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I hold a judgment lien for about $2K against a debtor who is going though BK
in California. I discovered the damage to my house on May 2003, won a
judgment on September 2003 and have had a lien on the debtors house since
Nov 2003. I have always known this guy was a deadbeat so I was not
surprised to get the Ch 13 letter. The creditor meeting is in late October.
There have been no motions to avoid liens, so far.
The Voluntary Petition states that the house is worth about 450K, - 75K
Homestead.
On the other hand the Plan states the house is worth 250K and 315K owned to
the bank. Since this is CA I am calling BS on the plan number and assuming
that the house is worth 450-315(1st mort)-75(Homestead)=60K free and clear.
The plan still states that the house is worth 0, but I will try to correct
that at the creditors meeting. Is that the proper venue?
There is some nebulous statement that his house is also attached by another
loan of 110K, but there is no written lien that I can find in the county
records, nor is it noted in any other paperwork.
Question:
1. Should I bother getting a lawyer and spending *any* money?
2. Am I screwed because sooner or later he will make a motion to avoid the
lien and I will be thrown in with the credit card companies (of which there
is 50K and counting).
3. Should I just expect to get about $200 and consider myself lucky, or is
$200 expecting too much.
4. Can I write off the loss (part or all) on my taxes, a silver lining, or
am I liable for some kind of gift tax BS if I my lien is avoided by the
court?
5. I think the guy is a crook and is making up expenses ($1K a month for
Food (eating out?), $300 charity a month, $75 cable a month) Can I call BS
at the creditor meeting or is this already set in stone?
Thanks for your help,
CFH
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Creditor from Hell wrote:
To begin with, I am not a lawyer. I can answer your question 4,
however, given enough facts -- which you have NOT given in your post.
I hold a judgment lien for about $2K against a debtor who is going though BK
in California. I discovered the damage to my house on May 2003, won a
judgment on September 2003 and have had a lien on the debtors house since
Nov 2003.
A relevant question: How did debtor damage your house? As renter?
Contractor? Seller?
Further questions relating to point 4. Are you presently living in
the house?
4. Can I write off the loss (part or all) on my taxes, a silver lining, or
am I liable for some kind of gift tax BS if I my lien is avoided by the
court?
The damages to your house may be a casualty loss, partially deductible
on
your 2003 return. However, if the the house is considered a personal
asset rather than a business asset at that time, it would be a personal
casualty loss, and not deductible if your AGI (Adjusted Gross Income)
exceeds approximately $19K -- assuming the $2K is a measure of your
loss, rather than a lesser amount you were able to get from the court.
In general, before bankruptcy, your casualty loss would be the
actual damages less the $2K "expected" payment. If the $2K becomes
unexpected, you may then ignore it for the purpose of filing your
2003 tax return. Regardless of the amount, if considered a
"personal" loss (as opposed to a "business" loss), you subtract
$100 per occurance and 10% of AGI, before it becomes an itemized
deduction. If a "business" loss, it's deductible on whatever
form the business profits would be included in.
I don't think the "bad debt" provisions of the tax code apply -- if
they DID, you would instead be able to claim a $2K loss when the
debt was nullified by the Court. If your house was a business
asset, it would be a business loss; if a personal loss, it would
be a $2K long term capital loss.
No gift tax BS. In fact, the debtor may have the tax basis of his
house reduced by the $2K, leading to a $2K increase in the taxable
gain on sale. This depends on factors which you and the creditors
may not need to know.
5. I think the guy is a crook and is making up expenses ($1K a month for
Food (eating out?), $300 charity a month, $75 cable a month) Can I call BS
at the creditor meeting or is this already set in stone?
I can't see the court approving ANY payments to charity; and it seems
to me that previous payments to charity might be reversed as
preferential
payments. Unfortunately, $75 for cable sounds realistic, although
perhaps
not allowable by the court. But again, I am not a lawyer.
--
This account is subject to a persistent MS Blaster and SWEN attack.
I think I've got the problem resolved, but, if you E-mail me
and it bounces, a second try might work.
However, please reply in newsgroup.
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I hold a judgment lien for about $2K against a debtor who is going though BK
in California. I discovered the damage to my house on May 2003, won a
judgment on September 2003 and have had a lien on the debtors house since
Nov 2003. I have always known this guy was a deadbeat so I was not
surprised to get the Ch 13 letter. The creditor meeting is in late October.
There have been no motions to avoid liens, so far.
The Voluntary Petition states that the house is worth about 450K, - 75K
Homestead.
On the other hand the Plan states the house is worth 250K and 315K owned to
the bank. Since this is CA I am calling BS on the plan number and assuming
that the house is worth 450-315(1st mort)-75(Homestead)=60K free and clear.
The plan still states that the house is worth 0, but I will try to correct
that at the creditors meeting. Is that the proper venue?
There is some nebulous statement that his house is also attached by another
loan of 110K, but there is no written lien that I can find in the county
records, nor is it noted in any other paperwork.
Question:
1. Should I bother getting a lawyer and spending *any* money?
2. Am I screwed because sooner or later he will make a motion to avoid the
lien and I will be thrown in with the credit card companies (of which there
is 50K and counting).
3. Should I just expect to get about $200 and consider myself lucky, or is
$200 expecting too much.
4. Can I write off the loss (part or all) on my taxes, a silver lining, or
am I liable for some kind of gift tax BS if I my lien is avoided by the
court?
5. I think the guy is a crook and is making up expenses ($1K a month for
Food (eating out?), $300 charity a month, $75 cable a month) Can I call BS
at the creditor meeting or is this already set in stone?
I can help you with #4. If you itemize your income tax deductions,
then you can write off the entire unpaid debt as a "bad debt loss" if
it is never repaid.
Gift tax does not apply here, and even if it did, you can still give
away up to $11,000 each year before gift taxes become an issue.
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