It's tax refund season: Over the next two months countless New Yorkers will be filing tax returns and claiming tax refunds.
The New York State Court of Appeals has finalized rules requiring buyers of credit card debt to prove they own the accounts, and has added additional notice requirements for consumer credit lawsuits. The court clerk will be mailing a notice of a consumer credit lawsuit, in addition to the notices the creditor must serve or mail.
The cost of filing bankruptcy has gone up again. Effective June 1, 2014, the cost of filing a chapter 7 bankruptcy case rose from $306 to $335, and the chapter 13 fee goes from $281 to $310.Bankruptcy filing fees are split among various parties within the bankruptcy system. For example, chapter 7 trustees receive $60 from the filing fee. The $29 increase in filing fees is allocated to the administrative fee portion of the filing fee; it goes to the United States Courts. Trustee get no raise.The filing fee for an adversary proceeding (a federal lawsuit filed inside a bankruptcy case) raises from $293 to $350. The official schedule of the changes in the fee is available online at the website for the United States Courts.
After filing a bankruptcy, a debtor is obligated to take a debtor education course. Only organizations that are approved by the Office of the United States Trustee is authorized to offer this course. Under a new change in Rule 1007(b)(7) of the Federal Rules Rules of Bankruptcy Procedure, these counseling organizations may file a certificate that the requirement has been met directly with the Court.
As reported in the New York Times today, the newly-created Consumer Financial Protection Bureau is proposing rules that would empower the Bureau to regulate the biggest consumer collection agencies, law firms and debt buyers, as well as big credit reporting companies. The proposed regulation does not impose any new regulations on these entities; it sets the stage for future regulations by specifying what large collection companies will be subjected to its future regulation.
Legislation is pending in the New York State Senate to legalize and regulate for-profit debt settlement companies. S.5215 was introduced by Senator Griffo on May 3. There is not currently a companion bill in the Assembly. The bill would have debt settlement companies regulated by the Banking Superintendent, as well as authorizing attorneys to do this work. Restrictions on the more abusive practices of the industry seem to track the Federal Trade Commission rules which I blogged about Oct. 27, 2010 (Legislation & Rules Updates). I will attempt to write a more detailed analysis of the pending legislation in the near future.
On March 23, I reported that there was pending in the New York State legislature a proposal that would allow local municipalities to sell their property tax liens to private parties, with the consent of the property owner. The lender who pays the pax in exchange for the lien would be in a senior position on the btitle (senior to the first mortgage) and would enter into an agreement with the property owner to pay back the loan, at interest of up to 18%. If the property owner defaults, the property tax lender could foreclose on the property.
A new interim federal rule, 31 C.F.R. Part 212 promulgated by the U. S. Treasury Fiscal Service [FN1] goes into effect May 1, 2011 protecting federal benefits automatically deposited into bank accounts from restraint or execution by judgment creditors. The interim rule applies to all banks and credit unions chartered by any state or by the federal government. The amount protected in the account from restraint or execution is the total amount of all exempt benefits deposited in the previous two months, or the balance in the account as of the day the restraint is received, whichever is less. So, if $3,000 in social security funds were deposited in the previous two months, then the bank balance, up to $3,000, is exempt from restraint. This is more generous (from the perspective of the debtor) than New York's LIBR (lowest intermediate balance rule) of accounting. The new interim rule applies only to Social Security, SSI, Veterans, Railroad Retirement and Federal Government employees retirement benefits. Other exempt federal benefits may be added later, by rulemaking. This interim rule does not apply if the garnishment is for child support or by the United States Government. Here is one feature that could be very significant for New York debtors: funds deposited afterwards cannot be frozen or seized, so that the bank does not have to continually monitor the account for subsequently deposited exempt benefits (212.6(f)). So even if an account contains no protected funds, the restraint or execution only applies to the money in the account on the date of receipt. No more worrying about the paycheck or the tax refund check that is automatically deposited into a restrained account a week later.
A bill has been introduced in the New York State Assembly and Senate that would allow lenders to pay off property taxes in exchange for the tax lien, with the consent of the property owner. Assembly Bill A6348 was introduced March 15 by Democratic Buffalo Assembly Member Sam Hoyt, with multiple co-sponsors. An identical bill was interduced in the New York Senate (S.2976) by Western New York Republican Senators George D. Maziarz and Michael F. Nozzolio. I wish to express my appreciation to Russ Haven, legislative counsel for New York Public Interest Research Group, Inc. (NYPIRG) for bringing this piece of legislation to my attention. The bill would allow a property owner to agree to let a lender pay off their property taxes, in exchange for the property tax lien. The property owner and the lender would enter into an agreement to pay the lender back for the property taxes. This loan could carry an interest rate of 1.5% per month, plus costs, and could be enforced by a foreclosure.
Of the thousands of benefits available to married couples, one is the opportunity to file joint bankruptcies. Section 302 of the Bankruptcy Code permits an individual and "such individual's spouse" to file bankruptcies together. Joint bankruptcies are less expensive than filing separate petitions, and, in some cases, may have legal advantages. Can legally-married same-sex married couples file a joint bankruptcy? The "Defense of Marriage Act" (DOMA), which prohibits recognition of same-sex marriages in relation to federal laws would seem tio prohibite it, but an announcement by the United States Department of Justice yesterday may change all that.