Falling behind on federal student loans can lead to other major financial problems according to CNBC

 

Falling behind on federal student loans can lead to other major financial problems

A story on CNBC reports that "more than 80% of borrowers who experienced default stated that they’d faced at least one additional consequence as a result. The most common impact was a drop in their credit score (62%) followed by being subject to collection fees (47%) and losing eligibility for future federal financial aid (37%)."

The story can be found at 

https://www.cnbc.com/2023/02/22/falling-behind-on-student-loans-can-lead-to-other-financial-problems.html

We help individuals & businesses with too much debt!

Jim Shenwick, Esq   917-363-3391   jshenwick@gmail.com

Office Landlord Debt Defaults Rising as Remote Work Takes Hold

The New York Post is reporting that “A growing number of office landlords are defaulting on loan payments as the rise of remote work causes more corporate tenants to rethink long-term leases". The story can be found at https://nypost.com/2023/02/21/office-landlord-debt-defaults-rise-as-remote-work-takes-hold-report/?utm_source=gmail&utm_campaign=android_nyp  

If New York City office landlords are defaulting on their mortgages, should commercial tenants in New York City with surplus space due to remote work or the recession also be asking for concessions such as a reduction in base rent or additional rent or seek to exit or terminate their leases? 

At Shenwick & Associates, we believe they should be, and we have helped many commercial tenants surrender, exit, or terminate their leases. We also work with their good guy guarantors to reduce or eliminate their exposure.

We recently helped a garment center company surrender their lease on very favorable terms and the post can be found at https://shenwick.blogspot.com/2023/01/office-lease-closing-termination-or.html

Jim Shenwick Esq. has office leasing, bankruptcy & workout experience and an LLM in Taxation from NYU Law School.  "Jim Shenwick, Esq helps individuals & businesses with too much Debt!"

Relief of Indebtedness Income and Workouts under Section 108 of the Internal Revenue Code

 Relief of Indebtedness Income and Workouts under Section 108 of the Internal Revenue Code.

Shenwick & Associates performs many workouts for clients, and one point that is often overlooked during negotiations is relief of indebtedness income. 

Section 108 of the Internal Revenue Code provides that income from discharge of indebtedness is income to the Debtor, unless otherwise provided for in that section.

 The following example illustrates the point: If a debtor owes a creditor $100,000.00 and the creditor agrees to accept $50,000.00 as payment for that debt, the debtor has been enriched by the sum of $50,000.00 and the Debtor must report $50,000 of income on its tax return.

Answers to many relief of indebtedness income questions are provided below:

1. Question: Do creditors really report relief of indebtedness income to the IRS?

Answer: Yes they do and the income is reported on IRS Form 1099-C

2. Question: Which creditors report income to the IRS? 

Answer: All banks and financial institutions do. Landlords, hospitals and trade vendors generally do not report relief of indebtedness income, although they should.

     3. Question: Is the income ordinary income or capital gain? 

Answer: Sadly, it is ordinary income.

     4.  Question: Is relief from indebtedness income recognized by the guarantor of a debt?

            Answer: The IRS generally holds that a guarantor (whether or not the primary obligor has defaulted and the guarantor has become liable for the indebtedness) does not realize relief of indebtedness income on release of a liability. IRC 108(e)(2)

5. Question: Do I have to recognize relief of indebtedness income if I file for bankruptcy?

Answer: No. See section 108(a)(1)(A) of the Internal Revenue Code. This is why many debtors elect to file for bankruptcy rather than do a workout.

6. Question: If I am insolvent (my Liabilities exceed my Assets also known as the Balance Sheet test) do I have to pick up relief of indebtedness income?

Answer: No. See section 108(a)(1)(B) of the Internal Revenue Code

7. Question: What if I am a member, partner, or shareholder of a company that defaults on an unpaid debt? 

Answer: A member, partner, or shareholder of an LLC, partnership, or S corporation (a pass-through entity) must report income unless an exception applies.

Clients or their advisors with questions regarding relief of debt income should contact Jim Shenwick, Esq.   jshenwick@gmail.com   917 363 3391

 "We held individuals and businesses with too much debt!"

SDNY Revisits Section 502(b)(6) Cap on a Landlord’s Claim for Rejection Damages

 

Judge Wilde's, a Bankruptcy Judge Revisits the Rent Cap Calculations allowed a Landlord under Section 502(b)(6) of the Bankruptcy Code. The article can be found at jdsupra at https://www.jdsupra.com/legalnews/sdny-revisits-rent-cap-calculations-a-8004543/?origin=CEG&utm_source=CEG&utm_medium=email&utm_campaign=CustomEmailDigest&utm_term=jds-article&utm_content=article-link

Jim Shenwick, Esq.  jshenwick@gmail.com   917 363 3391

"We held individuals and businesses with too much debt!"

WE HELP INDIVIDUALS & BUSINESSES WITH TOO MUCH DEBT! PLEASE CLICK THE LINK BELOW TO SCHEDULE A TELEPHONE CALL WITH JIM SHENWICK, ESQ.

   https://calendly.com/james-shenwick/15min

Crypto In Bankruptcy: Tax Apocalypse For Celsius Customers?

 Garrett L. Brodeur at Kostelanetz has published a very informative article on crypto and related tax and bankruptcy issues. The article can be found at https://kflaw.com/crypto-in-bankruptcy-tax-apocalypse-for-celsius-customers/

The article touches on many important bankruptcy and tax issues related to cryptocurrency in the Celsius case and other crypto cases.  Jim Shenwick, Esq.  917-363-3391  jshenwick@gmail.com 

WE HELP INDIVIDUALS & BUSINESSES WITH TOO MUCH DEBT! Please click the link to schedule a telephone call with me.

  https://calendly.com/james-shenwick/15min

Client Review from Melissa ________ January 29, 2023

 "Jim was a tremendous help in sorting through a complex corporate structure and personal finance situation. Not only did he help with 3 separate bankruptcy filings, but he advised and appeared as needed in state court litigation and kept us calm during a nearly 5 year-long process and a very emotional time.  We are so grateful for his counsel and support and the successful outcomes he achieved for us."

 

What You Need To Know About Buying A Home After Bankruptcy

 HouseDigest.com has an excellent article about What You Need To Know About Buying A Home After Bankruptcy. The article can be found at   https://www.housedigest.com/1179558/what-you-need-to-know-about-buying-a-home-after-bankruptcy/

Jim Shenwick, Esq has helped many bankruptcy filers rehabilitate their credit after a bankruptcy filing so they can purchase houses or lease automobiles.  Jim Shenwick, Esq  jshenwick@gmail.com  917 363 3391

Schedule a telephone call with Jim Shenwick, Esq

Please click the link to schedule a telephone call with me.

 https://calendly.com/james-shenwick/15min

SBA EIDL Loan Repayments have Commenced according to an article in abc 11

Beginning in January 2023, millions of small businesses will have to budget for a new monthly expense. During the pandemic, federal loans granted to small businesses will begin repayment, according to a story at  https://abc11.com/small-business-ppp-loans-pandemic/12721676/

Many small businesses will now have to begin repaying their SBA EIDL loans despite a difficult business environment, including high interest rates and inflation. This may result in many businesses filing for chapter 7 bankruptcy or closing. Jim Shenwick, Esq  jshenwick@gmail.com   917 363 3391

FOR MORE BLOG POSTS ABOUT SBA EIDL LOANS SEE:

EIDL LOAN WORKOUTS AND BANKRUPTCY

https://shenwick.blogspot.com/2022/07/eidl-loan-workouts-and-bankruptcy.html

EIDL Loan Default Questions & Answers https://shenwick.blogspot.com/2022/10/eidl-loan-default-questions-answers.html EIDL LOAN DEFAULT DOCUMENT REVIEW, WORKOUT, BANKRUPTCY FILING & OFFER IN COMPROMISE https://shenwick.blogspot.com/2022/07/eidl-loan-default-document-review.html EIDL Defaulted Loans https://shenwick.blogspot.com/2022/07/eidl-defaulted-loans.html New Relief Program for SBA EIDL Borrowers Who are Having Difficulty Repaying EIDL Loans " Hardship Accommodation Plan" https://shenwick.blogspot.com/2023/05/new-relief-program-for-sba-eidl.html EIDL LOANS and SBA OFFER IN COMPROMISE PROGRAM https://shenwick.blogspot.com/2022/07/eidl-loans-and-sba-offer-in-compromise.html PPP & EIDL Fraud https://shenwick.blogspot.com/2022/08/ppp-eidl-fraud.html Better to connect-What small business owners need to know about repaying loans tied to pandemic relief from the SBA EIDL Loans https://shenwick.blogspot.com/2022/11/better-to-connect-what-small-business.html