foreclosure defense attorney

Right to Foreclosure Mediation Extended to Divorcees and Surviving Spouses – Connecticut Public Act No. 15-124

Right to Foreclosure Mediation for Divorcees and Surviving Spouses

Connecticut Public Act 15-124 – An Act Extending The Foreclosure Mediation Program

One of the benefits of being in a multi-partner law firm is the overlap between our different practice areas, allowing us to better help our clients in difficult situations. Since our firm represents divorce clients, probate clients, and foreclosure clients, Connecticut Public Act no. 15-124 is going to allow us to help clients better solve their foreclosure issues when relating to residential real estate property that was part of divorce or probate proceedings.

The Problem Was Standing

Perhaps you are a divorcee. You just finished the long and stressful process of divorce. Part of the Court ordered Divorce Decree is that your ex-spouse execute a quitclaim deed transferring a house or condominium to your ownership. The deed is drafted and recorded on the land records and as far as you are concerned the property is now yours.

Perhaps your spouse recently passed away. You just finished the extremely complicated probate process. In their will your spouse left you residential real estate property. The Executor of your spouse’s estate drafted an Executor’s Deed, which was approved by the probate court and recorded on the land records, transferring title in the property to you.

In either case, let’s assume there was a mortgage on the property. Either your ex-spouse had not been making payments or the probate estate had not been making payments and the mortgage is in default. Or, even if the payments are current, the mortgage has a “due on transfer” clause, which states that if the property is ever transferred from the ownership of the borrower under the mortgage, the entire outstanding amount is due and payable in full. As is common, the collateral on the mortgage is the property itselfThe bank is now foreclosing on the property.

As the new owner, you want to enter foreclosure mediation so that you can find a way to keep your family home; through mortgage modification or refinance. Until October 1, 2015, YOU COULDN’T!

The issue was standing! Since you were not a party to the mortgage, you had no “privity of contract”, and therefore no standing to challenge the foreclosure in court. The foreclosure would proceed and the bank would be allowed to either repossess or sell your property to pay off the money owed to them.

The Connecticut Legislature Solves The Problem

The Connecticut Legislature saw the issue of removing spouses from the family home without letting them be heard when a court order had given them possession of the residential real estate property. After all, how is it fair to completely stonewall the new owner of the property from mediating a solution to the foreclosure?

Therefore, Public Act No. 15-142 has extended the foreclosure mediation process to include spouses who became “successors in interest” due to divorce, separation, or death of the other spouse.

What this means for our clients

The new law allows the divorcee or decedent’s spouse to stand in the shoes of the previous owner, at least as far as defending against foreclosure of the property is concerned. This means that we can now offer assistance to our foreclosure clients who became owners through divorce or death of their spouse. Previously, we would have had to turn these people away as there was no legal procedure available for us to resolve their problem. It is not guaranteed that the successor-in-interest spouse will be allowed to keep the property, but at least now they have a fighting chance.

Taxes and PowerBall: What to do with your $4.3 Million

 

The Powerball has never been so high – so here is my obligatory blog post on what to do when you win the jackpot.

The most obvious answer is a pretty simple one – don’t worry about it. Everything will work out. You now have tons of money, and you can probably buy most of the things you want. But then the other questions arise – what do you do with the rest of the money once you have all of the things you wanted? Do you share? Do you spend? Do you invest, save, try to change the word?

Whatever you do with the money will have tax consequences. But there’s another thing to consider: if you know what you would do with the money if you happen to beat the odds – planning ahead can help minimize the tax impact.

 

What are the tax consequences of winning the Powerball? It depends.

The first thing to realize when dealing with the tax consequences of a transaction – especially one involving a windfall – is that it is much better to plan ahead than to react to the situation after the fact. Even once you’ve won the lotto, you should be making a plan for your money going forward.

If you plan to spend your winnings until the money is gone, this post probably isn’t for you. Have a good time and invite some friends along for the ride.  Keep reading to see what you consider before and after you win that $1.5 Billion jackpot (or $4.3 Million if you share. Read more

Short Sale Debt Forgiveness Tax Relief

Tax Relief for Short Sale Debt Forgiveness

Short Sale Tax Relief

Exemption for Tax Liability Created by Short Sale Debt Forgiveness

The Budget Bill signed into law by President Obama on December 18th, 2015, has received a lot of coverage in the news for many reasons. One of the good thing hidden in the Bill is that The Mortgage Forgiveness Debt Relief Act, which had expired in 2014, has been retroactively extended through 2016. Let’s take a look at why further relief is necessary when debt is forgiven through short sale.

Debt Forgiveness is a Taxable Event

In this world, very few people are strangers to debt. Whether it is unsecured debt such as credit cards or student loans, or secured debt such as a mortgage on real estate property or car loan, almost everybody owes somebody else money. However, lenders do not always successfully collect debts owed to them. In these cases, the lender may elect to cancel all or part of the debt of the borrower.

With unsecured debt, the lender might not be able to collect the debt or may simply give up on trying to collect. With secured debt, the lender will usually chose to foreclose or repossess the property, or allow a short sale as discussed below.

What many people do not know, is that the forgiveness, discharge or cancellation of debt (whichever term you chose to use), is generally a taxable event. The IRS expects people to pay taxes on the difference between the amount they owed and the amount they actually paid. How does the IRS know? Because the lender is required by Federal Law to file Form 1099-C “Cancellation of Debt”, for any debt forgiveness greater than $600. the 1099-C contains pertinent information such as the borrower and lender identification, amount of debt forgiven and date of discharge. you are then required to show the amount of forgiven debt as income on Form 982 and submitted with your Form 1040 “Income Tax Return”.

How Does Debt Forgiveness Tax Impact Short Sale?

In a Short Sale, the lender allows the property owner and borrower to sell the property for less than they owe, and forgive the remainder of the debt, in an attempt to save themselves the time and cost of foreclosure and property maintenance. Technically, this debt forgiveness would be a taxable event as discussed above.

However, The Mortgage Forgiveness Debt Relief Act shields homeowners from tax liabilities created by mortgage debt that is forgiven due to Short Sale of a principal residence (as well as debt forgiven through mortgage modification or deed in lieu of foreclosure). Up to $2,000,000 of forgiven debt is eligible for tax exclusion.

Is Tax Relief for Short Sale Debt Forgiveness Fair?

Whether the forgiveness is fair or not is up for debate, but it definitely makes sense. People seeking Short Sale to avoid foreclosure do not have the money to pay their mortgage. How can the IRS expect the borrower to pay taxes on money they couldn’t pay? With the great number of financially distressed properties in this housing bubble, they can’t.

Consult a Professional

You need to make sure you are making use of the right professionals so that you do not pay the price at a later date. Your account should be consulted whenever a large scale taxable event occurs; such as the forgiveness of thousands of dollars or more in debt. They will need this information to accurately file your tax return. Your real estate attorney needs to make sure that the lender provides you with a 1099-C that is complete and accurate. Finally, you need to make sure that your team is communicating and exchanging information efficiently.

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factors that affect alimony payments

How Do Courts Determine Length and Amount of Alimony?

How Do Courts Determine Length and Amount of Alimony?

Factors That Affect Alimony Payments

At Glouzgal Ramos Groth LLP we represent both husbands and wives in divorce proceedings, both as the party filing for divorce or defending against it. In most cases, the issues of alimony arises early on:

  • Who will pay alimony to who?
  • What will be the amount of the alimony payment?
  • How long will alimony payments last?

In deciding whether alimony should be awarded, and if so for how much and how long, the Court will consider a list of factors as provided by Connecticut General Statute Sec. 46b-82. The section provides that either party may be liable for alimony to the other. In coming to a decision, the Court will take evidence and hear testimony on:

  • the length of the marriage
  • the cause of the separation or divorce
  • the ages of the divorcing parties
  • the station and occupations of the divorcing parties
  • the amounts and sources of income for the divorcing parties
  • the vocational skills and employability of the divorcing parties
  • the estate (total assets) of each divorcing party, and
  • any other awards of property in connection with the divorce.

The Court is looking at the financial situation of each divorcing party, how much one party may have relied on the other for financial support, and whether the situations of either divorcing party are likely to change in the future. What the Court is doing is establishing a need, or lack of need, for the financial support of one of the parties, trying to evaluate the ability of the other party to provide that financial support, and finally deciding the extent of that financial support and when and if it should stop.

The Courts perception of the circumstances will depend heavily on which documents or testimony are presented to the Court and whether they are presented in the proper manner. While each factor is relevant, some are more relevant than others in specific situations, and those need to be highlighted to Court. An experienced Connecticut divorce attorney can be instrumental in the fair and adequate award of alimony.