4 Northeastern states sue Trump administration

Four northeastern democratic states have sued the Trump administration claiming the new federal cap on the $10,000 cap on local and state taxes is unfair and unconstitutional.

New York, New Jersey, Maryland an Connecticut say the new tax overhaul has upended 150 years of precedent and that the deductions are essential to prevent the feds from abridging constitutional states rights. New York State Attorney General Barbara Underwood said in a statement the new law is a result of “hyper-partisan and rushed process.” A State analysis found that the cap will increase New Yorkers taxes by $14.3 billion in 2018 an another $121 billion from 2019 to 2025.

According to the lawsuit filed yesterday in Manhattan Federal Court, the so-called SALT deduction will make it more difficult for the four states to maintain their taxation and fiscal policies, thus “hobbling their sovereign authority to make policy decisions without federal interference.”

The tax law, passed last December, caused some local governments to revise their rules to help last-minute change in federal tax strategies, while homeowners in states with the highest property taxes quickly began looking to prepay bills ahead of the cap.

In a written statement, New Jersey Attorney General Gurbir Grewal said the federal government “went after these states deliberately” in crafting the SALT deductions cap.

 

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Five Biggest Fears of Bankruptcy

After interviewing hundreds of individuals contemplating file for bankruptcy in New York, I have collected a list of the biggest fears of filing. The good news is that in a vast majority of cases these fears are unwarranted.

The top five (5) include:

    1. Fear of losing one’s job.
    2. Fear of destroying one’s credit for seven (7) years.
    3. Fear of harming the credit of the non – filing spouse.
    4. Fear that bankruptcy will make a debtor ineligible of qualifying for a student loan in the future.
    5. Fear that one will never be able to buy a house if he files for bankruptcy.

I. Clearly, the loss of a job or harming one’s chances of getting a new job is the fear most frequently cited. With few exceptions, one need not be concerned about losing a job due to filing a bankruptcy. Chances are your employers will never know you filed for bankruptcy.

The exception is if you are currently having your wages garnished by your employer. Since filing bankruptcy will stop the garnishment, your employer must be notified to stop the program.

As for a bankruptcy disqualifying a job applicant, most employers do not care if you filed for bankruptcy. The exception is if an applicant is seeking a position in the financial advisory or banking industry. In these industries, the applicant’s credit rating may be a concern, and a bankruptcy may hinder one’s chances.

II. The second most frequently cited concern is how bankruptcy will affect one’s credit in the future. Today bankruptcy will only impact your credit for a short term. twenty years ago if someone filed for bankruptcy, banks would blacklist a borrower for seven (7) years. Today, the primary focus is on one’s credit score. After being discharged from bankruptcy, the debtor can take steps to rehabilitate his/her credit score. By paying all bills on time, avoiding late payments and chargebacks, overtime a debtor can significantly improve his/her credit score to an acceptable level. If you take an aggressive approach, the restoration of your credit can be achieved in no more than one to three years, but certainly less than seven years.

III. Many debtors expressed concern that their spouse with good credit could be hurt by the debtor filing bankruptcy. Again, not true. As long as the spouse of debtor filing bankruptcy is not a co – debtor, the filing will not impact on her credit rating. However, if the spouse is a co – debtor, 100% of the obligation of the debt will fall on the shoulders of the non – filing spouse.

IV. How will filing affect the ability of the debtor to obtain student loans in the future? The ability to obtain student loan post – filing bankruptcy will depend on the financial institution, as there is no set policy.

Student loans are not dischargeable in bankruptcy. Thus many banks are not concerned if a debtor filed bankruptcy. However, even with government issued loans, the student will have to submit a credit report. If the applicant’s credit score is below the acceptable range, the application may be rejected. Due to the uncertainty and varied policies among loan issuing banks, I suggest not filing bankruptcy, if you can avoid it, if you plan to seek a student loan in the near future.

V. The fifth most frequently note of concern is the fear of is not being able to buy a home post-filing. A bankruptcy in your credit history is no longer a fear bar for obtaining a mortgage. Today credit scores rule. Anyone with sufficient income and a satisfactory credit score over 680 will likely be approved for a home mortgage. I have seen many people who have filed bankruptcy obtain a bank mortgage within one – two years after their bankruptcy has been discharged.

In conclusion, for those considering filing for bankruptcy, and have fears of the consequences, you should contact your bankruptcy attorney. You may find your fears unfounded. Perhaps bankruptcy is the best solution for you.

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How Will Bankruptcy Affect Your Future

While filing a Bankruptcy will likely affect your credit in the short term, the long-term effects, with a few exceptions, will be minimum. Today the financial and credit world runs on “credit scores”. If an individual has a high credit score, 680 or higher, having a personal bankruptcy in one’s credit history will have little or no impact on getting a loan after a year.

The key to success is to rehabilitate your credit after you go bankrupt. As you restore your credit, your credit score will gradually rise to an acceptable level. How do you restore your credit rating? First, you must pay all your bills on time, cell phone, utilities, and credit cards. If you build a history of “no lates, no chargebacks, and no disputes”, after a period of 6-9 months, you will start to see your credit score improve.

If you retain one or two credit cards after filing a bankruptcy, start using those cards, prudently. But, you must pay the cards in full every month. If you stopped using all your cards before Bankruptcy, open one or two credit cards account for the sole purpose of building up your credit. In other words, do not charge anything on your credit cards you cannot pay off at the end of the month.

If you think that the banks will not issue you a new credit card after bankruptcy, think again. You will be amazed how quickly the banks will be willing to open a new account for a person who recently filed bankruptcy. They are in the business of lending money and they know, (1) You are no longer in debt and (2) You cannot file bankruptcy for another eight (8) years. So now you have become a good risk to the bank. For most banks, the scourge of bankruptcy is gone.

How will filing bankruptcy affect your present job or job prospects?

As for the effect of filing a bankruptcy on one’s present employment, it is highly unlikely that there will be any repercussions. In fact, unless you owe your company or your boss any money, they will never know you filed for bankruptcy.

There is no law that requires one to notify their employer if they file for bankruptcy. However, there may be a company policy in some financial institutions that require notifications. This would likely be limited to positions that involve the handling of monies for clients. That policy information must be easily ascertainable from your company.

As for a new employment, some companies may require a credit score report as part of the employment application. But not every company will disqualify an applicant if he has filed for Bankruptcy in the past. Obviously, the more time has passed since the bankruptcy, the less of an impact there will be on the job prospect.

In most cases, an explanation for the bankruptcy will satisfy the employer. This is especially true if the reason for giving Bankruptcy is beyond the control of the individual. Examples are, medical problems, divorce, the current financial crisis or torts against the debtor.

For more information email me at j.weinstein@jlwlawoffices.com or call me at 212-693-3737

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