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Foreclosure

September 18, 2014 by admin

Steven A. Leahy
Foreclosure

By Steven A Leahy

When a person borrows money to buy a home, the loan is memorialized with 2 documents, a promissory note and a mortgage. The promissory note is a written promise to repay the money borrowed to purchase the home. The promissory note spells out the amount of the loan, the interest rate charged, the term of the loan (number of years), and how to define a default.

The mortgage is the document that provides security for the loan detailed in the promissory note. The mortgage details the property used as collateral for the promise to pay including, the property address, property identification number and legal description. The mortgage is recorded in the county where the property is located. If the borrower defaults on the promise to pay, the property detailed in the mortgage may be sold to cover the debt in a process known as foreclosure.

Foreclosure is the process necessary for a mortgage lender (i.e. mortgagee) to take possession of a property because the borrower (i.e. mortgagor, homeowner) defaults on a contractual obligation to the mortgage lender, usually a default in payments. Mortgage foreclosures are governed by State law. Generally, there are two kinds of mortgage foreclosures – judicial and non judicial. Twenty-two states use primarily judicial foreclosures – Twenty-eight, non-judicial foreclosures. Several states actually provide both ways to foreclose on a mortgage loan.

In non-judicial states, the mortgage company does not file an action in court. Rather, the mortgage company simply sends a notice to the homeowner and, in most non-judicial states, records a Notice of Default with the county. Once a prescribed time elapses without cure, a Notice of Sale is mailed to the homeowner and the date and time of such sale is published in local newspapers and recorded with the County. The homeowner may object to the foreclosure with appropriate court action. Without an objection, the property is sold to the highest bidder at a public auction.

For a judicial foreclosure, the mortgage company must file a mortgage foreclosure complaint with the court in the county where the property is located, and go through litigation in order to receive permission from the court to conduct a public sale. State law governs the foreclosure process and procedures.

State law also governs whether a mortgage loan is a recourse or non-recourse loan. If the public sale of the property does not generate enough money to pay off the borrower’s obligation to the mortgage company, the remaining balance is defined as a deficiency. If the sale generates more than the borrower’s obligation, a surplus is created and the surplus is paid to the borrower. Recourse loans allow the mortgage company to hold the homeowner (borrower) personally liable should the sale result in a deficiency. Non-recourse loans do not allow the mortgage companies to hold the homeowner (borrower) responsible. The debt is forgiven, and the homeowner is protected.

Often non-judicial foreclosures are also non-recourse. Non-judicial foreclosures usually occur fairly quickly and judicial foreclosures can take many months. It appears that in return for a quick foreclosure process, states protect the homeowner from a deficiency. Conversely, judicial foreclosures may take many months, but homeowners may be held liable for a deficiency.

Illinois allows only judicial foreclosures and allows recourse against the borrower. In Illinois, a mortgage lender must file a law suit against the homeowner (borrower), and complete the litigation process as laid out in the Illinois Mortgage Foreclosure Law (IMFL) 735 ILCS 5/15-1101 et seq. (2013).

If you are facing foreclosure, there are options. Which option is right for you depends on your specific circumstances. Never hire a firm to help you with a foreclosure unless the firm can help with all your options, foreclosure defense, deed-in-lieu of foreclosure, short-sales, deficiency protection and bankruptcy. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Owe Taxes”, “Tax Relief Chicago”, back taxes, Chicago Tax Help, currently non collectible, Help With IRS, IRS Help IL, irs non-collectible status, Offer in Compromise IRS, Offer in compromise Settlement, tax attorney chicago

IRS – Bankruptcy Chapter 13

September 4, 2014 by admin

Steven A. Leahy
IRS – Bankruptcy Chapter 13

By Steven A. Leahy

There are six things you can do if you owe the IRS money. First, you can simply write the IRS a check for the full amount. For many, that is simply not a realistic option. Often, if the tax obligation is not too significant, borrowing money from another source (friends, family, bank loan, credit cards, etc.) may be a less costly alternative than an installment agreement with the IRS. Second, you can enter into an Installment Agreement; pay the IRS over time. Third, you can obtain an Offer-in-Compromise: A lump sum settlement for less than the tax owed. Fourth, you can be declared Currently Not Collectible; pay the IRS nothing (for a period of time). Fifth, you can file for protection under the bankruptcy code. And the last option – you can do nothing, and let the IRS do what they will to you, your family and your assets.

This article addresses the fifth option – Bankruptcy. The Bankruptcy Code is found in United States Code: Title 11. Think of the Bankruptcy Code as a book, and like other books, it is divided into chapters. That’s why you hear so much about Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13, or Chapter 15. Each chapter has a different remedy for a different situation. Chapter 7 is titled “Liquidation,” Chapter 9 “Adjustment of Debts of a Municipality,” Chapter 11 “Reorganization,” Chapter 12 “Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income,” Chapter 13 “Adjustment of Debts of an Individual with Regular Income,” and Chapter 15 “Ancillary and Other Cross-Border Cases.” Generally, individual taxpayers rely on Chapter 7, Chapter 11 or Chapter 13.

This article will focus on the second kind of bankruptcy available for individual taxpayers, IRS Bankruptcy Chapter 13 “Adjustment of Debts of an Individual with Regular Income.” People who file bankruptcy are referred to as “Debtors.”

Chapter 7 is not available to some Debtors. If a Debtors’ monthly gross income is greater than the average income of the average family of the same size, it is presumed abusive to allow a Chapter 7 discharge to Debtors. Many over the mean debtors can overcome the presumption of abuse. But others cannot, making Chapter 7 discharge of their debts unavailable. Chapter 13 and Chapter 11 are available to over the mean Debtors.

Under Chapter 13 the debtor proposes a plan to repay creditors over a period of time – up to 60 months. Generally, Chapter 13 is used by people who are behind in some payments and are trying to protect their assets – a home, a car, etc. Chapter 13 allows debtors to repay arrears over a period of time.

For example, a family may find themselves several months behind on their mortgage payments, due to a temporary job lay-off. Once the lay-off is over, the debtor can return to paying their regular monthly mortgage payments. But, because they are behind in payments, the mortgage company will not accept regular monthly payments unless the family can bring their mortgage account current. Chapter 13 will allow that family to pay the arrears over 60 months and require the mortgage company to accept the regular monthly payments while they are in Chapter 13. In this way the family can avoid foreclosure of their home.

But Chapter 13 can also be used to stop IRS collection actions against a taxpayer – even if the underlying tax is not dischargeable. If the IRS has placed a wage garnishment against a taxpayer – and missing a pay check will have dire consequences (e.g. eviction) – the best option may include filing Chapter 13 to stop the wage garnishment. Under Chapter 13 the taxpayer can set up a payment plan for the portion of the IRS debt that is not dischargeable and discharging some, or all, of the dischargeable tax debt.

Tax issues in bankruptcy are complicated. This is just a general overview. If you owe the IRS and are unable to pay the full tax obligation immediately, bankruptcy may be your best option. Never hire a firm to help you with your IRS problem unless the firm is experienced in helping taxpayers use the bankruptcy code to protect them from the IRS. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Owe Taxes”, “Tax Relief Chicago”, back taxes, Chicago Tax Help, currently non collectible, Help With IRS, IRS Help IL, irs non-collectible status, Offer in Compromise IRS, Offer in compromise Settlement, tax attorney chicago

IRS Offer In Compromise

August 27, 2014 by admin

Steven A. Leahy
IRS Offer In Compromise

By Steven A. Leahy

There are six things you can do if you owe the IRS money. First, you can simply write the IRS a check for the full amount. For many, that is simply not a realistic option. Often, if the tax obligation is not too significant, borrowing money from another source (friends, family, bank loan, credit cards, etc.) may be a less costly alternative than an installment agreement with the IRS. Second, you can enter into an Installment Agreement; pay the IRS over time. Third, you can obtain an Offer-in-Compromise: A lump sum settlement for less than the tax owed. Fourth, you can be declared Currently Not Collectible; pay the IRS nothing (for a period of time). Fifth, you can file for protection under the bankruptcy code; Chapter 7, Chapter 13 or Chapter 11. And the last option – you can do nothing, and let the IRS do what they will to you, your family and your assets.

This article addresses the third option – IRS Offer in Compromise (OIC). An OIC permits a taxpayer to settle their tax debt for less than the full amount owed. The good news is, in May 2012 the IRS revamped the process with its “Fresh Start” initiative, making it easier for taxpayers to take advantage of an OIC.

The first requirement for an IRS Offer In Compromise, as in all IRS payment programs, is compliance. The taxpayer must have filed all tax returns, made all required estimated tax payments for the current year and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees. The taxpayer must remain in compliance during consideration and, should the OIC be accepted, after approval.

There are three grounds the IRS may use to accept an OIC: Doubt to liability (a genuine dispute as to the existence or amount of the correct tax debt under the law), Doubt to collection (taxpayer’s assets and income are less than the full amount of the tax liability), and effective tax administration (payment of the IRS liability would create an economic hardship or would be unfair and inequitable because of exceptional circumstances). Most OICs are granted as to doubt to collection. An OIC can be paid in two different ways – Lump Sum (paid in 5 or fewer installments) or a Periodic Payment offer (paid in 6 to 24 installments).

A successful OIC must offer an amount equal to, or greater than, what the IRS determines is a reasonable collection potential. The reasonable collection potential is the amount the IRS determines the taxpayer has the ability to pay. The IRS will evaluate the taxpayer’s ability to pay, income, expenses, and equity in assets to make that determination. How that information is presented may be the deciding factor.

Before the Fresh Start Initiative, the IRS calculated the reasonable collection potential by looking at the taxpayer’s disposable income – actual income less “allowable expenses” (not the taxpayer’s actual expenses) multiplied by 60 (number of months for 5 years), plus “net realizable equity” of the taxpayer’s assets. For example, a taxpayer with a monthly income of $5000.00 and allowable expenses of $3000.00, with zero assets, may get an OIC approved for $120,000.00 (60 x $2000.00) – no matter what they owed the IRS. Not really an attractive option.

Under the Fresh Start Initiative, the IRS has allowed more flexibility in “allowable expenses” and the multiple has been reduced from 60 to 12 (if the OIC will be paid in a Lump Sum) or 24 (if the OIC will be paid in a Periodic Period). Let’s assume the new flexibility reduces our example’s disposable income to $1000.00 – the new OIC that may be accepted would be $12,000.00 if paid in a Lump Sum or $24,000.00 if paid in a Periodic Plan. Quite a contrast from the pre-initiative number of $120,000.00!

So, if you owe the IRS and are unable to pay the full tax obligation immediately, you may be eligible to pay the IRS less, much less, than you owe. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Owe Taxes”, “Tax Relief Chicago”, back taxes, Chicago Tax Help, currently non collectible, Help With IRS, IRS Help IL, irs non-collectible status, Offer in Compromise IRS, Offer in compromise Settlement, tax attorney chicago

IRS Bankruptcy Chapter 7

August 27, 2014 by admin

Steven A. Leahy
IRS Bankruptcy Chapter 7

By Steven A. Leahy

There are six things you can do if you owe the IRS money. First, you can simply write the IRS a check for the full amount. For many, that is simply not a realistic option. Often, if the tax obligation is not too significant, borrowing money from another source (friends, family, bank loan, credit cards, etc.) may be a less costly alternative than an installment agreement with the IRS. Second, you can enter into an Installment Agreement; pay the IRS over time. Third, you can obtain an Offer-in-Compromise: A lump sum settlement for less than the tax owed. Fourth, you can be declared Currently Not Collectible; pay the IRS nothing (for a period of time). Fifth, you can file for protection under the bankruptcy code. And the last option – you can do nothing, and let the IRS do what they will to you, your family and your assets.

This article addresses the fifth option – Bankruptcy. The Bankruptcy Code is found in United States Code: Title 11. Think of the Bankruptcy Code as a book, and like other books, it is divided into chapters. That’s why you hear so much about Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13, or Chapter 15. Each chapter has a different remedy for a different situation. Chapter 7 is titled “Liquidation,” Chapter 9 “Adjustment of Debts of a Municipality,” Chapter 11 “Reorganization,” Chapter 12 “Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income,” Chapter 13 “Adjustment of Debts of an Individual with Regular Income,” and Chapter 15 “Ancillary and Other Cross-Border Cases.” Generally, individual taxpayers rely on Chapter 7, Chapter 11 or Chapter 13.

This article will focus on the first kind of bankruptcy available for individual taxpayers, IRS Bankruptcy Chapter 7 “Liquidation.” Taxpayers who file Bankruptcy are referred to as “Debtors.” Under IRS Bankruptcy Chapter 7 all the Debtor’s assets, above a certain level of exemptions allowed by law, are sold and the proceeds of that sale are used to pay their creditors all or a portion of what the creditor’s claims are. In a vast majority of cases, there are not any assets above the exemptions allowed by law. So, most Debtors don’t lose any assets, but most of their debts are discharged. Not all debts are dischargeable – for example, past due child support, student loans, government fines and recent taxes are not dischargeable in bankruptcy, but most other debt is.

While recent taxes and some specific types of taxes (e.g. Trust Fund Recovery Penalty, excise taxes, etc.) are never dischargeable, some tax debts are dischargeable. There are three important dates to remember if you are trying to discharge IRS tax debts in bankruptcy. First, the due date for filing the tax return in question must be more than three years before the date of the bankruptcy filing. Second, the tax return in question must have been filed at least two years before the date of bankruptcy filing. Finally, the tax claim must have been assessed more than two-hundred and forty days before the date of the bankruptcy filing.

The taxpayer’s conduct may also come into question. In order to discharge taxes in bankruptcy, in addition to the time criteria, the Debtor must not have filed a fraudulent return or willfully tried to evade taxes.

Discharging taxes in bankruptcy can be very complicated. For example, there are events that may extend the dates discussed here; there may be questions about exactly when a return was “filed” or when a tax was “assessed.” Objections may be raised about whether the document filed meets the technical definition of “Tax Return,” or whether the taxpayer’s conduct to evade taxes was “willful.”

This is just a general overview. If you owe the IRS and are unable to pay the full tax obligation immediately, bankruptcy may be your best option. Never hire a firm to help you with your IRS problem unless the firm is experienced in helping taxpayers use the bankruptcy code to protect them from the IRS. Before you do anything, you should give me a call. We can discuss your all your options. Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Tax Relief”, back taxes, Chicago Tax Help, currently non collectible, Help With IRS, IRS Help Chicago, IRS Lien, irs non-collectible status, tax attorney chicago, Tax Debts, Tax Solution, taxes and bankruptcy

IRS Collection Process

July 24, 2014 by admin

Steven A. Leahy
IRS Collection Process

By Steven A. Leahy

Resolving IRS problems is not easy. When a taxpayer owes the IRS, the IRS will send a bill, a “Notice” in IRS speak – This begins the four step collection process. Additional notices will follow – each directing the taxpayer to pay the outstanding balance, or set up a “payment solution.”

The initial notice (IRS Form CP 501) is generated by one of ten Regional Compliance Centers. IRS Form CP 501 is a reminder telling the taxpayer that there is a balance due on a tax account. Five weeks after the first notice, the compliance center will generate IRS Form CP 503, “Second Notice: You have unpaid taxes for 20xx.” IRS Form CP 503 uses a more urgent tone. Five weeks after IRS Form CP 503, the compliance center will generate IRS Form CP 504 “Notice of Intent to Levy: Intent to seize your property or rights to property Amount due immediately: $XX,XXX.XX.” Now, the IRS is taking things from you.

If the taxpayer does not respond to these notices, the account becomes delinquent. Delinquent accounts are assigned to the Automated Collection System (ACS) or the Collection Field function (CFf). Most accounts go to the ACS for collection efforts. Some accounts, however, go directly to CFf and are assigned to a Revenue Officer.

If the delinquent account is assigned to ACS, ACS employees will contact the taxpayer by telephone and try to work out a payment solution. The taxpayer may also call ACS to work out a payment solution. ACS maintains a computerized inventory system that has taxpayer information, including personal information (name, address, telephone number, date of birth, adjusted gross income and social security number), audit information, IRS collection information, and perhaps the taxpayer’s credit report and bank account information. ACS uses this information to assist them in their telephone collection efforts and enforced collection efforts. Enforced collection authorizes ACS to collect delinquent accounts via bank account levies, wage garnishments and levies on accounts held by other third parties (e.g. accounts receivables). Often delinquent accounts are forwarded on by ACS to CFf.

When an account reaches CFf, a Revenue Officer (RO) is assigned. The RO will be directly responsible for collecting the balance on the delinquent account. A RO may call the taxpayer, or even appear at their home or place of business. Being on the receiving end of a RO visit is never a good experience. Once a RO is assigned – that person is your contact person within the IRS. The RO can also direct enforced collection efforts – bank account levies, wage garnishments and levies on accounts held by other third parties (e.g. accounts receivables).

If a taxpayer disagrees with a decision by the IRS Collections office, there is an appeal process. Appeals are conducted by the IRS Office of Appeals – a separate and independent office. There are two main appeals procedures, Collection Due Process (CDP) and Collection Appeals Program (CAP). A CDP or CAP will often get a better result than dealing with ACS or a RO – but not always.

Before the IRS can levy your assets they must send the taxpayer IRS Letter 1058 “Final Notice – Notice of Intent To Levy And Notice of Your Right to A Hearing.” Use this last opportunity to resolve your IRS Problem. Generally, IRS Letter 1058 is sent via certified or registered mail. So, if you are experiencing IRS problems and you receive notice of a certified letter, GO TO THE POST OFFICE AND PICK IT UP.

If you are facing IRS Collection Efforts, you should work with a local law firm that understands the IRS Collection procedures and will work to get you the best deal possible. You should give me a call – Opem Tax Resolutions & The Law Office of Steven A. Leahy, PC (312) 664-6649. Call NOW to set up your FREE Consultation.

Filed Under: Uncategorized Tagged With: “Offer in Compromise”, “Owe Taxes”, “Tax Relief Chicago”, Chicago Tax Help, currently non collectible, IRS Help, IRS Help Chicago, irs options, IRS Tax Debt, Tax Help Chicago

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