Guide to Wage Garnishment, Tax Liens, and Releasing Penalties

[tobee43]

throughout my months here on this GREAT forum, it has struck me that one of the deepest fears associated with the filing of a bankruptcy; whether it be a chapter 7 or 13, wage garnishment, tax liens have been of the utmost forerunner of priory concerns to many. i know for us personally, we were scared to death, since in our state wage garnishments were happening, even without "proper" or legal notification. it was a true concern for us.

i had come across this site, as i had done some research on the situation on some of these questions:

Is it possible to get released from a wage garnishment?
Can I get a tax lien released?


i'm certainly not pushing this site...just some hopefully helpful insight to a few of the questions i know we had.

http://www.debthelp.com/guides/taxes/penalties-releases-garnishment.html

[Srpiccollo]

Bankruptcy in 2004 and now deed in leui. What about the 1099?

Ok I am new here and hope i am doing this correct. I have questions and am trying to get some help. This is my situation: I filed for chapter 7 in 2004 and never signed a reaffirm but kept my home at the time and my car. Then a few year later I got married and that home became a vacation home for us. At the time of the bankruptcy it was my primary home. Anyhow I worked out a deed in leui with the mortgage company for the home and everything is done with them now. I am concerned about the 1099 I was told by a friend they will send me. Can they still give it to me even if this property was included on my chapter 7? Or will I get stuck with the 1099? After I got married the property in the capter 7 was no longer my primary residence. I live in Michigan if that matters. I also can not ask my bankruptcy AT&T. Because she stopped practicing the year after I did the bankruptcy. Thanks for any info you can give.

[tobee43]

good afternoon srpiccollo....i know you did a blog with the same question....however, once again, if anyone knows different please chime in...however, as far as my understanding once you have done the deed in lieu you are fine....in as much as the bank agreed to accept it.

had you lived in a deficiency state....an example...in new jersey if you owned the bank 400k and they sold your house for 200k they can go after you for the 200k shortage or attempt to 1099c you for the "gain" as the bank would like to make it appear. however, if you listed the mortgage and it was discharged and did a deed in lieu what reason would the bank have to issue the 1099....

[Srpiccollo]

Thanks for the response. The mortgage company told me I would get a 1099 for $30,000 because that was how much I owed to them still on the property. The person I was dealing with at the mortgage company knew nothing about bankruptcy per her own admition. I was told by her she thought I still would have the 1099 no matter what. They told me to call my bankruptcy lawyer to make sure. Since i have no way to contact her I tried to hire someone local to help mr. They refered me to a tax person. I keep getting the run around and I am not sure who go ask. I don't mind paying someone for advice but I want to make sure it is the person is the person I need. Thanks in advance again for any help.

[tobee43]

do you have a copy of your bk discharge??? i'm certain you must along with the docket number of your bk case.

i would GO INTO the bank...do not do this by phone with the bank...bring down a copy of your discharge bankruptcy ......if you listed your mortgage on the bk and did not reaffirm...and gave them a deed in lieu this makes no sense whatsoever.....the deed is the transfer of the property to the bank so why or how could they think you owe them....there must be more to the story here.

i must suggest.....you need to get a copy of bk...a tax person...NO not yet....of course they are not bk experts, you need an atty first and you also need to review your bk and make certain the mortgage was included on the petition.

[URODOC]

I am not quite sure why you would post links on this forum that end up giving formulaic answers to obvious questions. I assume you get paid for the "hits" ?
I thought posters would give some insight into their problems and how they solved them or ask for help.
I'm new to the forum, so maybe I am confused.
Just some insight to visitors looking for advice on wage garnishment; the IRS does not have to give notice. The revenue officer might also not answer phone calls from your CPA or other POA. Sometimes bankruptcy might be the only way to get it stayed, especially if they have garnished 85% of your wages which they can and will do even if you have been in contact/negotiation with them.

[tobee43]

I am not quite sure why you would post links on this forum that end up giving formulaic answers to obvious questions. I assume you get paid for the "hits" ?
I thought posters would give some insight into their problems and how they solved them or ask for help.
I'm new to the forum, so maybe I am confused.
Just some insight to visitors looking for advice on wage garnishment; the IRS does not have to give notice. The revenue officer might also not answer phone calls from your CPA or other POA. Sometimes bankruptcy might be the only way to get it stayed, especially if they have garnished 85% of your wages which they can and will do even if you have been in contact/negotiation with them.

I am not quite sure why you would post links on this forum that end up giving formulaic answers to obvious questions. I assume you get paid for the "hits" ?
I thought posters would give some insight into their problems and how they solved them or ask for help.
I'm new to the forum, so maybe I am confused.
Just some insight to visitors looking for advice on wage garnishment; the IRS does not have to give notice. The revenue officer might also not answer phone calls from your CPA or other POA. Sometimes bankruptcy might be the only way to get it stayed, especially if they have garnished 85% of your wages which they can and will do even if you have been in contact/negotiation with them.

many people on this forum use links to "help" as oppose to type out information, if the information is applicable to the subject matter...LOL...nope i personally don't get paid and many times even link an applicable irs site.......wage garnishments are not necessarily only imposed by the irs...also since you know and have information in reference to garnishing wages.....85%....is unheard of and as far as i know not legal...can you please clarify that information??

not all answers are as obvious to some as others and it's best to be at times elementary as opposed to complex. just my opinion and you know what they say about those

[URODOC]

Thanks for clarifying the link situation.
As far as what would be considered "legal" with regard to percentage of wages garnished it is probably not relevant, especially with regard to the IRS. I am aware that one's wages are usually attached for 25% by a normal creditor. The IRS calculates what you can live on with minimum wage standards, thus, a high income earner like myself would lose a larger percentage of their wages, relatively speaking, than the average person. In re-calculating, they took actually 95% leaving me $199/wk!

[tobee43]

Thanks for clarifying the link situation.
As far as what would be considered "legal" with regard to percentage of wages garnished it is probably not relevant, especially with regard to the IRS. I am aware that one's wages are usually attached for 25% by a normal creditor. The IRS calculates what you can live on with minimum wage standards, thus, a high income earner like myself would lose a larger percentage of their wages, relatively speaking, than the average person. In re-calculating, they took actually 95% leaving me $199/wk!

i actually know someone that was paying the irs 20k monthly....of course his salary was over 60k monthly.....30k in child support.. (i want to be one of his kids!)......the irs was forever seizing his bank account!....he'd go out of country on business and the irs would wipe out his child support payments......what a nightmare.

he, of course, apparently,was not an average person...but the irs wanted him to live on nothing...

[Eniko]

Hi.
I can't post yet, therefore I am writing out everything.

"IRS Form 1099-A and 1099-C After Bankruptcy, What Do I Do?

I have written on this topic before (here), but with tax time approaching and 2010 being a near record year for bankruptcy and foreclosure, it is time to re-visit the tax reporting and implications related to mortgage debt after bankruptcy.

Let’s set the stage: you (the debtor) received a bankruptcy discharge in 2010 and as part of that process surrendered your home (allowed it to foreclose or short sold). The mortgage lender, following IRS guidelines, may send you 2 forms related to that event.

The first form is the 1099-A. The 1099-A records that a sale of real estate occurred (a potentially taxable event). From your perspective, the 1099-A is used to determine if there is a taxable gain or loss. Before you get your hopes up, you do not get to write off the loss from a foreclosure or other abandonment of real estate. At the end of the day, there is nothing you need to do with a 1099-A relative to your taxes if the 1099-A is from a foreclosure and you received a bankruptcy discharge. The 1099-A is simply a reporting document letting the IRS know that a disposition of real estate occurred. To find out more, review IRS Publications 544 and 4681, but no action is required on your part.
The more important form you may receive is the 1099-C Cancellation of Debt. The 1099-C records when a bank, truly, forgives a debt (writes off with no intent to collect; don’t confuse debt forgiveness with “charge off” on your credit report, they are not the same thing). In the normal course, the IRS treats forgiven debt as income. In this real estate climate, it is exceedingly rare that a bank’s loan is fully paid from a foreclosure sale meaning that there is a deficiency balance still owed (the difference between what you owe and the proceeds received from the sale). If you received your bankruptcy discharge, you are not liable for that deficiency balance and therefore not liable to pay income tax on the deficiency. However, the bank may still issue the 1099-C. If you receive a 1099-C after bankruptcy, you MUST complete IRS Form 982 with your tax filing. If you received your bankruptcy discharge, you would check box 1(a) on Form 982 and send it in with your tax filing, and that will be the end of it. If you don’t, you will be hearing from the IRS and have several weeks of headache trying to sort out the issue.
So, in the normal circumstance, no action is required on a 1099-A when the property was foreclosed or otherwise abandoned. However, if you receive a 1099-C you need to file IRS form 982 to show the IRS that you don’t owe tax on the deficiency."


methnerlaw. (this is the website)

[jacko]

I just received my 1099-A from my mortgage firm in regards to my foreclosure. Have not filed BK yet. Will I need to file a 982 form with my 1040 ez one?

Hi.
I can't post yet, therefore I am writing out everything.

"IRS Form 1099-A and 1099-C After Bankruptcy, What Do I Do?

I have written on this topic before (here), but with tax time approaching and 2010 being a near record year for bankruptcy and foreclosure, it is time to re-visit the tax reporting and implications related to mortgage debt after bankruptcy.

Let’s set the stage: you (the debtor) received a bankruptcy discharge in 2010 and as part of that process surrendered your home (allowed it to foreclose or short sold). The mortgage lender, following IRS guidelines, may send you 2 forms related to that event.

The first form is the 1099-A. The 1099-A records that a sale of real estate occurred (a potentially taxable event). From your perspective, the 1099-A is used to determine if there is a taxable gain or loss. Before you get your hopes up, you do not get to write off the loss from a foreclosure or other abandonment of real estate. At the end of the day, there is nothing you need to do with a 1099-A relative to your taxes if the 1099-A is from a foreclosure and you received a bankruptcy discharge. The 1099-A is simply a reporting document letting the IRS know that a disposition of real estate occurred. To find out more, review IRS Publications 544 and 4681, but no action is required on your part.
The more important form you may receive is the 1099-C Cancellation of Debt. The 1099-C records when a bank, truly, forgives a debt (writes off with no intent to collect; don’t confuse debt forgiveness with “charge off” on your credit report, they are not the same thing). In the normal course, the IRS treats forgiven debt as income. In this real estate climate, it is exceedingly rare that a bank’s loan is fully paid from a foreclosure sale meaning that there is a deficiency balance still owed (the difference between what you owe and the proceeds received from the sale). If you received your bankruptcy discharge, you are not liable for that deficiency balance and therefore not liable to pay income tax on the deficiency. However, the bank may still issue the 1099-C. If you receive a 1099-C after bankruptcy, you MUST complete IRS Form 982 with your tax filing. If you received your bankruptcy discharge, you would check box 1(a) on Form 982 and send it in with your tax filing, and that will be the end of it. If you don’t, you will be hearing from the IRS and have several weeks of headache trying to sort out the issue.
So, in the normal circumstance, no action is required on a 1099-A when the property was foreclosed or otherwise abandoned. However, if you receive a 1099-C you need to file IRS form 982 to show the IRS that you don’t owe tax on the deficiency."


methnerlaw. (this is the website)

[HHM]

1099-A is a different animal. If this is our primary residence, the issue is moot. If the property was an investment property or 2nd residence, then there are issues...

http://methnerlaw.com/2011/03/14/now-what-i-received-a-1099-a-on-investment-property-after-foreclosure-and-bankruptcy/

[jacko]

Thank you! It was my primary residence.

1099-A is a different animal. If this is our primary residence, the issue is moot. If the property was an investment property or 2nd residence, then there are issues...

http://methnerlaw.com/2011/03/14/now...nd-bankruptcy/