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What happens to my Federal Income Tax Refund after I file a Chapter 13 Bankruptcy and I still owe the IRS Pre-Petition Income Taxes?

In the Eastern District of Michigan, Judge Opperman concluded that the IRS permitted to set off prepetition tax refunds against prepetition debts. However, the IRS is not permitted to offset postpetition tax refunds against prepetition debt, without first obtaining relief from the Automatic Stay. See In re Marcola, No. 07-23438-dob, 2011 WL 7789569 (Bankr. E.D. Mich. Apr. 22, 2011)

WHY REAFFIRM A MORTGAGE LOAN IN MICHIGAN?

Entering into a reaffirmation agreement on a fixed term mortgage is not generally advised.  The vast majority of attorneys will advise their clients not to sign reaffirmation agreements regarding fixed term mortgage loans, unless there is a specific benefit to be obtained in signing the agreement. For example – if the mortgage loan was not a fixed term (a balloon note) financed through a credit union – you would sign a reaffirmation agreement if you wanted to keep the house and you wanted that credit union to refinance the mortgage loan when it ballooned. Upon completing your Chapter 7, you will receive a discharge order which relieves you of any personal liability on your debts – unless you choose to reaffirm the personal liability through…

EXCEPTIONS TO REPORTING 1099-C FORGIVENESS OF INDEBTEDNESS

You do not have to report 1009-C income on your current year income tax return for the following types of debts: 1. Debts discharged in bankruptcy. If you filed for bankruptcy protection, do not report the canceled debt as income. 2. Mortgage debt forgiven due to foreclosure. Undert the Mortgage Forgiveness Debt Relief , you probably do not have to pay tax on debt forgiven when you lost your home. 3. Debts canceled when you were insolvent. Debt is generally only canceled when debtors are “insolvent” or broke – but only up the amount by which you are insolvent. 4. Student loans forgiven after you worked a period of time. If your student loans contain a loan forgiveness provision based on service in your field…

Consumer Financial Protection Bureau Develop the First Ever Industry-Wide Standards for Student Loan Servicing Companies

As reported by DeWayne Sheaffer, President of NEA’s National Council for Higher Education, this past summer the Consumer Financial Protection Bureau (CFPB) listened to the voices of more than 30,000 frustrated Americans, including thousands of NEA members, who were tired of receiving bad or unclear information from their student loan servicers. Thanks to the efforts of education activists like you, the CFPB will develop the first ever industry-wide standards for student loan servicing companies. This was a huge victory in advocating for students seeking higher education, but more needs to be done. Now we need members of Congress to listen and make sure to protect the interests of students in the new Higher Education Act (HEA). Good luck with that thought DeWayne – Do you really…

Michigan Bankruptcy Court Judge Rules that Unemployment Insurance Agency Quadruple Damage Penalties are Dischargeable in Chapter 13!

Eastern District of Michigan Bankruptcy Court Judge Mark Randon ruled that the “super discharge” provisions of Chapter 13 operate to discharge the quadruple damage penalty assessed by the Michigan Unemployment Insurance Agency. The Michigan Unemployment Insurance Agency (“the Agency”) determined that the debtor was overpaid $6,897.00 in unemployment benefits because she intentionally failed to report wages from two jobs. After a quadruple-damage statutory penalty and interest were added, the Agency demanded payment of more than $34,000.00; the debtor filed Chapter 13 bankruptcy. The Court held that: A debtor who successfully completes a Chapter 13 bankruptcy receives a broader discharge of debts than she would under Chapter 7. Among the debts dischargeable under Chapter 13, but not Chapter 7, are penalties payable to and for the…

In re: Harris: What should the Chapter 13 trustee do with funds that the trustee has received but not yet distributed

Harris v. Viegelahn : Basic House-Keeping in Consumer Bankruptcy Bankruptcy Law Letter July 2015 35 No. 7 Bankruptcy Law Letter NL 1 In a rare unanimous case, the Supreme Court has finally resolved a question that has nagged courts for decades. Harris v. Viegelahn,[ ] involved a Chapter 13 case that was converted to Chapter 7. The question, as addressed by Judge Daniel S. Opperman (ED Mich) depends on whether the case was converted or dismissed. In a converted case, the funds on hand to to the Debtors. Judge Opperman distinguished the 11 USC 348 from 349 base on 11 USC 349 a(a) “Unless the court, for cause, orders otherwise . . .. 349 deals with dismissal as popposed to conversion. In the case at hand, Judge…

Validity, Construction, and Application of 18 U.S.C.A. § 152(2), Prohibiting Knowingly and Fraudulently Making False Oath or Account in or in Relation to Any Bankruptcy Case

Validity, Construction, and Application of 18 U.S.C.A. § 152(2), Prohibiting Knowingly and Fraudulently Making False Oath or Account in or in Relation to Any Bankruptcy Case American Law Reports ALR Federal 2d The ALR databases are made current by the weekly addition of relevant new cases. 90 A.L.R. Fed. 2d 333 (Originally published in 2014) Title 18 U.S.C.A. § 152(2) prohibits the one from knowingly and fraudulently making a false oath or account in or relation to a bankruptcy proceeding. This annotation collects and discusses all cases in which courts have considered the construction or application of 18 U.S.C.A. § 152(2) prohibiting one from knowingly and fraudulently making a false…

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