Archive for March, 2011


Mortgage Help Is Declining Fast

Last summer, officials revealed  a $1 billion program to provide loans to aid the unemployed pay their mortgages until they could obtain employment. It was scheduled to go into effect before the end of the year but the program has yet to accept any applications.

Now the existence of the main program, the Home Assistance Modification Program, is in doubt.

The House, controlled by the Republicans, voted this week to terminate the foreclosure relief program. The Democrat-controlled  Senate will seek a rescue.

The housing assistance effort has failed to end a tsunami of foreclosures and a decline in home values.  There were 225,000 foreclosure filings in February nationwide.

If you have questions about a foreclosure contact us at





primer on wage garnishment

Garnishment in California is a practice creditors can use to recover amounts owed from debtors who do not pay of their own accord. For example, wage garnishment is when a creditor collects part of the debtor’s wages or income sent to the creditor, to fulfill the debt. Money held by third parties, such as money in a bank account, could also be garnished.

Garnishment is an apparatus for enforcing a judgment. Therefore, in most cases a creditor has to file a lawsuit and obtain a judgment to create its right to the money. For instance, the IRS does not have to obtain a judgment first.

California Exemptions

Social Security is usually exempt from garnishment under California state law.

California’s garnishment exemptions include:

  • Pensions: all public and private retirement benefits are protected, including distributions from IRAs, state and county worker benefits, and firefighter or police office benefits.
  • Public benefits or assistance: workers’ compensation; unemployment benefits; aid to families with dependent children; aid to the blind, disabled, and aged; student financial aid; relocation benefits; union benefits owing due to a labor dispute.
  • Insurance benefits: disability and health benefits; life insurance proceeds if the policy prohibits proceeds them from being used to pay creditors; matured life insurance benefits, up to the amount needed for support; homeowner’s insurance proceeds.

Maximum Limit

California follows federal law to determine the maximum amount that can be garnished. The lesser of the following may be garnished:

  • The amount by which a debtor’s weekly income exceeds 30 times the minimum wage.
  • 25% of disposable income, with “disposable income” defined as income left after legally required deductions from a person’s paycheck. Only legally mandated deductions are considered in calculating disposable income—other obligations or deductions, even ones enforced by employer policy (e.g. deductions for health insurance), are not counted. Therefore most of a person’s income will be considered “disposable income.”

However, note that the 25% rule applies for most debts. There are certain debts, like taxes or child support, where the 25% rule doesn’t apply.

Statute of Limitations

Once the creditor obtains a judgment for money owed, the creditor has up to 10 years to take any action to collect.  During the 10 years following the judgment the creditor may garnish the debtor’s wages.

If you have any questions about wage garnishment, contact us at:



IRS announces easing of tax collection practices

The Internal Revenue Service announced measures to be more lenient with taxpayers who can not pay their tax liability, in recognition of the financial crisis affecting the entire economy.

IRS Commissioner, Doug Shulman, announced five concrete steps that the IRS will use to be more flexible. He said he gave IRS personnel greater authority to suspend enforcement in certain circumstances, for example, when a taxpayer has recently lost a job, support is based solely on social security benefits or faces steep, unexpected medical bills.

Deferred Levies

In such cases, the tax liability is not eliminated or forgiven, but the collection activity, including the notices and phone calls, levies, liens and penalties, will be postponed, said IRS officials.

Second, taxpayers who fail to make a payment under a payment agreement with the IRS, the IRS will not automatically suspend the agreement.

It would allow taxpayers who are in economic trouble the ability to miss a payment. Missing more than one payment may compromise the installment agreement.

The IRS also expand eligibility for its “offer in compromise” program, taking into account certain taxpayers who appear to have enough equity in their homes to cover their tax burden. In the past, offers in compromise were not considered for those with equity in their homes.

Under an offer in compromise, a taxpayer can be resolved with the IRS for less than the total amount of taxes owed.

Special Unit

Mr. Shulman said he created a special unit to investigate cases where individual taxpayers with an equity  real estate may qualify for an offer in compromise.

In addition, taxpayers who do not receive a payment under an existing offer in compromise agreement to work with IRS officials to avoid any breach of this Agreement.

Finally, Mr. Shulman said the IRS to accelerate the payment of publications for taxpayers in financial difficulties.

Taxpayers who have difficulty meeting their obligations, should contact the IRS to take advantage of this new flexibility, said Shulman.

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