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On May 8, 2014 the 11th Circuit Court of Appeals released an interesting ruling denying a claim for damages filed by Chapter 13 debtors against their mortgage company. The Lodge v. Kondaur Capital Corporation and McCalla Raymer arose when a mortgage company started foreclosure proceedings against Mr. & Mrs. Lodge who were then debtors in an active Chapter 13 case.Under the automatic stay provision of the Bankruptcy Code, of course, lenders cannot initiate or continue collection activity against a debtor who has filed Chapter 13 unless and until the lender first convinces the bankruptcy judge to lift the automatic stay.In Georgia, most foreclosures are non-judicial meaning that to start foreclosure a lender needs to notify the debtor and run a written notice of the pending foreclosure in the legal newspaper of the county where the property is located. In the Lodge case, the mortgage company started the foreclosure process and bought the ad.The day after purchasing the ad, the lawyer for the mortgage company, McCalla, Raymer, recognized the mistake and immediately canceled the foreclosure process. Unfortunately for them, however, it was too late to stop the ad from running.When the ad ran, it was picked up by several of the foreclosure notification companies that operate in the Atlanta area and the Lodges began receiving solicitations from home buyers and bankruptcy attorneys offering to help them avoid foreclosure.The Lodges thereafter sued the mortgage company and McCalla, Raymer in federal district court alleging that they suffered from emotional distress due to the violation of the automatic stay and for violation of the Fair Debt Collection Practices Act.The district court denied the Lodges’ claim and the case was thereafter appealed to the 11th Circuit Court of Appeals. Circuit Courts of Appeal are the highest appellate court in the country except for the Supreme Court, so Circuit Court opinions are binding on all district and bankruptcy courts in the 11th Circuit (which includes Georgia).Click here to read the decisionA copy of the 11th Circuit’s opinion is here – just click on the picture on the left.  As you can see, they denied the Lodge’s claim for emotional distress because the Lodges failed to introduce specific evidence of damages. There were no doctor’s notes, proof of reduced income or any other evidence save their testimony that they were damaged.Thus, even though there was a clear violation of the automatic stay, no damages were awarded because no proof of injury was submitted.What do you think? Is this a case where the mortgage company got off too easy for ignoring the automatic stay – the core protection of the Bankruptcy Code? Were the debtors being punished for having “unclean hands” – arising from their failure to make on-going mortgage payments as required by their Chapter 13 plan. Is it reasonable to put the burden on cash strapped debtors to pay for medical care to produce evidence of damages? Will this decision give license to mortgage companies to be less concerned about the significance of the automatic stay? Or did the 11th Circuit get it right by insisting on evidence of damages and not just a showing of a stay violation.The post Appeals Court Denies Damage Claim for Clear Violation of the Automatic Stay appeared first on theBKBlog.

There may be some good news for taxpayers with problems since IRS loosened up the rules for relief in 2012, according to recently-released reports by the agency.

The IRS changes for granting tax relief recognize the downturn in the economy.

From 2012 to 2013 the number of so-called "offers in compromise" (proposed agreements by taxpayers to IRS to discount back taxes) increased from 64,000 to 74,000. And, more importantly, the number of offers accepted jumped from 24,000 to 31,000 -- a 29% increase.

Likewise, the IRS seems to be moderating its forced collection efforts. IRS levies on bank accounts and paychecks dropped from 2,961,162 to 1,855,095 -- a 37% decrease. And the number of seizures dropped from 733,000 to 547,000, which amounts to 25% fewer seizures of property.

Says Morgan King, a California attorney and tax relief expert: "Clearly, the new policies are making it feasible for more honest but delinquent taxpayers to wipe the slate clean, become compliant with the tax laws, and get a fresh start."

"Most delinquent taxpayers," says King, "do not deliberately fail to pay their taxes when due. In most cases there is a small business failure, a serious illness, drugs, divorce, and similar causes. Once they get behind, they tend to go into avoidance until penalties and interest skyrocket the debt. At that point, they need a lawyer."

Still, says Kings, taxpayers need to beware of the tax relief scammers who advertise heavily, but deliver little: King notes that the percentage of accepted offers would be higher if only professionally drafted, competent offers are counted. "The acceptable rate is lower than it should be because so many ʻoffer mills,ʼ like the ones advertising on T.V., are slap-dashed together and sent to the IRS so poorly prepared that they are basically dead-on-arrival."

The new IRS changes generally focused on the financial analysis used to determine which taxpayers qualify for an OIC ("offers in compromise"). The changes enable some taxpayers to resolve their tax problems in as little as two years compared to four or five years in the past.

The IRS looks at the taxpayer's income and assets to make a determination of the taxpayer's "reasonable collection potential." OICs are subject to acceptance on legal requirements.

When the IRS calculates a taxpayer's "reasonable collection potential," it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted.

For more details, contact our office. We specialize in resolving tax and debt matters.

There may be some good news for taxpayers with problems since IRS loosened up the rules for relief in 2012, according to recently-released reports by the agency.
The IRS changes for granting tax relief recognize the downturn in the economy.
From 2012 to 2013 the number of so-called “offers in compromise” (proposed agreements by taxpayers to IRS to discount back taxes) increased from 64,000 to 74,000. And, more importantly, the number of offers accepted jumped from 24,000 to 31,000 — a 29% increase.
Likewise, the IRS seems to be moderating its forced collection efforts. IRS levies on bank accounts and paychecks dropped from 2,961,162 to 1,855,095 — a 37% decrease. And the number of seizures dropped from 733,000 to 547,000, which amounts to 25% fewer seizures of property.
Says Morgan King, a California attorney and tax relief expert: “Clearly, the new policies are making it feasible for more honest but delinquent taxpayers to wipe the slate clean, become compliant with the tax laws, and get a fresh start.”
“Most delinquent taxpayers,” says King, “do not deliberately fail to pay their taxes when due. In most cases there is a small business failure, a serious illness, drugs, divorce, and similar causes. Once they get behind, they tend to go into avoidance until penalties and interest skyrocket the debt. At that point, they need a lawyer.”
Still, says Kings, taxpayers need to beware of the tax relief scammers who advertise heavily, but deliver little: King notes that the percentage of accepted offers would be higher if only professionally drafted, competent offers are counted. “The acceptable rate is lower than it should be because so many ʻoffer mills,ʼ like the ones advertising on T.V., are slap-dashed together and sent to the IRS so poorly prepared that they are basically dead-on-arrival.”
The new IRS changes generally focused on the financial analysis used to determine which taxpayers qualify for an OIC (“offers in compromise”). The changes enable some taxpayers to resolve their tax problems in as little as two years compared to four or five years in the past.
The IRS looks at the taxpayer’s income and assets to make a determination of the taxpayer’s “reasonable collection potential.” OICs are subject to acceptance on legal requirements.
When the IRS calculates a taxpayer’s “reasonable collection potential,” it will now look at only one year of future income for offers paid in five or fewer months, down from four years, and two years of future income for offers paid in six to 24 months, down from five years. All offers must be fully paid within 24 months of the date the offer is accepted.

For more details, contact our office. We specialize in resolving tax and debt matters.

Joint Bankruptcy Filing a joint bankruptcy makes perfect sense when you are married and both you and your spouse have either joint debt or separate debt. Since the means test is going to take into consideration your entire family income, you might as well try to eliminate your entire family debt in one fell swoop.+ Read More
The post Filing A Joint Bankruptcy: When Does It Make Sense? appeared first on David M. Siegel.