, received 60 days before filing; a statement of monthly net income and any anticipated increase in income or expenses after filing; and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302(a). Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.

The courts must charge a $245 case filing fee, a $75 miscellaneous administrative fee, and a $15 trustee surcharge. Normally, the fees must be paid to the clerk of the court upon filing. With the court’s permission, however, individual debtors may pay in installments. 28 U.S.C. § 1930(a); Fed. R. Bankr. P. 1006(b); Bankruptcy Court Miscellaneous Fee Schedule, Item 8. The number of installments is limited to four, and the debtor must make the final installment no later than 120 days after filing the petition. Fed. R. Bankr. P. 1006. For cause shown, the court may extend the time of any installment, provided that the last installment is paid not later than 180 days after filing the petition. Id. The debtor may also pay the $75 administrative fee and the $15 trustee surcharge in installments. If a joint petition is filed, only one filing fee, one administrative fee, and one trustee surcharge are charged. Debtors should be aware that failure to pay these fees may result in dismissal of the case. 11 U.S.C. § 707(a).

If the debtor’s income is less than 150% of the poverty level (as defined in the Bankruptcy Code), and the debtor is unable to pay the chapter 7 fees even in installments, the court may waive the requirement that the fees be paid. 28 U.S.C. § 1930(f).

In order to complete the Official Bankruptcy Forms that make up the petition, statement of financial affairs, and schedules, the debtor must provide the following information:

  1. A list of all creditors and the amount and nature of their claims;
  2. The source, amount, and frequency of the debtor’s income;
  3. A list of all of the debtor’s property; and
  4. A detailed list of the debtor’s monthly living expenses, i.e., food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

Married individuals must gather this information for their spouse regardless of whether they are filing a joint petition, separate individual petitions, or even if only one spouse is filing. In a situation where only one spouse files, the income and expenses of the non-filing spouse are required so that the court, the trustee and creditors can evaluate the household’s financial position.

Among the schedules that an individual debtor will file is a schedule of “exempt” property. The Bankruptcy Code allows an individual debtor (4) to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state. 11 U.S.C. § 522(b). Many states have taken advantage of a provision in the Bankruptcy Code that permits each state to adopt its own exemption law in place of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between a federal package of exemptions or the exemptions available under state law. Thus, whether certain property is exempt and may be kept by the debtor is often a question of state law. The debtor should consult an attorney to determine the exemptions available in the state where the debtor lives.

Filing a petition under chapter 7 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. 11 U.S.C. § 362. But filing the petition does not stay certain types of actions listed under 11 U.S.C. § 362(b), and the stay may be effective only for a short time in some situations. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.

Between 21 and 40 days after the petition is filed, the case trustee (described below) will hold a meeting of creditors. If the U.S. trustee or bankruptcy administrator (5) schedules the meeting at a place that does not have regular U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the order for relief. Fed. R. Bankr. P. 2003(a). During this meeting, the trustee puts the debtor under oath, and both the trustee and creditors may ask questions. The debtor must attend the meeting and answer questions regarding the debtor’s financial affairs and property. 11 U.S.C. § 343. If a husband and wife have filed a joint petition, they both must attend the creditors’ meeting and answer questions. Within 10 days of the creditors’ meeting, the U.S. trustee will report to the court whether the case should be presumed to be an abuse under the means test described in 11 U.S.C. § 704(b).

It is important for the debtor to cooperate with the trustee and to provide any financial records or documents that the trustee requests. The Bankruptcy Code requires the trustee to ask the debtor questions at the meeting of creditors to ensure that the debtor is aware of the potential consequences of seeking a discharge in bankruptcy such as the effect on credit history, the ability to file a petition under a different chapter, the effect of receiving a discharge, and the effect of reaffirming a debt. Some trustees provide written information on these topics at or before the meeting to ensure that the debtor is aware of this information. In order to preserve their independent judgment, bankruptcy judges are prohibited from attending the meeting of creditors. 11 U.S.C. § 341(c).

If you need more info, call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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Bankruptcy– PART 2

 

Part 2- Bankruptcy Basics

This chapter of the Bankruptcy Code provides for “liquidation” – the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.

If the debtor’s “current monthly income” (1) is more than the state median, the Bankruptcy Code requires application of a “means test” to determine whether the chapter 7 filing is presumptively abusive. Abuse is presumed if the debtor’s aggregate current monthly income over 5 years, net of certain statutorily allowed expenses, is more than (i) $12,850, or (ii) 25% of the debtor’s non-priority unsecured debt, as long as that amount is at least $7,700. (2) The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income. Unless the debtor overcomes the presumption of abuse, the case will generally be converted to chapter 13 (with the debtor’s consent) or will be dismissed. 11 U.S.C. § 707(b)(1).

Debtors should also be aware that out-of-court agreements with creditors or debt counseling services may provide an alternative to a bankruptcy filing.

Background

A chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor’s property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain “exempt” property; but a trustee will liquidate the debtor’s remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.

Chapter 7 Eligibility

To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity. 11 U.S.C. §§ 101(41), 109(b). Subject to the means test described above for individual debtors, relief is available under chapter 7 irrespective of the amount of the debtor’s debts or whether the debtor is solvent or insolvent. An individual cannot file under chapter 7 or any other chapter, however, if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d) and (e). In addition, no individual may be a debtor under chapter 7 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

One of the primary purposes of bankruptcy is to discharge certain debts to give an honest individual debtor a “fresh start.” The debtor has no liability for discharged debts. In a chapter 7 case, however, a discharge is only available to individual debtors, not to partnerships or corporations. 11 U.S.C. § 727(a)(1). Although an individual chapter 7 case usually results in a discharge of debts, the right to a discharge is not absolute, and some types of debts are not discharged. Moreover, a bankruptcy discharge does not extinguish a lien on property.

If you need more info, call Attorney LindaFessler at 213-446-6766 for a free consultation.

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Bankruptcy— PART 1

These excerpts taken from uscourts.gov website

 

Bankruptcy

Bankruptcy helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect financially troubled businesses. This section explains the bankruptcy process and laws.

About Bankruptcy

Filing bankruptcy can help a person by discarding debt or making a plan to repay debts. A bankruptcy case normally begins when the debtor files a petition with the bankruptcy court. A petition may be filed by an individual, by spouses together, or by a corporation or other entity.

All bankruptcy cases are handled in federal courts under rules outlined in the U.S. Bankruptcy Code.

There are different types of bankruptcies, which are usually referred to by their chapter in the U.S. Bankruptcy Code.

  • Individuals may file Chapter 7 or Chapter 13 bankruptcy, depending on the specifics of their situation.
  • Municipalities—cities, towns, villages, taxing districts, municipal utilities, and school districts may file under Chapter 9 to reorganize.
  • Businesses may file bankruptcy under Chapter 7 to liquidate or Chapter 11 to reorganize.
  • Chapter 12 provides debt relief to family farmers and fishermen.
  • Bankruptcy filings that involve parties from more than one country are filed under Chapter 15.

Bankruptcy Basics provides detailed information about filing.

Seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences. Individuals can file bankruptcy without a lawyer, which is called filing pro se.

Use the forms that are numbered in the 100 series to file bankruptcy for individuals or married couples. Use the forms that are numbered in the 200 series if you are preparing a bankruptcy on behalf of a nonindividual, such as a corporation, partnership, or limited liability company (LLC). Sole proprietors must use the forms that are numbered in the 100 series.

 

If you need additional information, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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DACA ENDS

Top 5 Things to Know About President Trump’s Announcement to End DACA

On September 5, 2017, U.S. Attorney General Jeff Sessions, on behalf of the entire Trump Administration, announced an end to the DACA program. Here are the top 5 things to know about his announcement:

  1. Your DACA is valid until its expiration date.
    DACA and work permits (Employment Authorization Documents) will remain valid until its expiration date. To determine when your DACA and work permit expires, look at your I-795 Approval Notice and the bottom of your Employment Authorization Document (EAD).
    2. No new DACA applications will be accepted.
    United States Citizenship and Immigration Services (USCIS) no longer will accept or process first-time applications after September 5, 2017.
    3. DACA issuances and work permits expiring between now and March 5, 2018 must be submitted for renewal by October 5, 2017.
    If you have a permit that will expire between now and March 5, 2018, you must apply for a two-year renewal of your DACA by October 5, 2017.
    4. Advance Parole to travel abroad is no longer available.
    The Department of Homeland Security (DHS) will no longer grant DACA recipients permission to travel abroad through Advance Parole. Any pending applications for advance parole will not be processed and DHS will refund any associated fees.
    5. We are united in this fight.
    You are not alone. We mobilized, organized, and marched five years ago for DACA, and we will continue to do everything in our power to protect immigrant youth and their families across the country. Visit www.weareheretostay.org for resources to help you and your loved ones take care of yourselves in this difficult time as well as information on what you can do to take action now.

If you need additional info, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.

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WHAT DO I NEED TO KNOW IF THE DACA PROGRAM ENDS?

by Allison Davenport, Lena Graber, Sally Kinoshita
There are some reports that President Trump may end the Deferred Action for Childhood Arrivals (DACA) program soon. At this time, we do not know when or if the DACA program will be terminated or what the end of the program may look like. For example, will those with DACA continue to be protected from deportation and able to use their work permits until they expire? Or will DACA approvals and work permits be revoked? While the DACA program remains in effect at this time, below are some things to keep in mind should the program end.
I. Work Permits
Employment Authorization Documents (EADs), also known as work permits, are generally valid until they expire or the government demands they be returned. Unless the government demands that you return your work permit, the following points should apply.
If the DACA program ends but you are allowed to keep your work permit, you have the right to work legally until your work permit’s expiration date.
Even if the DACA program ends, you have no obligation to inform your employer that DACA has ended. Your employer does not have the right to ask you whether you are a DACA recipient or how you got your work permit.
Your employer does not have the right to fire you, put you on leave, or change your work status until after your work permit has expired. If your expiration date is nearing, your employer may ask you for an updated work permit but cannot take any action against you until after it is expired.
For more information about your rights as an employee see this advisory by the National Immigration Law Center: https://www.nilc.org/issues/daca/daca-and-workplace-rights/.
II. Social Security Numbers (SSNs)
Your SSN is a valid SSN number for life, even once your work permit and DACA approval expires.
If you have not done so already, apply for a SSN while your DACA and work permit are still valid.
You can and should continue to use the SSN you got under DACA as your SSN even after your work permit expires. You can use your SSN for education, banking, housing and other purposes.  Your SSN contains a condition on it that requires a valid work permit to use it for employment purposes.
III. Driver’s Licenses and Other Identification Cards
Eligibility for these depends on the state in which you live. If you have not already done so, apply for a driver’s license or state identification card if your DACA is still valid and that makes you eligible for a driver’s license or state-issued identification card in your state.
IV. Travel on Advance Parole
DACA recipients should be cautious about travel abroad on advance parole.
If you are outside the country with advance parole, make sure to return right away and while your advance parole and EAD are valid. If the DACA program ends, it is not clear that people with advance parole based on DACA will be able to return. The safest route is to return as soon as possible, before an announcement ending DACA.
If you have been granted advance parole under DACA but have not yet left the United States, or are interested in applying for advance parole, speak with an attorney to determine potential risks before doing anything.
V. Other Immigration Options
Many DACA recipients may be eligible for another immigration option to get a work permit or even a green card.
Talk to an immigration services provider to understand your legal options and if you might be eligible for another immigration benefit. Find low-cost immigration legal services: https://www.immigrationlawhelp.org
Avoid fraudulent service providers: confirm their credentials, ask for a written contract and a receipt for any payments, and if you have doubts, get a second opinion.
VI. Criminal Issues
Any criminal arrest, charge, or conviction can put you at risk with immigration authorities.
Avoid contact with law enforcement that may result in a criminal arrest. If you end up being arrested, make sure to consult an expert immigration attorney.
If you have a criminal conviction, find out if it can be changed to lessen the impact on a future immigration case you may have.
VII. Know Your Rights
Everyone – both documented and undocumented persons have rights in this country.
At all times, carry a red card to exercise your right to remain silent in case you are stopped or questioned by ICE (https://www.ilrc.org/red-cards).
You have constitutional rights:
DO NOT OPEN THE DOOR if an immigration agent is knocking on the door.
DO NOT ANSWER ANY QUESTIONS from an immigration agent if they try to talk to you. You have the right to remain silent. •
DO NOT SIGN ANYTHING without first speaking to a lawyer. You have the right to speak with a lawyer.  If you are outside of your home, ask the agent if you are free to leave and if they say yes, leave calmly.  GIVE THIS CARD TO THE AGENT. If you are inside of your home, show the card through the window or slide it under the door. I do not wish to speak with you, answer your questions, or sign or hand you any documents based on my 5th Amendment rights under the United States Constitution. I do not give you permission to enter my home based on my 4th Amendment rights under the United States Constitution unless you have a warrant to enter, signed by a judge or magistrate with my name on it that you slide under the door. I do not give you permission to search any of my belongings based on my 4th Amendment rights. I choose to exercise my constitutional rights. These cards are available to citizens and non-citizens alike.
VIII. Updates and Information
Follow the news carefully and go to reliable sources for information on the status of the DACA and other immigration programs. Don’t fall for scams about new fees or false information about your DACA work permit. Good sources of information include www.unitedwedream.org, www.informedimmigrant.com, www.defenddaca.com, www.ilrc.org, www.nilc.org and www.weareheretostay.org.
If you need further help, please call Attorney Linda Fessler at 213-446-6766 for a free consultation.
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Adult Cyber-Bullying———Don’t put up with it

There are individuals in this internet age, who are accosting others, verbally harassing and threatening to do them bodily harm. Furthermore, these people publish untrue inflammatory accusations on various sites, and spread malicious, defaming false information. If you are being threatened in this manner, or someone is allowing another person to use an account under their control to threaten you in this manner, you can file a criminal complaint that can lead to conviction for a class C felony assault. This in turn can lead to hard time in prison. Furthermore, if someone is defaming you by spreading libelous, malicious, untrue information you can also sue them in civil court. They cannot be allowed to get away with this adult form of cyber-bullying.

If you need further info, please contact Attorney Linda Fessler at 213-446-6766 for a free consultation.

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How to Handle a Reverse Mortgage After Death

How to Handle a Reverse Mortgage After Death

Ralph Miller
July 11th, 2017

What to do About a Reverse Mortgage After Death

There are five options for handling a reverse mortgage after the death of the borrower.

  • Keep the property. In this situation, you must pay the loan in full, but never more than 95% of the property’s appraised value.
  • Sell the property. If the home is worth more than the loan amount, the heirs may sell the home, pay off the loan, and keep the remainder of the money from the sale.
  • Complete a short sale. Sell the property for 95% of its appraised value in a short sale to satisfy the loan.
  • Walk away. Walking away from the home will result in foreclosure and alleviates any responsibility for paying off the loan.
  • Sign a deed-in-lieu of foreclosure. This titles the property back to the lender. This allows the house to go into reverse mortgage foreclosure and gives the seller the property in order to satisfy the loan.

Reverse Mortgage After Death Timeline

Here’s a timeline of what to expect in order to handle a reverse mortgage after death.

30 days. Within 30 days of receiving notice of the death of the borrower, the loan servicer will send a due and payable notice to the estate, along with information on the reverse loan and the eligibility requirements for a deferral period of the reverse mortgage after death.

60 days. Within 30 days of receiving the due and payable notice, the estate must respond to the notice with a letter of intent as to the property. Additionally, the mortgagees must obtain an appraisal of the property no later than 30 days after the due and payable notice is sent. The surviving, non-borrowing spouse may apply for a deferral if they meet the requirements.

2-6 months. During this time, the estate has the opportunity to sell the house, or otherwise satisfy the loan. Be aware that interest on the loan accrues during this time.

6 months. Within six months of the death of the last surviving mortgagor, the loan servicer may begin foreclosure proceedings if someone does not pay the loan amount. If a deferral has been issued, then the foreclosure proceedings may begin six months after the end of the deferral.

12 months. The estate may apply for two extensions in 3-month intervals. This gives them up to 12 months from the death of the borrower to sell the property or satisfy the loan.

Spouse’s Responsibility for the Reverse Mortgage After Death of the Borrower

When one spouse dies, but the surviving spouse is a borrower on the reverse mortgage, the terms of the loan do not change. Also, the surviving spouse may continue to live in the house.

If the surviving spouse is not a borrower, then the mortgagee will send a letter stating the requirements for a deferral period before the loan is due and payable. If the spouse doesn’t meet a requirement of the deferral period, they have 30 days to remedy the situation. Otherwise, a notice that the loan is due and payable will be issued.

Once receiving a notice that the loan is due and payable, the spouse may choose to sell the home, hand the property over to the lender, or keep the home by paying the reverse loan amount.

During the time after the death of the borrower, the spouse must maintain the property and pay property taxes. Failure to do so may result in action against the spouse by the loan servicer. This may lead to foreclosure on the property.

Heirs’ Responsibility for the Reverse Mortgage After Death of the Borrower

After the death of the borrower, the heirs will receive a letter from the loan servicer. The letter will offer information on the borrower’s estate, details on the reverse mortgage, and available options for satisfying the loan.

It is the responsibility of the heirs to reply to the loan servicer with the intentions of keeping the property, selling it, or handing it over to the servicer. Here’s some advice for children of seniors for handling the reverse mortgage after death.

In order to keep the property, the loan must be paid off. The cost to pay off the loan is never more than 95% of the appraised value of the home, even if the loan amount is more. If the property is worth more than the amount owed, the heirs may choose to sell the home and keep the difference.

If the home isn’t worth as much as the loan, the heirs may choose to sign a deed-in-lieu of foreclosure. This turns the house over to the lender, who will sell it to get their money back. If the loan balance exceeds the home’s value, then you won’t owe anything additional by choosing this option.

Whatever you choose to do, keeping good communication between yourself and the loan servicer is imperative. With the proper documentation, you may have up to a year to sell the home before it must be turned over. If you fail to provide the proper documentation, the loan servicer may begin foreclosure proceedings within six months.

Reverse Mortgage Facts Non-Borrowers Should Consider

Here are a few things you need to know prior to inheriting a reverse mortgage after the death of the borrower.

Understand reverse mortgages. Most reverse mortgages are home equity conversion mortgages (HECMs), which are subject to FHA rules. Non-HECMs may not follow these same rules. Speak with a mortgage professional, accountant, and other trusted advisors to help you understand the ins and outs of a reverse mortgage.

Communicate with the loan servicer. After the death of the borrower, keeping in good communication with the loan servicer is vital to ensure a smooth transition.

Selling the property. If the loan amount is less than the house is worth, then selling the property may make the most sense. Here are some tips when selling a house with a reverse mortgage.

Non-recourse. A reverse mortgage is a non-recourse loan. This means borrowers are never responsible for more than 95% of the home’s appraised value. Even if the loan exceeds that amount.

Avoiding negative financial impact. You may avoid the responsibility of paying the loan amount, including the negative financial impact of the loan amount exceeding the home’s value, by completing a deed-in-lieu of foreclosure, short sale, or by walking away from the home. This will allow the loan servicer to begin foreclosure proceedings.

Six months to complete the transaction. Once you’ve decided to sell the property, or pay off the loan, you have six months from the death of the borrower to complete the transaction. After this time, the loan servicer may proceed with foreclosure.

Time extensions. If you need additional time to market and sell the property before foreclosure proceedings ensue, you may request up to two 90-day extensions. This is subject to HUD approval.

Avoiding foreclosure. If you do not respond to the due and payable notice, if the house does not sell before your extension expires, or the property taxes and insurance are not paid, then the loan servicer may begin foreclosure. Work closely with your loan servicer to assure all documentation is completed properly to avoid early foreclosure.

For additional information, please call Linda Fessler at 213-446-6766 for a free consultation.

 

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