Article I of the Constitution grants to Congress the power to establish uniform bankruptcy laws throughout the country. While initially a device for creditors to divide up a debtor’s assets, over time bankruptcy has become more debtor friendly and now it is means for debtors to obtain a fresh start free from burdensome debts. Unfortunately, while the purpose of bankruptcy has changed over time, the stigma of filing bankruptcy has still remained. While I don’t advocate intentionally or recklessly getting over your head in debt, I do certainly see the advantages to clients of being able to file bankruptcy when it’s in the clients best interest. Nothing can be more destructive to a family than to be crippled with overwhelming debt and no chance to save money for retirement. To help erase some of that stigma, I have listed famous people who have filed for bankruptcy. I do not list these names for purposes of ridicule but to point out that bankruptcy is there for both rich and poor, famous or infamous. Properly applied, bankruptcy can be a life preserver for those in need.
- Rapper 50 Cent
- Marvin Gaye
- Kim Basinger
- F. Lee Bailey
- Meat Loaf, the singer.
- Cyndi Lauper
- MC Hammer
- Francis Ford Coppola
- Larry King
- Curt Shilling
- Larry King
- Mike Tyson
- Dave Ramsey
- Walt Disney
- P.T. Barnum
- Mark Twain
- Henry John Heinz, of Heinz Ketchup fame
- Milton Hershey, of Hershey’s Chocolate fame
- Henry Ford
- J.C. Penney
- Mickey Rooney
- Debbie Reynolds
And there are many more that could be listed…
If you are over your head in debt and need help, please call my office for a free initial consultation. My firm is a debt relief agency, as provided under the Bankruptcy Code, and I assist debtors file for bankruptcy.
Give and you shall receive, as the saying goes. If you are considering a year-end gift of money or property to a worthy charity, here are some tips on maximizing your charitable tax deduction:
- Keep good records! Regardless of the amount of money given, meaning from dollar $1 up, the taxpayer must maintain a record of the donation made at or near the time of the donation. You can meet this requirement with a bank statement, a cancelled check, a credit card statement or a statement from the charity. Regardless of the form of the record, such record needs to show the name of the charity, the date of the donation, and the amount of the donation.
- If you make a single donation, of money or property, and it is worth more than $250 then you must get a written acknowledgement from the charity to deduct this donation. The written acknowledgement needs to contain the name of organization; the amount of cash contribution, if applicable; a description of any non-cash contributions, if applicable; a statement that no quid pro quo goods or services were provided in return for the contribution or, if goods or services were provided, a description and good faith estimate of the value of goods or services provided to the donor.
- If you make a gift using a credit card before midnight on the 31st than it is deductible in 2016 even if you do not pay your credit card until 2017. Similarly, if you properly mail a check on the 31st than it will also count as deductible in 2016 even if the check clears in 2017.
- If you are 70 ½ or older and you hold an IRA account, you may be required to take what are called required minimum distributions from a traditional IRA account. You can make a donation, up to $100,000, directly from your IRA to an eligible charity tax free. While you will not get a tax deduction for the contribution, the distribution is not taxable to you and qualifies as a required minimum distribution.
- If you are going to make a gift of household goods or clothing than such items must be in good used or better condition to be deductible. Damaged or stained goods and clothing will not be acceptable and hence deductible. Household goods includes such things as furniture, furnishings, electronics, appliances and linens. Items worth over $500 do not have to meet this “good used or better condition” if a qualified appraisal is done.
- If you are making a gift of property with substantial worth than you may need to have an appraisal to provide a proper value to use for your charitable donation. There are some complicated rules in this area so I won’t go into detail but if you intend to donate artwork, antiques or collectibles than you may need to meet other requirements to get full advantage of your deduction.
I hope you and yours have a wonderful New Year’s Eve and best of wishes in 2017!
As of December 31, 2016, the Home Affordable Modification Program or HAMP will end. HAMP was designed to help financially struggling homeowners avoid foreclosure by obtaining a loan modification that makes mortgage payments affordable through interest rate reductions, fixing the interest rate, principal reductions or through forbearance and term extensions. While other loan modification programs exist, HAMP provided loan modification guidelines that applied to most servicers along with some added financial incentives for borrowers, servicers and investors such as cash incentive payments. Now, at the stroke of midnight on the 31st, HAMP will end and servicers will fall back on other loan modification programs.
Enter the Flexible Modification foreclosure prevention program (a mouthful) or as I call it Flex Mod. Applicable to Freddie Mac and Fannie Mae loan, Flex Mod was developed by the Federal Housing Finance Authority (FHFA) and other interested parties based on feedback from homeowners, services, and consumer advocates. Flex Mod is designed to provide streamlined guidance for servicers regarding loan modification as well as cash incentive payments to reduce delinquencies. Here is what Freddie Mac and Fannie Mae are saying about the program:
- Flex Mod will be applied to all mortgage loans that are determined to be in imminent default (according to guidelines set out in the program).
- Payment relief will include allowing forbearance of principal to an 80% mark-to-market loan-to-value ratio for eligible borrowers (not to exceed 30% of the unpaid principal balance).
- This forbearance of principal will be accomplished in two ways:
- For borrowers less than 90 days delinquent, the program requires a complete loss mitigation application and targets a 20% payment reduction and 40% housing expense-to-income ratio.
- For borrowers 90 or more days delinquent, the program targets a 20% payment reduction and requires no borrower documentation.
- Servicers will receive cash incentive payments based on how long a loan is delinquent; the servicer will receive a larger payment the short the period of delinquency.
Flex Mod is set to launch on October 17th of 2017 and so it will be interesting to see how this program works for affected homeowners and if the program leads other servicers who are not under Freddie Mac or Fannie Mae’s umbrella to try and stream line their loan modification programs. I have to dig into the details but for now I am hopeful this program is a sign of things to come..
Here is the link to the FHFA’s news release on the program, which also contains links to Freddie Mac and Fannie Mae press releases: https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-of-FHFA-Deputy-Director-Sandra-Thompson-on-New-Loan-Mod-Offering-for-Delinquent-Borrowers.aspx