Central District Consumer Bankruptcy Attorney's Association

Actually, I've read authority for proposition that the Court can waive the
18% simple interest rate. I don't remember where at this point, but it's
out there.
Giovanni Orantes, Esq.
Orantes Law Firm, P.C.
3435 Wilshire Blvd. Suite 1980
Los Angeles, CA 90010
Tel: (213) 389-4362
Fax: (877) 789-5776
e-mail: go@gobklaw.com
website: www.gobklaw.com
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Actually, I've read authority for proposition that the Court can waive the 18% simple interest rate. I don't remember where at this point, but it's out there.-- Giovanni Orantes, Esq. Orantes Law Firm, P.C.
3435 Wilshire Blvd. Suite 1980Los Angeles, CA 90010Tel: (213) 389-4362Fax: (877) 789-5776e-mail: go@gobklaw.comwebsite: www.gobklaw.com
WE ARE A "DEBT RELIEF AGENCY" AS DEFINED BY FEDERAL LAW.SERVING BAKERSFIELD, LOS ANGELES, ORANGE COUNTY, RIVERSIDE, SAN BERNARDINO AND SANTA BARBARA.Note: The information contained in this e-mail message is confidential information intended only for the use of the individual or entity named. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that any dissemination, distribution or copy of this communication is strictly prohibited. If you have received this communication in error, please immediately notify us by telephone or e-mail and delete the original e-mail at (213) 389-4362 or (888) 619-8222.
IRS Circular 230 Disclosure: In order to comply with requirements imposed by the Internal Revenue Service, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

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I can tell you what I've done in the last 4 chapter 11s, although none have been confirmed or rejected yet!
1.5% per month is 18% per year. So I have my clients pay that debt off at 18% interest over 5 years. After the final payment nothing should be owed.
I can look up the code sections if you'd like but 18% is mandated by Cali and the code defers to the state rate. My understanding is you cannot alter this tax so not paying interest is probably what is getting you.
I've never done a 13, so my guess is 1. No discharge of that debt and 2. Tax man does not object because he gets even more penalties!!
-Michael Avanesian
Sent from my iPhone
On May 4, 2012, at 4:37 PM, "Link W. Schrader" wrote:
> I have been unable to find good information on the treatment of real property taxes in a plan of reorganization, and the difference, if any, of the treatment in a chapter 13 vs. chapter 11 plan.
>
>
>
> Here is an example: The debtor owes $4300 in defaulted property taxes and the confirmed plan pays this full amount, without interest over 5 years. However, the tax collector continues to add interest of 1.5% each month, plus penalties and late fees, during the five years and claims it can do this because it is a secured claimant and the penalty and interest are allowed by state law.
>
>
>
> Three years into the plan, after the debtor has paid over $2,000 to the tax collector, the balance owed on real property taxes have increased to $9,300. Clearly, the treatment in the example is not going to help the debtor.
>
>
>
> Both Riverside and Los Angeles are requiring/requesting language in chapter 11 plans such as:
>
>
>
> The Secured Property Tax Claim will be paid within the period set forth below, together with all applicable costs, fees, charges and interest pursuant to 11 U.S.C. Sections 506(b) and 511. The secured claimant shall retain its lien until the secured tax is paid in full. Payment of 25% of the total amount due shall be made annually, with the first payment due no later than April 10, 2013. Each subsequent payment will be due no later than April 10 of each subsequent year. A failure by the Debtors to make a payment to the Tax Collector pursuant to the terms of the Plan shall be an event of default, as Default is described in the Plan.
>
>
>
> In addition to the Secured Property Tax Claim, the Debtors will continue to make all post-petition real property tax payments as they come due. Pursuant to 11 U.S.C. 503(b)(1)(B) and (D), post-petition real property taxes incurred by the estate, including any fine, penalty, or reduction in credit relating to such tax, shall be an allowed administrative expense of the Debtors bankruptcy estate. The failure of the Debtors to timely make post-petition real property tax payments shall be an event of default, as Default is described in the Plan.
>
>
>
> If the Debtors fail to cure a Default as to tax payments within ten (10) days after service of a written notice of default, then the Tax Collector may enforce the entire amount of its claim, plus penalties and interest accrued under state law, against the Debtors in accordance with applicable state law remedies.
>
>
>
> I am now thinking of putting a similar treatment in chapter 13 plans to avoid problems, but Ive never had a tax collector object to a lesser treatment in a chapter 13 plan. So if the debtor in my example had actually received a discharge, would the balance owed on taxes have been discharged? I doubt it since under state law it is a lien against the property, and liens ride through bankruptcy. Ive heard that non-pecuniary penalties can be discharged, but
>
>
>
> Maybe we could have an MCLE on this one Saturday?
>
>
>
> Link Schrader, Attorney
>
> Law Office of Link W. Schrader
>
>
>
>
I can tell you what I've done in the last 4 chapter 11s, although none have been confirmed or rejected yet!1.5% per month is 18% per year. So I have my clients pay that debt off at 18% interest over 5 years. After the final payment nothing should be owed. I can look up the code sections if you'd like but 18% is mandated by Cali and the code defers to the state rate. My understanding is you cannot alter this tax so not paying interest is probably what is getting you. I've never done a 13, so my guess is 1. No discharge of that debt and 2. Tax man does not object because he gets even more penalties!! -Michael Avanesian Sent from my iPhoneOn May 4, 2012, at 4:37 PM, "Link W. Schrader" <lschrader@schrader-law.com> wrote:

Maybe we could have an MCLE on this one Saturday? Link Schrader, AttorneyLaw Office of Link W. Schrader

The post was migrated from Yahoo.

I have been unable to find good information on the treatment of real property taxes in a plan of reorganization, and the difference, if any, of the treatment in a chapter 13 vs. chapter 11 plan.
Here is an example: The debtor owes $4300 in defaulted property taxes and the confirmed plan pays this full amount, without interest over 5 years. However, the tax collector continues to add interest of 1.5% each month, plus penalties and late fees, during the five years and claims it can do this because it is a secured claimant and the penalty and interest are allowed by state law.
Three years into the plan, after the debtor has paid over $2,000 to the tax collector, the balance owed on real property taxes have increased to $9,300. Clearly, the treatment in the example is not going to help the debtor.
Both Riverside and Los Angeles are requiring/requesting language in chapter 11 plans such as:
"The Secured Property Tax Claim will be paid within the period set forth below, together with all applicable costs, fees, charges and interest pursuant to 11 U.S.C. Sections 506(b) and 511. The secured claimant shall retain its lien until the secured tax is paid in full. Payment of 25% of the total amount due shall be made annually, with the first payment due no later than April 10, 2013. Each subsequent payment will be due no later than April 10 of each subsequent year. A failure by the Debtors to make a payment to the Tax Collector pursuant to the terms of the Plan shall be an event of default, as Default is described in the Plan.
In addition to the Secured Property Tax Claim, the Debtors will continue to make all post-petition real property tax payments as they come due. Pursuant to 11 U.S.C. 503(b)(1)(B) and (D), post-petition real property taxes incurred by the estate, including any fine, penalty, or reduction in credit relating to such tax, shall be an allowed administrative expense of the Debtors' bankruptcy estate. The failure of the Debtors to timely make post-petition real property tax payments shall be an event of default, as Default is described in the Plan.
If the Debtors fail to cure a Default as to tax payments within ten (10) days after service of a written notice of default, then the Tax Collector may enforce the entire amount of its claim, plus penalties and interest accrued under state law, against the Debtors in accordance with applicable state law remedies."
I am now thinking of putting a similar treatment in chapter 13 plans to avoid problems, but I've never had a tax collector object to a lesser treatment in a chapter 13 plan. So if the debtor in my example had actually received a discharge, would the balance owed on taxes have been discharged? I doubt it since under state law it is a lien against the property, and liens ride through bankruptcy. I've heard that non-pecuniary penalties can be discharged, but
Maybe we could have an MCLE on this one Saturday?
Link Schrader, Attorney
Law Office of Link W. Schrader

The post was migrated from Yahoo.