In a previous article, Wynn at Law, LLC, highlighted why the holidays are an ideal time to discuss your estate planning needs. The old adage ‘there’s no time like the present’ holds true with estate planning. So, here is a little more detail on the most common, and sometimes overlooked, planning tool: The Will. There are three types of wills about which you should give some thought. The Last Will and Testament is what most people know about and refer to generally as a “Will.” In addition to the Last Will and Testament, there is also a Living Will and a Pourover Will. The Last Will and Testament There are dozens of online templates that suggest you can do this yourself. The problem with that is simple: How many have you done? An experienced attorney will help you create a legally binding document that specifically suits your needs, expresses what your final wishes are, and is tailored to Wisconsin law. That’s so important, because the tool speaks for you after you pass on, directing how you want assets divided and appointing who will be in charge of acting on your estate’s behalf. The Living Will The Last Will and Testament becomes effective at your passing, while the Living Will speaks for you when you are unable to speak for yourself due to injury or illness. This document makes known your wishes regarding life prolonging medical treatments. This tool, also called an advanced directive, is every bit as important as the Last Will and Testament. However, a University of Pennsylvania Philadelphia study found that less than a third of adults have a Living Will. The Pourover Will We’re covering Trusts next in this series, but you should know that this particular tool can save the day for your loved ones. When you forget or neglect to add all property into your planning documents over the years– and people do forget to go back and revise their estate plan when circumstances change – this tool puts the forgotten property into a Trust. This tool got its name because any assets you failed to title into your trust prior to your passing will “pour over” into the trust after you are gone. Stay up to date You’re going to want to review all of these Wills and your wishes periodically, too, because ‘life happens.’ In the following two articles on the Estate Planning Toolbox, Wynn at Law, LLC, guides you through Trusts and Powers of Attorney. The post Your Estate Planning Toolbox: The Will appeared first on Wynn at Law, LLC.

 The 7th Circuit decision reduced the punitive damage award from $3 million to $582,000, finding this was the maximum possible award based on the ratio between $82,000 awarded under the state law count for which punitive damages were awarded and the $3 million punitive damage award.  Saccameno v United States Bank Nat'l Ass'n, 2019 U.S. App. LEXIS 35550 (7th Cir., 27 November 2019).  An explanation of the background is useful to see how the servicer's errors resulted in a judgment likely in excess of the amount of the debt, even when reduced.A typical chapter 13 case resulted in substantial post-discharge litigation when Ocwen Mortgage failed to properly account for payments in the chapter 13 case, and improperly commenced foreclosure.  Ms. Saccameno had filed a chapter 13 plan providing for curing the prepetition default on her mortgage, and continuing to pay the ongoing mortgage payment under the court's supervision.  The bankruptcy court issued a notice of final cure under Fed. R. Bankr. 3002.1, to which Ocwen did not respond.   Immediately after receiving the discharge, Ocwen undertook collection actions against her, apparently based on a mistake by an employee who coded the discharge as a dismissal in their records.  This was compounded by another error in which Ocwen's foreclosure module which inaccurately reflected that Ms. Saccameno had not made any mortgage payments in 2013.  Ms. Saccameno repeatedly attempted to correct Ocwen's records, including sending them copies of the bankruptcy paperwork.  When Ocwen began to reject mortgage payments that were, in fact, current, Ms. Saccemeno employed counsel who again repeatedly sent documentation to Ocwen showing the loan was current except for payment improperly rejected by Ocwen.  While the prepetition foreclosure remained stayed by the circuit court, Ocwen was preparing to revive it and periodically sent appraisers and inspectors to the property, adding such costs to the debt of Ms. Saccemeno.  Prior to reviving the foreclosure, Ms. Saccameno filed suit for breach of contract for the refused payments; the Fair Debt Collection Practices Act (FDCPA) for the false collection letters; the Real Estate Settlement Procedures Act (RESPA) for inadequate responses to her inquiries; and the Illinois Consumer Fraud and Deceptive Business Practices Act (ICFA) for Ocwen's false oral and written statements regarding her default and its unfair practies in violation of consent decrees Ocwen had entered with various regulatory bodies.  A jury trial followed on such complaint, resulting in an award of $500,000 compensatory damages under the breach of contract, FDCPA, and RESPA claims.  Only the ICFA permitted punitive damages, and under this claim the jury awarded $12,000 in economic damages, $70,000 in non-economic damages, and $3,000,000 in punitive damages.  The total verdict was $3,582,000.  Ocwen appealed, and the verdict was upheld by the district court which found Ocwen's employees had been deliverately indifferent to the risk that Saccameno would be harmed, and management had notice of an ratified its employees conduct.  Ocwen also challenged the ratio of compensatory and punitive damages.  The district court determined the the proper comparator for the punitive damages was the total amount awarded in all counts; resulting in a punitive damage ratio of 5:1 which it determined was not unconstitutionally high given the reprehensibility of Ocwen's conduct.  The Seventh Circuit reversed the final finding of the district court, accepting Ocwen's argument that the ratio computation must look just to the compensatory damages awarded under the state law ICFA claim in the amount of $82,0001.  Using solely these damages, the punitive damage ratio would be 37:1.  While the district court found that such a ratio might still be constitutional, the Circuit Court disagreed.  The 7th Circuit concluded that $582,000 in punitive damages was reasonable, as reflecting a 1:1 ratio relative to the total compensatory award and an approximate 7:1 ratio relative to the $82,000 awarded on the ICFA claim.1 The 7th Circuit looked to the Supreme Court's decision in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416, 123 S. Ct. 1513, 155 L. Ed. 2d 585 (2003) for guideposts determining the reprehensibility of the defendant's conduct as well as standards for the punitive damage ratio.↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com 

You are likely reading this because you live in Pennsylvania and need debt relief, but are on the fence about whether you should file bankruptcy or pursue debt settlement or debt consolidation with your creditors. This guide will explain the pros and cons of each option so that you can decide which is best for you, take action, and get free of debt. Philadelphia bankruptcy attorney David M. Offen has used both bankruptcy and debt settlement and debt consolidation to help his clients get free of debt. What is PA Debt Relief? You’ve probably seen the advertisements and TV commercials by Pennsylvania debt settlement agencies trying to persuade people struggling with debt to hire them to settle their debt.  How does this work? You pay the agency to negotiate with your creditors on your behalf to achieve a “settlement” – meaning, you pay something less than what you owe. This is done over time – you pay the agency every month, and the agency disburses payments to your creditors. Are Debt Relief Programs a Good Idea? These agencies often claim that for most people, debt settlement is a better alternative to bankruptcy, and they warn people away from bankruptcy because a bankruptcy filing can remain on one’s credit report for years. While that is true, you need to know that there are downsides to debt settlement as well. Is Debt Settlement Really Worth It? Perhaps – it depends upon different factors like the amount of income you have vs. the amount of debt and how many different creditors you have. Also consider the following… 1. No creditor is required to negotiate with you outside of bankruptcy. Each of your creditors is entitled to be paid in full per the terms of their contracts with you, and creditors have little incentive to negotiate with you unless the law intervenes somehow (such as with Bankruptcy’s automatic stay). Some creditors may be willing to negotiate but will require a lump sum payment of the settled amount, and that’s not how debt settlement agencies work. The agency tries to get all of your creditors to agree to be paid some lesser amount, and then you pay the agency each month and the agency pays your creditors over time. Some creditors may not want to negotiate at all. In that case, you may be settling with and paying some of your creditors, while others remain unpaid. Here’s what happens next: 2. Any creditor can continue collection efforts or sue you while you are in debt settlement. While you are in debt settlement, there is nothing legally preventing any creditor from trying to collect the debt you owe, or suing you. Filing a bankruptcy petition is the only sure way to stop collection efforts and force creditors to the table. The minute you file the “automatic stay” is in place, protecting you from intrusive and annoying collection efforts. If you’ve been sued, the automatic stay provides immediate reprieve from creditor actions to collect such as levy on bank accounts, garnishment of wages, eviction from or foreclosure on your home, and repossession of your vehicle. In other words, if you have several delinquent accounts and opt for debt settlement, you may be paying some creditors while being sued by others. 3. Forgiven debt is taxable to you as income. If the agency is successful in settling your debt, the amount of debt that is forgiven is reported to the IRS by your creditors and that amount is taxable to you as income. This raises your tax bracket, requiring you to pay more tax on all of your income. 4. The debt settlement agency takes their cut first. Yes, you read that right. Even if your debt settlement agency is able to settle all of your debt for you, when you pay the monthly payment to the agency, the agency takes their percentage and then disburses the rest to your creditors. This means your creditors get paid only a small amount each month. While this does not seem problematic on its face, if your debts are in collection chances are that your debt has been sold to or is being administered by a debt collection agency. These agencies do not have the infrastructure to accept and account for small monthly payments over time and so are not willing to wait for payment. Some debt settlement agencies take a step further by calculating their total fee and applying your monthly payments to their fee first, leaving your creditors unpaid for months! While this is prohibited by the Federal Trade Commission, be sure to read the fine print if you opt to work with a debt settlement agency. Debt Consolidation or Bankruptcy? In Some Circumstances, Debt Settlement is a Better Alternative to Bankruptcy There are situations where debt settlement makes sense. For example, if you have only one or two delinquent accounts, or if you have too much equity in your assets to avoid seizure by the bankruptcy Trustee, then it may be in your best interests to negotiate with your creditor(s) to pay off these debts in a lump sum or over time. These negotiations can take place either before or after a creditor files suit against you to collect on the debt, however, the sooner you can get help to negotiate with your creditors the better. Waiting until a creditor files a lawsuit means that you will have to pay legal fees and filing fees to defend in that action. Sometimes the contract you have with a creditor will allow that creditor to add their legal fees to your debt, meaning that you pay the creditor to sue you! Talk about adding insult to injury! Last, waiting until a creditor takes a judgment against you may mean that your wages can be garnished, your bank account may be levied upon, or a lien may be placed on your property. Once you know that a creditor is taking collection efforts against you and perhaps planning to sue you in order to collect on the debt you owe, contact us at (215) 278-4495 as soon as you are able so that we can meet and discuss ways that you can avoid these possibilities. Bankruptcy Pros and Cons You Get a “Fresh Start” Bankruptcy offers you a “fresh start” because your unsecured debt is discharged – meaning, you are no longer responsible for that debt and do not have to pay it. Unsecured debt includes most credit cards, medical debt, personal loans, some forms of taxes, and private student loan debt. Bankruptcy Deals With All of Your Creditors In a Chapter 7 Bankruptcy filing, all of your unsecured debt is discharged and your creditors can no longer try to collect. You can also surrender a home or car you cannot afford in Chapter 7 and be discharged of the underlying debt. Recently we helped a client with little income who had a gambling problem and over $150,000 in credit card debt. The whole credit card debt was wiped out and he got a fresh start. In a Chapter 13 Bankruptcy filing, all of your debt is addressed through your Chapter 13 plan. The Chapter 13 plan is a 3 or 5 year payment plan to pay off any mortgage or car payment arrears and perhaps some of your unsecured debt through affordable monthly payments to the Trustee.  Unlike debt settlement of debt consolidation, all of your creditors are forced to accept your plan, and at the end of the plan, you are discharged of any remaining unsecured debt. Recently we helped a client who owed over $50,000 in credit card and collection agency debt. Her Chapter 13 plan of reorganization reduced her monthly payments to $280 per month for 36 months with the remaining balance being wiped out when she completed her plan. Your Credit Score Will Improve After the Bankruptcy While it is true that the fact of your bankruptcy filing will remain on your credit report up to ten years, how quickly you repair your credit after filing for bankruptcy relief is determined by your payment history from then on, and that, of course, is up to you and how you manage your debts after your case closes. Many of our clients have reported that their credit score improved shortly after their bankruptcy case closed. This happens because their unsecured debt was discharged and their debt-to-income ratio improved so dramatically. How does a debt relief program affect your credit? Consider that leaving unpaid debts out there, or even settling with creditors for a lower amount, also has a negative effect on your credit rating. How long does settled debt stay on credit? Perhaps as long as a bankruptcy does, if you do not replace that old negative information with new, positive information like accounts kept current. Can I get a credit card after debt settlement? Yes, but the interest rate will be high because credit card companies would have seen the settled debts on your credit report, and would consider you high-risk. The same applies to bankruptcy, however. Your best bet is to get a credit card after debt settlement or after filing bankruptcy, and pay it off every month so that there is no revolving debt subject to that high interest rate. You will help build your credit back up this way, too. In Bankruptcy, You Get Financial Management Training The mandatory credit counseling and financial management training you take as part of your bankruptcy case should assist you in managing your finances, in tandem with the “fresh start.” In Bankruptcy, You Have No Tax Liability for Discharged Debt Unlike debt settlement or debt consolidation, you will pay no income tax on debt that is discharged in Chapter 7 or Chapter 13 bankruptcy. Please take note of this important caveat: the information on this page is not legal advice, nor is it intended to be legal advice. The purpose of this page is merely to introduce you to some basic concepts so that you can have an informed discussion about your options when you attend your consultation. If you need a Philadelphia bankruptcy attorney, give us a call. We look forward to meeting with you and helping you get free of bills.   The post Need Debt Settlement or Debt Consolidation? Bankruptcy vs Debt Relief appeared first on David M. Offen, Attorney at Law.

If you are a child support obligor (meaning, you pay child support) and you are reading this because you are wondering, does bankruptcy clear back-owed child support, the simple answer is no.  But bankruptcy might be a solution for you in other ways, by discharging and/or reorganizing other debt and making your monthly child support payment more affordable. If you are a child support obligee (meaning, you receive child support) and you are wondering whether child support received is considered income for bankruptcy purposes, it probably is. Speak with an experienced local bankruptcy attorney about this. If you need a bankruptcy attorney in Philadelphia or the surrounding areas, contact our office today – your initial consultation is free of charge! Bankruptcy and Child Support Arrears For reasons of public policy, Congress provided an exemption for child support arrears (i.e., accumulated missed payments) in bankruptcy, categorizing child support as a “priority debt” that cannot be discharged. As a priority debt, child support arrears are paid before other general unsecured debts like credit card debt and medical debt. Child support arrears also are paid before most other priority debts – including back-owed taxes. Can interest on child support be discharged? No. If interest accrues on child support arrears in your state. it must be paid either through your Chapter 13 plan, or outside your Chapter 7 bankruptcy case. Chapter 7 Bankruptcy and Child Support Payments While the “automatic stay” stops most creditors from attempting to collect a debt you owe, Chapter 7 does not “stay” or stop the child support obligation because an obligor’s post-filing income is not part of the bankruptcy estate. So, after filing a Chapter 7 bankruptcy petition, an obligor must continue to pay child support and is still obligated to pay any child support arrears. Chapter 7 does not stay any legal proceeding to either establish, modify, or collect child support – meaning, a child support obligee can file a motion to modify or to enforce a child support order without first obtaining permission from the bankruptcy court. Child Support Modification and Chapter 13 Bankruptcy Chapter 13 Bankruptcy will not itself stop child support – neither the obligation to make continuing payments post-petition (after filing bankruptcy) nor the obligation to pay pre-petition (before filing) arrears. In other words, if an obligor files a Chapter 13 petition, he or she must continue to make child support payments and is still liable for child support arrears. However, he or she can provide for payment of any pre-petition child support arrears over a 3- or 5-year plan. Chapter 13 can help an obligor get caught up with child support, and get his or her other unsecured debt discharged once the Chapter 13 plan is complete. If an obligor files Chapter 13 bankruptcy and so has an additional monthly payment in the form of a plan payment to make, he or she might be eligible for a modification (decrease) in child support based on a significant change in circumstances. If a modification is granted, however, this will not change the amount in arrears that the obligor must pay, with interest, through his or her Chapter 13 plan. Unlike Chapter 7, in Chapter 13 the obligor’s post-filing income is considered part of the bankruptcy estate. So if an obligee wants an increase in child support or wants to initiate a collection action to collect any past-due post-petition child support, he or she must file a motion for relief from the automatic stay with the bankruptcy court and get the court’s permission to do so. What Can I do about Child Support Debt? You can’t discharge child support debt in bankruptcy. But getting other debt discharged in bankruptcy will free up more of your income so that you can more easily afford to pay child support. One unfortunate side effect of a bankruptcy discharge for child support obligors is that, if the obligor has less debt and therefore less or fewer monthly bills to pay after his or her bankruptcy, the obligee might file a motion for modification (increase) of child support because the obligor’s financial circumstances have significantly improved. Family law is state law and varies from state-to-state, and the interaction of family law with bankruptcy law can be very nuanced. Be sure to discuss your bankruptcy options and all of the possible effects of bankruptcy on your finances, including your child support obligation, with an experienced local bankruptcy attorney prior to filing.   The post Does Bankruptcy Clear Child Support? appeared first on David M. Offen, Attorney at Law.

Like child support in bankruptcy, alimony is a domestic support obligation that cannot be discharged in bankruptcy. However, filing Chapter 7 or Chapter 13 bankruptcy might help an alimony obligor (payor) get other debt discharged and make the alimony payment more affordable. How obligors are treated when they fall behind in paying alimony differs state-to-state.  In many states, an alimony obligor who defaults on his or her alimony payment will be charged interest as the arrears pile up. A family court judge could order an obligor’s wages garnished, an obligor’s drivers license suspended, or even sentence an obligor to prison. Domestic Support Obligations in Bankruptcy In the Bankruptcy Code a “domestic support obligation” is a financial obligation “in the nature of alimony, maintenance, or support” ordered to be paid by the court. What does “in the nature of” mean? Congress used that language in recognition of the fact that when parties divorce, certain aspects of their property settlement agreement may be intended for support if not described that way expressly. A bankruptcy judge will always look at the property settlement agreement carefully to determine whether any of the arrangements are really “in the nature of support” rather than simply division of assets. Generally, if an obligation is necessary to help the obligee (recipient) pay for basic necessities, it will qualify as support. The bankruptcy judge also looks to whether: The obligation is labelled as “support” in the divorce judgment; The obligation was placed in a section of the judgment labelled “support”; The obligation terminates when the obligee dies or remarries; The obligation terminates when the obligor remarries; The obligation is payable over time; There is a significant disparity in the parties’ relative incomes; The obligation looks like it makes up that disparity; There is no other mention of support elsewhere in the divorce judgment. Any division of marital property that cannot be categorized as “in the nature of support” using this criteria may be dischargeable in bankruptcy. There are two other criteria for finding that a debt is a non-dischargeable domestic support obligation: The debt must be owed to a former spouse, and The debt must be incurred in connection with a court order, such as a divorce judgment or property settlement agreement. Property Settlement Agreements can be used to set forth distribution of marital assets as well as responsibility for marital debts. While most property settlements are not dischargeable in Chapter 7, these can be discharged in Chapter 13: Hold Harmless Agreements Cash in Lieu of Other Assets Hold Harmless Agreements and Chapter 13 Bankruptcy If credit card debt was incurred by one or both spouses to benefit their family, either spouse might take responsibility for it in their property settlement agreement. While that agreement is enforceable against both spouses, it is not enforceable against the credit card company – the credit card company can try to collect from either spouse, regardless of their agreement. Spouses in this situation often execute a Hold Harmless Agreement, which provides that if the spouse taking responsibility for the debt does not pay it, and the credit card company collects from the other spouse, the spouse who was supposed to pay must reimburse the spouse who paid. This reimbursement debt is not dischargeable in Chapter 7 but may be dischargeable in Chapter 13. If you owe this type of debt, talk to an experienced bankruptcy attorney about whether you can have it discharged. Cash in Lieu of Other Assets and Chapter 13 Bankruptcy It is common for couples to offer cash in lieu of other assets, especially when the marital home is their only major asset. In that case, if the custodial parent wants to stay in the home with the children, he or she might agree to pay their ex so much per month until they pay off half of the value of the home. This kind of debt is not dischargeable in Chapter 7 bankruptcy, but maybe dischargeable in Chapter 13 bankruptcy. If you have this type of debt, contact a local bankruptcy attorney to discuss your case. Chapter 13 Bankruptcy and Alimony Arrears Alimony arrears is a “priority debt” that must be paid before any general unsecured debt is paid. An obligor can stretch out payment of alimony arrears over his or her 3 to 5 year Chapter 13 plan. Debt arising under Hold Harmless Agreements and Cash in Lieu of Other Assets provisions in a property settlement agreement are treated as general unsecured debt and are dischargeable. Whether those debts are paid or partially paid is determined by the amount of income the debtor/obligor has to fund his or her Chapter 13 plan. If he or she has only enough income to pay alimony arrears over five years, then the rest of the general unsecured debt is not paid at all and is discharged. Bankruptcy Can Help Struggling Child Support or Alimony Obligors While bankruptcy cannot help an obligor by discharging alimony arrears or changing the amount of alimony paid, both Chapter 7 and Chapter 13 bankruptcy can help an obligor by eliminating other debt. Chapter 13 can be used by obligors to eliminate certain financial obligations under a property settlement agreement or to establish a reasonable payment plan of alimony arrears over between three to five years. Talk with an experienced local bankruptcy attorney about whether there are any aspects of your property settlement agreement that are not “in the nature of” support and therefore eligible for discharge in bankruptcy. Even if you must pay support and repay support arrears, elimination of your other debt might improve your financial situation drastically. If you need a Philadelphia bankruptcy attorney, call us today. Your initial consultation is free of charge! The post Is Alimony Dischargeable in Bankruptcy? appeared first on David M. Offen, Attorney at Law.

It's almost impossible to get rid of student loan debt when filing for bankruptcy, but help may be on the wayFrom: Business InsiderBy: Mike Brown,LendED Uhttps://www.businessinsider.com/loan-debt-student-borrowers-bankrupcy-relief-act-2019-11

Bankruptcy is sometimes the only option for dealing with debt that is too burdensome to be paid within a reasonable amount of time. And while there are almost always certain consequences that can come along with bankruptcy, there are certain ages at which the debtor will be more impacted by these consequences than others. Whether […] The post When Is the Worst Age to File for Bankruptcy in Pennsylvania? appeared first on .

"A lawsuit charging that the city sold 400 taxi medallions under false pretenses about their worth and then breached its contract by letting ride-hail operators enter the market and undermine medallion values has been certified as a class-action suit.The suit, brought by five medallion owners and filed in early October, could now apply to more than 150 medallion owners, according to Daniel Ackman, one of the lawyers for the plaintiffs. The decision in State Supreme Court in Queens County was delivered late last week.The disputed medallions were bought at three auctions held by the Taxi and Limousine Commission in 2013 and early 2014—when prices were still astronomically high and Uber had barely dented the market. The sales netted the city $360 million. Mystery buyer snaps up taxi medallions as prices fall further Judge rules on taxi industry lawsuit: Compete with Uber or die Cab drivers and owners get caught in the headlights of a troubled taxi lenderAckman is asking for the city to take back the medallions from the auction winners and return the $360 million they paid for them. The medallions' prices ranged between $803,000 and $965,000 for independent medallions and $1.025 million and $1.259 million for corporate medallions, according to the suit.Medallions are currently selling at private auctions for less than $150,000 apiece."Not once before the Auctions did the City warn prospective buyers that it was about to radically change the economics of the taxi industry by allowing a massive influx of new for-hire vehicles—principally cars hailed through electronic apps—that would decimate the value of the yellow taxi medallions," attorneys write in the suit. "Nor did the TLC disclose that it would license the e-hail taxis as “black cars” despite the fact that they did not qualify for these licenses. Instead, Defendants omitted this information which, had it been known, would have dissuaded potential Auction bidders."Both the city and the plaintiffs have asked the court for summary judgment.The city's law department and the Taxi and Limousine Commission did not respond immediately to a request for comment.But in a related suit brought by Ackman that is currently before the same court, the city has argued that in its contracts with the medallion owners it made no claims "as to the present or future value of a medallion, or the present or future application of TLC rules."The city also noted that the contracts did not imply an "obligation to protect [the medallion purchasers] from competition from app-based companies such as Uber, when their contracts explicitly said otherwise, and when Uber was already operating in the market at the time of their purchases."A private-equity firm buying up taxi medallions could take on Lyft and UberThe city and the TLC have a good record defending themselves from the claims of medallion owners who blame them for the plunge in medallion values. In one noted case in Queens Supreme Court in 2015, a judge ruled that an e-hail was a prearranged ride--essentially what black car services have always provided--and did not conflict with medallion owners' street-hail privileges.Ackman maintains that his case is narrower than earlier suits, applying only to medallion owners who bought the assets directly from the city, and centers on the contractual relationship between them. It is also coming at a time when there is wider recognition of the hardships medallion owners have faced--highlighted by multiple suicides--and more interest among elected officials in taking steps to help them.A favorable ruling "could have implications beyond this case," Ackman said. "It's possible if a judge says, 'Yes, the city's conduct destroyed the value of the medallions,' that could spur other actions by the city or the state.""

   In a rare decision on the status of IRS claims based on the 'shared responsibility payment (SRP)' tax due to failing to carry health insurance Judge Hursh found that the IRS was not entitled to priority status for that portion of their claim.  The case involved an objection by the chapter 13 debtor to the priority claim of the IRS for 2017 and 2018 taxes, of which $917 was attributed to the SRP tax in 2017, and $60 for 2018.  The IRS asserted that the tax was in the nature of an excise tax, and therefore entitled to priority status.  The Debtors disagreed.  The tax is based on 26 U.S.C. §5000A(a) which requires individuals to maintain minimum essential health coverage each month after 2013, and sets a penalty with respect to such failure.  Such penalty is called the 'Shared Responsibility Payment' and is included in the taxpayer's return such year as insurance was not obtained.  §5000A(b)(1) and (2).     §507(a)(8)(E)(i) and (ii) of the bankruptcy code provides that a claim is entitled to priority if it is attributable to 'an excise tax on a transaction occurring before the bankruptcy for which a return is due less than three years prior to filing the bankruptcy, or if no return is due for a transaction occurring with three years of filing the bankruptcy.  The IRS cited Nat'l Fed'n of Indep. Bus., et al. v. Sebelius1 in support of it's position that the SRP penalty is an excise tax.  However, the court in Sebelius only found that the payment may reasonably be characterized as a tax.  The Ninth Circuit has generally defined an excise tax as one imposed on the performance of an act or the enjoyment of a privilege.2  The test asserted by the 9th Circuit is whether the payment is (1) an involuntary pecuniary burden laid upon an individual or property; 2) imposed by or under the authority of the legislature; 3) for public purposes, including the purposes of defraying expenses of government or undertakings authorized by it; and 4) under the police or taxing power of the state.  Judge Hursh found that the SRP penalty satisfied these requirements.  The next question is whether the SRP penalty is a tax on a 'transaction.'  §507(a)(8)(E)(i) and (ii) require the excise tax to be imposed 'on a transaction' occurring prepetition and within 3 years of the bankruptcy filing to qualify for priority status.  The SRB arises out of a taxpayers choice not to do something (maintain health insurance), thus is based on an omission rather than an act.  The Ninth Circuit previously determined that an employers failure to purchase workers' compensation insurance or apply for self-insured status does not satisfy the transaction requirement of 11 U.S.C. 507(a)(8)(E)(i) and (ii).3  Based on precedent in the 9th Circuit, Judge Hursh found that a tax based on an omission does not qualify for priority status under §507(a)(8)(E)(i) and (ii).   The IRS makes an alternative argument that the SRP penalty should qualify as a tax measured by income under §507(a)(8).  The court rejected this argument, noting that form 1040 indicates that the SRP is not an income tax.  Form 1040 includes a subsection on income tax, lines 7-22, before transitioning to a section on tax and credits (lines 38-56).  Line 43 computes taxable income.  The SRP penalty does not appear until line 61 under the subsection 'other taxes.'  Thus the tax also fails to qualify as priority under §507(a)(8).  The SRP penalty was found to be a nonpriority unsecured claim.1 567 U.S. 519, 569, 132 S. Ct. 2566, 183 L. Ed. 2d 450 (2012).↩2 U.S. v. 432 Mastercases of Cigarettes, More or Less, 448 F.3d 1168, 1185 (9th Cir. 2006).↩3 In re George, 361 F.3d 1157, 1163 (9th Cir. 2004).↩Michael BarnettMichael Barnett, PA506 N Armenia Ave.Tampa, FL 33609-1703813 870-3100https://hillsboroughbankruptcy.com

Sometimes declaring bankruptcy is the only way to deal with crippling debt, but some people may wonder which stage in their life would be best for declaring bankruptcy. Bankruptcy, although it can be a solution, does have some consequences that can affect personal finances, such as a lower credit score. While there is no ideal […] The post When Is the Best Age to File for Bankruptcy in Pennsylvania? appeared first on .