In short, like many areas of the law, it depends. You are responsible for repaying these overpayments. However, if you file bankruptcy and include that debt on the bankruptcy and the government does not object to the discharge of the debt then it may be wiped out. As with any other unsecured creditor they will of course have a set amount of time to object to the discharge, but after that time is up then that debt will go away just like the others. Of course, if the bankruptcy Trustee looks deeper into your case and finds you received these overpayments fraudulently, then there is a possibility those overpayments will not be discharged.
Overpayment can happen because of something like you were out of work and receiving disability payments from the Social Security Administration (SSA) and go back to work sooner than expected and try and inform the SSA but they do not respond and keep paying you. Technically when they discover this, they are supposed to collect back from you the amount you were overpaid. But if you were to file bankruptcy and they did not object to the discharge, then they cannot collect that money from you.
https://www.duncanlawonline.com/wp-content/uploads/2015/01/duncanlawlogo.png00Damon Duncanhttps://www.duncanlawonline.com/wp-content/uploads/2015/01/duncanlawlogo.pngDamon Duncan2012-03-20 09:00:072012-03-20 09:00:07Can Social Security Overpayments Be Wiped Out in Bankruptcy?
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You sure can! It may be a bit more difficult to find a place that will rent to you than it otherwise would be, but be patient. Depending on the rental agency, you may be required to pay a higher security deposit or even be required to have a co-signer. It really depends on the rental agency.
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With limited exceptions, most Americans are required to file tax returns with the Internal Revenue Service, and if you work or live in North Carolina, the North Carolina Department of Revenue. If you do not file and pay your taxes on time each year, you will incur penalties and interest on the amount of money you owe the tax entity. Initially, the tax entity will likely work with you to establish a payment plan for the taxes you owe. However, if you make no effort to contact and work with the taxing entity, do not be surprised if a lien is placed against all of the property you own or your wages are garnished through a tax levy.
First, let’s discuss the difference between a tax lien and a tax levy.
A tax lien is a security interest against your property. The IRS records a tax lien with the clerk of court in the county where you live. The lien is on all real and personal property you own including your house, car, bank accounts, clothing, household goods, etc. As a result, you will be unable to sell your home, car or other possessions without first obtaining a release from the IRS. In other words, the IRS will now allow you to sell your house and make a profit without being paid at least a portion of the debt that is owed to them.
A tax levy is a legal seizure of your property to satisfy a tax debt. With a tax levy, the IRS can seize and sell your house, car or other assets. They can also seize your bank accounts, retirement accounts, state tax refunds and other assets. They can also garnish wages.
By filing bankruptcy, you may be able to eliminate some of the tax debt and stop a wage garnishment while in an active bankruptcy. If you file a Chapter 7 bankruptcy to eliminate credit card, medical bill and other consumer debt, the wage garnishment will stop while you are in the bankruptcy but may resume once the bankruptcy is complete and if taxes are still owed. In certain situations, amounts owed on taxes that were due more than three year ago may be eliminated in a Chapter 7 bankruptcy. Unfortunately, if a tax lien is placed for the older tax years the tax debt may be eliminated BUT the lien is still in effect. As a result, you may still be required to pay the taxes if you sell your house or car in the future. As a result, you should contact the IRS and State of North Carolina and request a copy of any tax liens prior to filing bankruptcy.
You may want to consider a Chapter 13 bankruptcy to restructure your tax debt and pay the taxes over the course of three to five years. If you decide to file bankruptcy to restructure your tax debt, it is very important you determine whether there is a tax lien before the bankruptcy is filed. The existence of liens will impact the amount owed in the bankruptcy and will directly impact the monthly payments in a Chapter 13 repayment plan.
Tax liens and tax levies are the IRS’ and State’s way of ensuring taxes are paid by the majority of their citizens. If taxes are owed, it is best to work with the IRS and state proactively to avoid tax liens and levies. However, should you find yourself with a lien or levy, you may want to consider bankruptcy to restructure the payments.
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If you have filed or will be filing a workers’ compensation or personal injury claim, be sure to tell your bankruptcy attorney so your potential settlement can be listed and protected in the bankruptcy. If it is not listed and protected in your bankruptcy, you could lose the money received in the settlement.
If you have lived in North Carolina for at least two consecutive years, North Carolina General Statutes allow the settlement, regardless of the dollar amount received, to be protected in bankruptcy. If you are required to use exemptions from another state or federal exemptions because you have not met the residency requirement as outlined in the bankruptcy code, you may not be able to fully protect the settlement in bankruptcy. The exemptions vary by state, therefore, it is very important to discuss the potential settlement with your bankruptcy attorney before filing bankruptcy.
If you are in a Chapter 13 bankruptcy, it is necessary for you to work with your bankruptcy attorney to obtain the bankruptcy court’s permission to settle your workers’ compensation or personal injury case. This is necessary even when you listed the potential settlement on your original bankruptcy filing. By filing the motion and obtaining an order from the bankruptcy court to settle the claim, the total settlement is protected from the bankruptcy Trustee and your creditors assuming you are able to use North Carolina exemptions. Therefore, the settlement is yours to assist you and your family with living expenses or to cover future medical expenses you may incur due to your injury.
If you file a Chapter 7 bankruptcy, you may or may not be required to file a motion to settle the injury claim. If the settlement is offered while you are in an active Chapter 7, you should contact your bankruptcy attorney to determine if it will be necessary to file a motion with the court. If the settlement occurs after your Chapter 7 bankruptcy is discharged and final decree is issued, it is not necessary to obtain the bankruptcy court’s permission to settle the claim.
As previously mentioned, it is extremely important to speak with your bankruptcy attorney about your potential workers’ compensation or personal injury settlement prior to filing your bankruptcy. If the settlement is not protected correctly in the bankruptcy, you could lose your settlement.
https://www.duncanlawonline.com/wp-content/uploads/2015/01/duncanlawlogo.png00Damon Duncanhttps://www.duncanlawonline.com/wp-content/uploads/2015/01/duncanlawlogo.pngDamon Duncan2012-01-18 09:00:142015-04-13 00:03:25Must I Get the Court’s Permission To Settle A Workers’ Comp or Personal Injury Claim While In Bankruptcy?
Before 2005 it used to be fairly easy and cheap to file bankruptcy. When the bankruptcy laws changed in 2005 the process for filing for bankruptcy became more complicated. Due to the complications of cases fees across the country for filing bankruptcy also went up.
One of the main things that changed is the requirement to pass the “means test” in order to be able to qualify to file a Chapter 7 bankruptcy. Generally speaking, if your average monthly income is less than the states median income, then you will pass the means test. If your average monthly income is more than the states median income, then there are a few other things that are taken into account to determine if you will pass or not. In this case, the means test looks into your income, expenses and the total amount of debt you owe. If that determines you have enough income to pay a certain amount to those creditors each month, then you will fail the means test. This means that you will not qualify to file a Chapter 7 bankruptcy but, instead, you can seek bankruptcy protection under a Chapter 13 bankruptcy.
Another thing that the new laws now require is the debtors have to provide proof of income. This means that they must provide their tax returns for the previous year to the trustee. If the previous years’ taxes have not been filed, they must get filed before the bankruptcy filing can proceed. This goes for both Chapter 7 bankruptcies and Chapter 13 bankruptcies.
The new laws also now require people who file bankruptcy take a credit counseling course and a financial management course. These must be through government-approved agencies, so make sure to check with your attorney to find out which ones are government-approved. If these companies suggest a repayment plan or other options, you do not have to follow them. For bankruptcy purposes you only have to be able to show that you have taken the course. A lot of debtors feel that these courses help and give them good information.
These are a few of the main changes that accompanied the bankruptcy law changes in 2005.
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If you are behind on your house payments and have decided you no longer wish to keep the house, you may be looking at your options including a short-sale, deed in lieu of foreclosure and bankruptcy. For this blog, we will specifically look at the short-sale. A short-sale occurs when real property (house, land, etc.) is sold to a third-party for an amount less than what is owed on the property. The short-sale is a way of transferring the property out of the homeowner’s name, but it does not necessarily eliminate the homeowner’s responsibility to pay the balance on the loan, known as the deficiency balance, after the sale. As a result, the homeowner may be making payments on a house he no longer owns. The short-sale will have a negative impact on the homeowners’ credit, since it will show the house was sold for an amount less than what was owed on the property, however, it will not be considered as negatively as the foreclosure.
It is best to illustrate what can occur in a short-sale with examples. The examples have been simplified and do not reflect any real estate broker fees or other real estate closing costs and fees. These examples also assume the house is the homeowners’ primary residence.
Example One
There is a $150,000 mortgage loan owed on the house, but in today’s market the house will only sell for $130,000. You may approach the mortgage company to determine if they would accept $130,000 short-sale for the property. In some cases, this may be acceptable to the mortgage company, since they would not be required to go through expensive foreclosure process. If there is only one mortgage loan, the short-sale can be a viable option. However, keep in mind that although the mortgage company agrees to the reduced amount so the house may be sold, it does not eliminate their right to pursue the homeowner for the deficiency balance on the loan, in this example $20,000.
$130,000 Offer on the Property
$150,000 Mortgage Lien
($ 20,000)Deficiency Balance
Example Two
There is a first mortgage for $125,000, Home Equity Line of Credit (HELOC) for $30,000 and a Homeowners’ Association Lien of $1,000 or a total of $156,000 owed on the property. Consistent with Example One, the offer on the house is for $130,000. In order to proceed with the short-sale, the homeowners must get all three lienholders – first mortgage, HELOC and Homeowners’ Association – to agree to accept the $130,000 offer. Since the first mortgage will most likely insist on being paid in full, it is unlikely they will object to the $130,000 offer. On the other hand, the HELOC and Homeowners’ Association must both agree to share the remaining $5,000 and agree to release the liens on the property before the short-sale can occur. Also, just because the HELOC might agree to accept the short-sale, it does not preclude them from pursuing collection activities against the homeowners for the balance owed on the lien.
$130,000 Offer on the Property
$125,000 First Mortgage Lien
$ 30,000 HELOC Lien
$ 1,000 Homeowners’ Association Lien
($26,000)Deficiency Balance
As mentioned, it was assumed the house being sold in the two examples was the homeowners’ primary residence. As a result, there is no tax implication against the homeowners, since The Mortgage Forgiveness Debt Relief Act of 2007 allows the homeowners to exclude the deficiency balance, also known as “forgiven debt”, on their primary residence. On the other hand, if the property being sold is an investment property or any other property that was not the homeowners’ primary residence, the homeowners can be taxed on the deficiency balance or forgiven debt, since it is treated as income for tax purposes.
The short-sale is a viable option for many homeowners, however, it is important to be fully informed of the impact it may have on the homeowners’ financial position in advance of completing the sale. Request the mortgage company or mortgage companies sign a waiver stating they will not pursue a deficiency balance on the property. In many cases, the mortgage company will not agree to sign a waiver relinquishing their right to pursue collection activities, but it does not hurt to make a request. In addition, be prepared to make payments on the deficiency balance after the short-sale or consider filing bankruptcy to eliminate the deficiency balance and other debts.
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If before filing for bankruptcy you had automatic drafts from your bank accounts to pay other bills then this may stop when you file the bankruptcy. It’s obviously important to know that these automatic drafts may stop because we want to make sure you do not get behind on things like house payments, car payments and other important bills you have.
Creditors may stop the automatic draft(s) because they want to make sure they don’t violate the automatic stay enacted by filing the bankruptcy. They don’t want to accidentally charge you money that has been wiped out in the bankruptcy. However, even if you don’t include a debt in your bankruptcy they may still stop the automatic draft(s) for precautionary measures.
However, you may not be able to get automatic drafts set up right away after filing the bankruptcy. Be aware of this and be sure to plan accordingly.
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In short, like many areas of the law, it depends. You are responsible for repaying these overpayments. However, if you file bankruptcy and include that debt on the bankruptcy and the government does not object to the discharge of the debt then it may be wiped out. As with any other unsecured creditor they will of course have a set amount of time to object to the discharge, but after that time is up then that debt will go away just like the others. Of course, if the bankruptcy Trustee looks deeper into your case and finds you received these overpayments fraudulently, then there is a possibility those overpayments will not be discharged.
