Ron Siegel's Blog

What To Do At The Scene Of An Auto Accident

Ron Siegel — Tue, 11 Oct 2011 00:30:39 +0000

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STOP Immediately but do not obstruct traffic.
ASSIST injured. Have someone call 911.
SECURE names, phone numbers, addresses of other drivers, witnesses, injured persons, passengers.
SECURE make, model, license numbers of all cars involved.
MAKE rough drawing of scene, showing position of cars & other details.
DON’T hastily accept claim settlements at scene of accident.
DON’T accept blame or liability.
REMAIN calm, courteous and consistent in your version of accident.
NOTIFY your insurance agent/company as soon as possible.

Please call your protection team member now if you would like us to mail you an Insurance I.D. Card holder with this information printed on it for you. You can keep the holder in your car along with your registration.

Posted By Ron Siegel
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Ron Siegel is a Radio Show host on the Real Estate Radio Network and counsels clients in all matters Real Estate Related – Mortgage Banking, Real Estate Purchases and Sales, Short Sales, Foreclosures, Credit Repair. Reach on Ron Siegel at Ron@MBEhoa.com – 800.306.1990 – www.MBEhoa.com.

2011 Year-End Tax Planning for Individuals In A Changing Landscape

Ron Siegel — Tue, 11 Oct 2011 00:11:41 +0000

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By David Duner, CPA

2011 yearend tax planning for individuals lacks some of the drama of recent years but can be no less rewarding. Last year, individual taxpayers were facing looming tax increases as the calendar changed from 2010 to 2011; particularly, increased tax rates on wages, interest and other ordinary income, and higher rates on long-term capital gains and qualified dividends.

Thanks to legislation enacted at the end of 2010, tax rates are stable for 2011 and 2012, although the uncertainty will return as 2013 approaches, as political pressure in Washington builds to do something quickly for the economy. Ordinary income tax rates for individuals currently are 10, 15, 25, 28, 33 and 35 percent; capital gains rates are zero and 15 percent.

President Obama has proposed to preserve these tax rates for taxpayers with income below $200,000 (individuals) and $250,000 (married couples filing jointly) and to raise the rates for taxpayers in these higher-income brackets. If Congress is gridlocked and takes no action, everybody’s rates will rise, but again, not until 2013.

Expiring tax breaks

Unfortunately, not all is quiet on the tax front despite no dramatic rate changes until 2013. There are some specific tax provisions that will terminate at the end of 2011, unless Congress and the President agree to extend them. These include the tuition and fees above-the-line deduction for high education expenses, which can be as high as $4,000. Another expiring provision is the deduction for mortgage insurance premiums, which covers premiums paid for qualified mortgage insurance.

Several other benefits (“extenders”) are also scheduled to expire after 2011:

The state and local sales tax deduction;
The classroom expense deduction for teachers;
Non-business energy credits;
The exclusion for distributions of up to $100,000 from an IRA to charity;
A higher deduction limit for charitable contributions of appreciated property for conservation purposes.

Retirement accounts

An old standby that makes sense from year-to-year is maximizing contributions to an IRA. The contribution is deductible up to $5,000 ($6,000 for taxpayers over 50), depending on some specific taxpayer income levels and circumstances. Taxpayers in a 401(k) plan can reduce their income by contributing to their employer plan, for which the limit in 2011 is $16,500.

In 2010, it was particularly important to consider whether to convert a traditional IRA to a Roth IRA, because the income realized on conversion could be recognized over two years. While a conversion continues to be worthwhile to consider (because distributions from a Roth IRA are not taxable), there are no longer any special break to defer a portion of the income from the conversion.

Alternative minimum tax

The AMT has been “patched” for 2011. The exemptions have been temporarily increased from the normal statutory levels to the “patched” levels:

From $33,750 to $48,450 for single individuals;
From $45,000 to $74,450 for married couples filing jointly and surviving spouses; and
From $22,500 to $37,335 for married couples filing separately.

The amounts return to the “normal levels” of $33,750/$45,000/$22,500, respectively, in 2012 unless Congress takes action to maintain the patch. Elimination of the AMT is a goal of long-term tax reform, but the loss of revenue has been considered too high in the past. Without the “patch,” the Congressional Budget Office estimates that an additional 20 million middle-class taxpayers would suddenly become subject to an AMT once designed only for millionaires.

While planning for the AMT is difficult, taxpayers may want to consider realizing AMT income, such as capital gains, in 2011, when the patch is higher, rather than in 2012.

Conclusion

Taxpayers can take advantage of 2011 provisions to realize last-minute tax benefits. Some of these benefits may not be available in 2012. It is worthwhile to look at these planning opportunities as part of an overall year-year financial strategy.

Posted By Ron Siegel

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Motion to Continue Stay in Subsequent Filings

Ron Siegel — Mon, 10 Oct 2011 16:33:00 +0000

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By Christine Wilton

A literal reading of 11 U.S.C. Section §362(c)(3) terminates the stay 30 days after the filing of the petition only with respect to the debtor, not property of the estate. However, coming into bankruptcy court in the Central District, recent rulings have discussed whether the Stay terminates entirely or only with respect to the Debtor in subsequent bankruptcy case filings.

In re Reswick Jr., 2011 Bankr. LEXIS 873, (B.A.P. 9th Cir. February 4, 2011) held that the Automatic Stay terminated as to the debtor and property of the debtor’s bankruptcy estate 30 days after the debtor’s second bankruptcy filing. The court agreed with the persuasive reasoning set forth in In re Daniel, 404 B.R. 318 (Bankr. N.D. Ill. 2009), and held that the automatic stay terminated in its entirety on the 30th day after the petition date.” (Emphasis added.) This is a minority decision.

The Reswick court analyzed the majority viewpoint [*364],

“The majority interpretation finds the phrase “with respect to the debtor” to be both critical and unambi-guous, and concludes that on the 30th day after the peti-tion date, the automatic stay terminates only with respect to the debtor and the debtor’s property, but not as to property of the estate. See, e.g., Holcomb v. Hardeman (In re Holcomb), 380 B.R. 813 (10th Cir. BAP 2008); [**7] Jumpp v. Chase Home Finance, LLC (In re Jumpp), 356 B.R. 789 (1st Cir. BAP 2006); In re Pope, 351 B.R. 14 (Bankr. D.R.I. 2006); In re Murray, 350 B.R. 408 (Bankr. S.D. Ohio 2006); In re Brandon, 349 B.R. 130 (Bankr. M.D.N.C. 2006); Bankers Trust Co. of Cal. v. Gillcrese (In re Gillcrese), 346 B.R. 373 (Bankr. W.D. Pa. 2006); In re Williams, 346 B.R. 361 (Bankr. E.D. Pa. 2006); In re Harris, 342 B.R. 274 (Bankr. N.D. Ohio 2006); In re Jones, 339 B.R. 360 (Bankr. E.D.N.C. 2006); In re Moon, 339 B.R. 668 (Bankr. N.D. Ohio 2006); In re Johnson, 335 B.R. 805 (Bankr. W.D. Tenn. 2006). Although these decisions state that the court need not read beyond the phrase “with respect to the debtor” to discern its meaning, see, e.g., Jones, 399 B.R. at 363 (“Section 362(c)(3)(A) provides that the stay terminates ‘with respect to the debtor.’ How could that be any clear-er?”), these decisions arguably do read beyond the phrase because they find that the stay terminates with respect to the debtor and to any property of the debtor that is not property of the estate. Id. at 362; see also Holcomb, 380 B.R. at 816 (“[W]e conclude that the language of § 362(c)(3)(A) terminates the stay only as to the debtor [**8] and the debtor’s property.”); Jumpp, 356 B.R. at 797 (“Section 362(c)(3)(A) provides for a partial termination of the stay.”).”

On May 9, 2011, the Central District Riverside Division Court in In re Rinard, 2011 Bankr. LEXIS 1731, Judge Clarkson held,

“Under 11 U.S.C. § 105(a), a bankruptcy court “may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” Section 105(a) gives the bankruptcy courts the power to stay actions that are not subject to the 11 U.S.C. § 362(a) automatic stay (footnote omitted) but “threaten the integrity of a bankrupt’s estate.” Canter v. Canter (In re Canter), 299 F.3d 1150, 1155 (9th Cir. 2002) (citation and quotation marks omitted); Ingersoll-Rand Fin. Corp. v. Miller Mining Co., 817 F.2d 1424, 1427 (9th Cir. 1987).” Solidus Networks, Inc. v. Excel Innovations, Inc. (In re Excel Innovations, Inc.), 502 F.3d 1086, 1093 (9th Cir. 2007). The Ninth Circuit, in Solidus Network further found that the usual preliminary injunction standard applies to stays of proceedings against non-debtors under § 105(a). Solidus at 1094.”

One of our judges recently overruled a motion for turnover of property that was foreclosed upon after the Stay expired. What this means is that you MUST file a Motion to Continue the Automatic Stay beyond the 30 days when your client has filed a subsequent filing within 12-months preceding the filing of their current case. In our Central District these are fairly simple form motions that are routinely granted. These motions MUST be filed and heard within the first 30 days of the case. Don’t risk losing your client’s assets.

Posted By Ron Siegel

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Credit Cards and Becoming Debt Free

Ron Siegel — Tue, 27 Sep 2011 12:03:44 +0000

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By Rondi Lambeth

Did you know that 40% of your credit score is based on how you use credit cards and that you need to have at least 3 open credit cards at all times, but no more than 3.

If you ever go over 30% of your credit limit your score will go down as much as 100 points!

Paying down a credit card will help your credit score, but not much unless it is a substantial payment and it brings the balance of all cards below 30%.

Now with this being said it is always a good idea FINANCIALLY to pay off the cards in full every month, but if you cannot afford to do this, pay the minimum payment on ALL of the cards except the credit card with the highest interest rate. Make the largest payment you can towards the card with the highest interest rate, once the credit card with the highest interest rate is paid off start applying the large payment to the next credit card with the highest interest and continue to pay the minimum payments on the rest of the debt.

For example if you have 3 credit cards, a car loan and a mortgage your payments would look like the following;

Mortgage $1,500 a month at 4% interest
Car Loan $350 a month at 8% interest
Credit Card #1 $50 a month at 18% interest
Credit Card #2 $75 a month at 19% interest
Credit Card #3 $150 a month at 24% interest

Instead of paying $25 a month extra on each bill apply the extra $125 towards the $150 credit card payment for a total of pay $275 onto the highest interest loan, once the highest interest loan is paid off apply the $275 to the next highest loan.

I know this seems like a simple process and it is, but I find that most people forget it about and they look for something much more difficult. In most cases this simple process can get you 100% debt free in 7 to 10 years including your mortgage due to compound interest or in this case compounding payments.

Posted By Ron Siegel
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Real Estate Market Suffers From Shadow Inventory

Ron Siegel — Mon, 26 Sep 2011 22:34:22 +0000

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By Christine Wilton

The growing shadow inventory of homes held by lenders for various reasons, including the fact that they can’t find the paperwork to clear titles is causing the depressing market values these days and continues to stifle the economic recovery according to DSNews. Craig Crabtree, senior vice president and general manager, Equifax Mortgage Services says,“Shadow inventory and real estate owned properties are still playing a dominant role in today’s mortgage market and slowing the pace of economic recovery. While we are seeing stabilization across multiple sectors of lending, there remains a significant volume of delinquent first mortgage loans, which has slowed the foreclosure process. Until these foreclosures are processed, the mortgage market will continue to impact economic growth.”The problem I’m seeing is that we might not have buyers for all these properties and when our ADD sets in and we forget how bad securitized mortgages really are, they’ll crop back up like weeds in your garden and we’ll all be back in our homes again soon with mortgages we can’t afford and this vicious cycle will come full circle.Posted By Ron Siegel

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HOA Dues in Bankruptcy: Handle With Care

Ron Siegel — Mon, 12 Sep 2011 16:49:15 +0000

By Christine Wilton

Click Image for Recent Similar ArticlesJust another reason why I hate association living, Homeowners Association Dues. I know that when you're faced with either feeding your family or paying HOA dues, you'll need to feed your family. Just know that these particular fees are called covenants running with the land and are part of your obligation even after you've filed bankruptcy. 11 U.S.C. 523(a)(16) makes post-petition HOA fees nondischargeable and leaves the Debtors liable for these fees as long as they held legal, equitable, or possessory interest in the condominium. The problem with this scenario is that it provides no incentive to the lender to foreclose on the property because then they would be liable for these dues accruing. It's the perfect storm of natural disaster of legislative inequity.Never fear my precious condo owners in desperation, there is still HOPE. Quoting Aristotle, the nature of equity is the "correction of the law where, by reason of its universality, it is deficient." I hold this to mean that since the HOA and the bank choose to sit on their rights by trying to keep the homeowner liable for the accruing dues, then they consented to the remedy by their inaction. Remember that Bankruptcy Court is a court of equity, meaning they will do their best every time to balance those scales of justice.Posted By Ron Siegel Articles and information other readers found interesting:Credit Card Debt Rising Cultural Attitudes About Debt Debate Continues Car Won’t Start Because You Missed A Payment? No More Deficiency Judgments From Short Sales, But Income Taxes May Still Loom Max Gardner's Mortgage Loan Modification in a Box Program FSBO a No Go! Judicial Admissions in Your Bankruptcy Petition The LOW DOWN on low down Payments Real Estate Radio Show Archive Video Introduction to Ron Siegel Click Image Radio Show Archives

Credit Card Debt Rising

Ron Siegel — Wed, 31 Aug 2011 18:50:05 +0000

By Christine Wilton

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Apparently most Americans are still feeling the pressure to avoid bankruptcy so much so that they are continuing to turn to any open source of credit they can find. According to the Federal Reserve, credit card debt was up $3.3 billion to $793.1 billion in May and June shows an even greater jump up by $7.7 billion to billion totaling $798.3 billion. Overall consumer credit is up to $2.4 trillion in May.

Here is what’s happening. After consumers have filed for bankruptcy, all of their debts are discharged. Creditors know that consumer debtors are only eligible for a bankruptcy discharge after 8 years. Creditors also know that many who have filed bankruptcy have a taste for credit and will go to many lengths to rebuild their precious FICO score. So, at least for 8 years the creditors can get YOU to pay them high interest rates on your credit card balances until you qualify to file bankruptcy again. They want to keep YOU addicted to CREDIT.

Subprime consumers with poor credit or fresh out of bankruptcy are receiving more credit card offers according to this article. So, don’t tell me you can’t get credit after bankruptcy. In fact, the creditors encourage this irresponsible behavior and welcome you into high interest credit cards by telling you that this will rebuild your good credit. NO IT WON’T!!!!

Stop being a victim of circumstances and transform your financial life once and for all. You’re better off following the principles of our Depression Era elders by keeping your emergency fund in CASH, at least $1000.00 in reserves as our friends at Dave Ramsey suggest. If you’ve filed bankruptcy and want to rebuild your credit, work with our friends over at FortressCreditPro and tell them we sent you.

Posted By Ron Siegel
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Short Sale Success: Key is to Change Our Mindset!

Ron Siegel — Tue, 30 Aug 2011 19:44:01 +0000

Posted By Ron Siegel

We are honored to have Christopher Reale, Director of Short Sale Operations at Lepizzera and Laprocina Title and Escrow Services, as today’s guest blogger. He is an expert on the short sale process and will share his knowledge with us on a regular basis.

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In any business discipline, having the proper mindset is the key to a successful business venture. This holds true in the Real Estate industry. Now more than ever, having the proper “Short Sale Mindset” is a key ingredient to a successful short sale transaction. In order to have the proper” Short Sale Mindset” we need to ask ourselves:

What are the parties involved thinking?

During our nationwide educational seminars regarding the short sale process, we have found the following mindsets to permeate the industry:

Listing Agents - The short sale process is too lengthy. It is impossible to deal with the short selling banks.
Buyers – The short sale process takes too long. We want an answer from the short selling bank ASAP. Why should I wait to purchase a short sale when I can purchase a non- distressed asset?
Sellers - What is the point? I am just going to let the bank foreclose.
Banks – Their mindset changes all the time!

The Key to Success

The following comments, though general in nature, are the keys to changing these mindsets.

1.) Listing Agents – Though the short sale process does take longer than the traditional non distressed property sale, the short sale process on average is taking 72 days from start to finish. If the agents are properly positioned to negotiate with the bank, preferably through a law firm who has experience in the short sale process, their mindset will change. Taking the negotiation burden off the agent will allow them to properly market the property and help the distressed seller.

2.) Buyers - Understandably the short sale process is lengthy and not every buyer is a “short sale buyer” depending on their individual circumstances. However, according to the Realty Trac Foreclosure Report dated 8/23/2011, a buyer who engages in the purchase of a short sale will typically purchase the property at a 21% reduction to the current market value. That means INSTANT EQUITY for the potential buyer. In most cases this will change the mindset of the buyer.

3.) Sellers – In nearly every instance, a short sale is more advantageous to the seller than a foreclosure. We will cover this in detail in a later post.

4.) Banks – It is apparent the bank’s mindset changes on a day to day basis. However, through successfully negotiating over 1000 short sale transactions, we have found one common thread to be true. Banks are becoming more and more open to a discussion regarding short selling a property. We will again reference the RealtyTrac Foreclosure Report to explain our point. If a bank approves a short sale, on average, they will be approving a sales price that is at 79% of current market value. The other most common loss mitigation option is for the bank to foreclose on the property. When sold, the bank will sell the REO asset for 60% of current market value. Their mindsets are changing!

We certainly understand that a short sale transaction is not one without its complexities. That being said, if we change our mindset when dealing with them, we will be truly doing a service to our communities and the entire Real Estate market.

If you have questions, please post below in the comments section. Remember to share this with those you care about.

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Home Loan Modifications – Just the Stats

Ron Siegel — Mon, 29 Aug 2011 22:01:01 +0000

Posted By Ron Siegel

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Do you know that our Government gave $700 billion dollars in “Bail Out” money to the banks to help assist the homeowners in a “Loan Modification”?

Additional statistics as of June 2011:

According to “Wall Street Journal” homeowners are failing to achieve a loan modification because of missing paper work, and weak presentation of their financial package. There is no guidance from the banks to help the homeowners save their homes.
The banks have placed $680,000 homeowners on Trial Payments; only 10,000 received a permanent modification. That is a 1.47% success rate. HORRIBLE!!
BOA, Wells Fargo, and JPMorgan Chase in the first quarter made $13.6 billion dollars in profit. These banks are making money while homeowners are losing their homes. Where is the money the government gave these banks going? Treasury states servicers are not communicating to the homeowners in a loan modification. The government is now mandating the process of the loan modifications with every bank. They want to know why the modification success rate is extremely low.
Do you know that you are making your mortgage payments to a “Servicer” and not the bank that owns you’re “Mortgage Note”? Your mortgage is sold in secondary marketing, and the bank that owns your note pays the servicer to collect your payments. The servicer and investor are making a lot of money.

BOA is servicing $2 billion loans
Chase is servicing $1.4 billion loans
Citigroup is servicing $600 million loans
GMAC is servicing $400 million loans
Wells Fargo is servicing $1.7 billion loans

If you have questions, please post below in the comments section.
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IRS to discontinue high-low method for substantiating travel expenses

Ron Siegel — Mon, 29 Aug 2011 21:07:42 +0000

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By David Duner, CPA

The IRS has announced that it will discontinue the high-low method used by taxpayers in a trade or business to substantiate travel expenses incurred while away from home. The method, developed by the IRS, applies to travel expenses for meals, lodging and incidental expenses. It not only has provided a short-cut method for employers to cover the paperwork required to substantiate business travel deductions but in the past it has also helped the IRS streamline certain audits.

Background

Under the high-low method, the IRS provides optional per diem allowances that employers and employees are deemed to have substantiated. The method can be used in lieu of substantiating actual travel-related expenses. The per diem amounts also satisfy the requirement that employees provide the employer with an adequate accounting of meal and lodging expenses.

The IRS publishes a list of localities classified as high-cost areas under the high-low method. All other localities in the continental United States (CONUS) are classified as low-cost areas. The maximum per diem rate for high-cost areas is $233 for travel on or after October 1, 2010. This represents $168 for lodging and $65 for meals and incidental expenses (M&IE). The per diem rate for low-cost areas on or after October 1, 2010, is $160, which represents $108 for lodging and $52 for M&IE.

Waning interest

The IRS requested comments in 2010 on whether to continue the method and received no comments. The IRS interpreted such lack of interest as the deciding reason to discontinue the method. It also reportedly has found the collection of data, as well as the politics that went into designating an area as “high cost,” growing more difficult when compared to the value of continuing the method in an environment in which digitized travel receipts are now so easily available. Taxpayers currently using the high-low method, however, can anticipate continuing to use it through 2011.

More guidance to come

Later in 2011, the IRS promises to issue a new revenue procedure, without the high-low method, that will provide general rules and procedures for substantiating lodging, meals and incidental expenses incurred in business travel away from home. It is unlikely that the IRS will issue high-low rates for 2012.

Government employers use the per diem method widely, practitioners report. Private industry, however, generally prefers to reimburse employees based on actual receipts and, therefore, only a small percentage of private businesses will expected to miss using the high-low method to substantiate travel expenses.

Posted By Ron Siegel
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