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The 411 on Mortgage Forbearances

There are countless circumstances that can lead to homeowners falling behind on their mortgages.  Hurricane Harvey has forced thousands of coastal Texans into financial hardship.  When going through a hardship, homeowners might want to ask for a break from their lender and at that time, they could be offered a forbearance.

What is forbearance? The definition of forbearance is an agreement to not enforce something (such as a debt, right, or obligation) that is due. When it comes to mortgages, a forbearance is a special agreement between a lender and a borrower to delay payment(s) or even postpone a foreclosure.

What are the benefits? A forbearance can lower or temporarily suspend your monthly payment, giving you time to get back on your feet and improve your financial situation.  It is much less damaging to your credit report than a foreclosure and can be a tool to help you avoid foreclosure altogether.

How do they work? A forbearance is an agreement you and your lender make.  Some lenders will talk about forbearance as a form of “loss mitigation,” meaning it’s a tool lenders use to help people avoid the loss of their homes. The agreement can be to reduce your monthly mortgage payment—or suspend it completely—during the forbearance period. NOTE: You will have to repay any payments not made during the forbearance period. If you qualify for forbearance, you and your mortgage company should discuss the forbearance terms:

  1. length of the forbearance period,
  2. reduced payment amount (if the payment is not suspended), and
  3. the terms of repayment.

Here is where it gets tricky – After the forbearance period has ended, you will need to repay the amount that was reduced or suspended. Usually, this means that you must pay a lump sum (sometimes called “balloon”) payment of the amount that was due and accruing during the forbearance period.

What if you can’t afford a lump sum/balloon payment? Your lender should give you other options, assuming you qualify, to help you stay in your home and avoid foreclosure.  They could agree to add a specific amount to your payments each month until the entire amount is repaid or they could offer you a modification that would eliminate the past due amount and extend the overall term of your loan.

An attorney can help you fully understand all of your foreclosure prevention options and/or provide you help in navigating through the process. Lone Star Legal Aid’s Foreclosure Prevention Project can evaluate your situation and provide assistance if you’re eligible.  To apply for assistance with Lone Star Legal Aid, call 1- (800) 733-8394.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Despite 64 inches of Record Rainfall, Decimating Affordable Housing, Port Arthur & Jefferson County Left Out of Texas’ Plan for the Allocation of Harvey Relief Funds

Port Arthur, TX–The State of Texas Plan for Disaster Recovery: Hurricane Harvey, published on January 18, 2018 by the Community Development & Revitalization Program of the Texas General Land Office, fails to allocate any funds to Jefferson County despite relying on the storm’s impacts in this area to tell the Tale of Harvey.

Lone Star Legal Aid’s Equitable Development Initiative’s Environmental Justice team represents the Port Arthur Community Action Network (PA-CAN). PA-CAN is a community organization created after the storm to address the environmental releases and other public health issues in Port Arthur severely impacting the quality of life for residents. “PA-CAN” has a double meaning; it is a network for encouraging community awareness and action, with a fervent belief that “Port Arthur Can” be better and rise from the ashes like a phoenix,” says resident John Beard. In the wake of Harvey, Lone Star Legal Aid and PA-CAN hosted disaster relief legal clinics for Port Arthur residents. PA-CAN also retained Lone Star to successfully advocate on their behalf for the closure or relocation of a hurricane debris site that was located across the street from a low-income minority neighborhood in West Port Arthur.

Seventy-four thousand homes were flooded in the county with twenty-two thousand of those in the City of Port Arthur that reached up to six feet of water.  Without funding, Jefferson County has little chance of maintaining its population to the levels it had before the storm.  Many families have decided to leave the area permanently – detrimentally taking Port Arthur’s tax base and future for opportunity. Beard says, “Help is needed to restore lives, homes and city services; without this help, Port Arthur will cease to be a real city.  It, nor its people, deserve this.” Right now, there is no place to live.

Last month, Jefferson County suffered another heavy rain; they received ten inches in a twenty-four hour period of time. Port Arthur flooded again causing more frustration for residents and officials’ relief efforts. This rain came after the release of the state’s relief funds allocation plan, inducing hopelessness, PA-CAN has noticed that even more residents have decided to flee the area.

While it is home to wealthy industries, a quarter of Port Arthur’s population lives below the poverty level with the median household income for the city (in 2016) being estimated at $32,003.  The per capita income in the past twelve months for the city was $18,519.  The people of Port Arthur were already struggling before the storm and lack the ability to recover from Harvey on their own.

The analysis that GLO uses to determine the funding allocation is weighted against low-income and renter households. For example, the analysis looks at low to moderate income households (LMI) who are treated unfairly because of the Plan’s reliance on FEMA data. FEMA’s pre-existing condition policy leads to an undercounting of damage of LMI households.  Specifically, in cases where a FEMA inspector fails to differentiate between disaster-related damage and existing disrepair, FEMA claims are being denied.  They’re being denied as a result of the conditions of poverty.  LSLA’s Amy Dinn says, “After working in the Port Arthur area over the last several months, we were very disappointed that GLO left out Jefferson County given the devastation we saw in that community after the storm. Although the people of Port Arthur are resilient, they cannot be expected to recover without any financial assistance at all.”

What about renters? The state’s plan uses their personal property loss to determine their unmet needs.  With personal property loss being highly variable, unmet needs will be undercounted in areas with lower income, like Port Arthur.

The plan also adds emphasis on allocating funds towards infrastructure.  While all aspects of recovery are important, including plans for prevention of Texas cities under water, it is unlikely that the funds already promised will be adequate to cover basic housing needs.

Lone Star Legal Aid hopes that the State of Texas and the General Land Office reconsider the allocation of these initial funds and include hard-hit Jefferson County, and if not, that the county be first in line for funds in the next allocation.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

Trouble with the IRS? An Offer In Compromise May Be Right For You

Taxpayers who have received an audit notice from the Internal Revenue Service might be in luck if there are doubts about their liability or collectability.  There are even other exceptional circumstances for the IRS to accept what is called an Offer in Compromise.  Lone Star Legal Aid’s Low Income Taxpayer Clinic can help with this!

What is an Offer in Compromise?  An agreement between a taxpayer and the Internal Revenue Service that settles a taxpayer’s tax liabilities for less than the full amount owed.  Usually, taxpayers who can afford to make payments via an installment agreement will not qualify for an OIC.

Who is eligible? Taxpayers who have filed all tax returns, made all required estimated tax payments for the current year and made all required federal tax deposits for the current quarter if the taxpayer is a business owner with employees.

The IRS may accept an OIC based on three grounds:

  1. Doubt as to liability – A compromise meets this only when there is a genuine dispute as to the existence or amount of the correct tax debt under the law.
  2. Doubt as to collectability – A compromise meets this only when the taxpayer’s assets and income are less than the full amount of the tax liability.
  3. Effective Tax Administration – A compromise meets this when requiring payment in full would either create an economic hardship or would be unfair because of exceptional circumstances.

Low Income Taxpayers are usually eligible for our assistance in these matters and would not have to do this alone.  Although the forms are available via IRS.gov, an attorney can help fill them out for you, communicate with the IRS on your behalf, and help you better understand what is going on.  If you are low income or speak English as a second language, our Low-Income Taxpayer Clinic can evaluate your situation and provide help at no cost.

There is an application fee for an Offer in Compromise under usual circumstances.  This fee is waived if the OIC is based on doubt as to liability or if the taxpayer qualifies for the low-income exception.  For the IRS, this exception applies if the taxpayer’s total monthly income falls at or below 250% of the federal poverty guidelines.

Remember, the IRS can audit you for the past three years or even longer if there is a reasonable belief that there is fraud involved.  Remember that if you sign a tax return, you are agreeing that everything on it is correct.  If there are fraudulent items on your return, you will be held responsible.  Don’t be fooled by tax preparers who promise to get you a higher refund – your refund should only reflect what you are actually eligible for.

Do research on your tax preparer and make sure they are reputable.  If you make less than $55,000 a year, you are eligible for free tax preparation assistance through the IRS’s Volunteer Income Tax Assistance programs.  You can find one in your area by going to www.irs.gov/vita or by calling 800-906-9887.  The AARP also runs a Tax Counseling for the Elderly program for people 60 and over.  These programs are staffed by trained volunteers.  Most people who make under $55,000 have fairly simple returns, so you should not be paying hundreds of dollars for tax preparation.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

February is Teen Dating Violence Awareness Month

Teen Dating Violence Awareness Month was created to engage, educate, and empower young people to prevent and end abusive relationships. 

Everyone deserves to be in a safe and healthy relationship. You can help make that happen by raising awareness about the issue, saying something about abuse when you see it and organizing your friends to make a difference.

Remember to wear #orange4love on Tuesday, February 13, 2018, and share why you wear orange via social media.

Loveisrespect was launched in February 2007 as the first 24-hour resource for teens who were experiencing dating violence and abuse and is the only teen helpline serving all of the United States and its territories.  In 2011, loveisrespect grew even stronger as The Hotline partnered with Break the Cycle, another national leader in preventing dating abuse.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

 

IRS Imposters Targeting Taxpayers

Tax season may just be getting started, but tax scammers have been hard at work. In fact, the Federal Trade Commission (FTC) has gotten thousands of complaints about one kind of scammer in particular — IRS imposters.

Here’s how they work: scammers posing as IRS officials call and say you owe taxes. They threaten to arrest or deport you, revoke your license, or even shut down your business if you don’t pay right away. They may know your Social Security number — or at least the last four digits of it — making you think it really is the IRS calling. They also can rig caller ID to make it look like the call is coming from Washington, DC.

Before you can check out the callers, you’re told to put the money on a prepaid debit card and tell them the number — something no government agency would ask you to do. Once you do it, you find out it was a scam, and the money is gone.

If you owe — or think you owe — federal taxes, call the IRS at 800-829-1040 or go to irs.gov. IRS workers can help you with your payment questions. The IRS doesn’t ask people to pay with prepaid debit cards or wire transfers and doesn’t ask for credit card numbers over the phone. When the IRS contacts people about unpaid taxes, they usually do it by mail, not by phone.

Report IRS imposter scams to the Treasury Inspector General for Tax Administration (TIGTA) online or at 800-366-4484, and to the FTC at ftc.gov/complaint.

Speaking of tax scams, this is Tax Identity Theft Awareness Week. Tax identity theft happens when someone files a phony tax return using your personal information — like your Social Security number — to get a tax refund from the IRS. It also can happen when someone uses your Social Security number to get a job or claims your child as a dependent on a tax return. Tax identity theft is the most common form of identity theft reported to the FTC.

Tax identity theft victims typically find out about the crime when they get a letter from the IRS saying that more than one tax return was filed in their name, or IRS records show they received wages from an employer they don’t know. If you get a letter like this, don’t panic. Contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.  If you’re a victim of tax identity theft visit IdentityTheft.gov to help you recover from identity theft.

Visit our Low Income Taxpayer Clinic‘s page for more information on how we can help as well as other resources and IRS tax tips.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

Tax Scammers Might Target You: Here’s What to Do

tax-idtheft-banner

It’s that time of year — tax time. It’s also a great time to get up to speed on tax-related scams. Here are two ways tax scammers might target you and what you can do about it:

Tax identity theft

This kind of identity theft happens when someone files a fake tax return using your personal information — like your Social Security number — to get a tax refund. Tax identity theft also happens when someone uses your Social Security number to get a job. You find out about it when you get a letter from the IRS saying:

  • More than one tax return was filed in your name, or
  • IRS records show wages from an employer you don’t know

If you get a letter like this, contact the IRS Identity Protection Specialized Unit at 800-908-4490. You can find more about tax identity theft at ftc.gov/taxidtheft and irs.gov/identitytheft.

IRS imposter scams

This time scammers aren’t pretending to be you — they’re posing as the IRS. They call you up saying you owe taxes and threaten to arrest you if you don’t pay right away. They might know all or part of your Social Security number, and they can rig caller ID to make it look like the call is coming from Washington, DC – when it could be coming from anywhere. Leaving you no time to think, they tell you to put the money on a prepaid debit card and tell them the card number right away.

The real IRS won’t ask you to pay with prepaid debit cards or wire transfers, and won’t ask for a credit card number over the phone. When the IRS contacts people about unpaid taxes, they usually do it by mail. You can report IRS imposter scams to the Treasury Inspector General for Tax Administration (TIGTA) online or at 800-366-4484, and to the FTC at ftc.gov/complaint.

Visit IdentityTheft.gov

IdentityTheft.gov is the federal government’s one-stop resource to help you report and recover from identity theft. You can report identity theft, get step-by-step advice, sample letters, and your FTC Identity Theft Affidavit. These resources will help you fix problems caused by the identity theft.

Visit our Low Income Taxpayer Clinic‘s page for more information on how we can help as well as other resources and IRS tax tips.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

Are you eligible for the earned income credit?

For Immediate Release

Everywhere, USA – Workers may get a larger tax refund this year because of the Earned Income Tax Credit, but you must file a tax return to claim it!  Tomorrow, January 26, 2018, is Earned Income Tax Credit Awareness Day, a nationwide effort to increase awareness about EITC and free tax preparation sites.

What is the EITC? The Earned Income Tax Credit is an anti-poverty measure administered through the tax system to low and moderate income families with children.  For some families, this credit can represent up to a third of their total income for the year.

Who is eligible? The Earned Income Credit can be claimed by parents or legal guardians only.  CPS placements, Powers of Attorney, or other informal arrangements are not good enough.  There are also residency, citizenship, and support requirements.  A reputable tax preparer will be able to analyze your situation to ensure you qualify.

Some parents believe that the credit is theirs to give away and allow a relative or friend claim their child.  This is not allowed and is considered fraud.  The EITC is actually attached to the child and only a parent or legal guardian is allowed to claim it.  This situation is most common when parents live with family or friends that have helped them provide support to their children.  The IRS has become much more efficient and diligent in catching this fraudulent use of the EITC. They will audit and the person who unlawfully claimed the credit will have to pay it back along with penalties and interest.  This can even lead to the parent being banned from taking the credit for a period of up to ten years.

Some parents with custody arrangements agree to let the noncustodial parent claim some benefits related to the children.  While this may apply to the dependency exemption or the child tax credit, it does not apply to the EITC.

If you are self-employed and claiming the EITC, it is crucial that you maintain records of your income and business expenses.  The IRS audits self-employed people at a higher rate than employees because of the greater potential for fraud.

People with no children can also claim the EITC! However, if you’re filing as single, you must make under $15,010 annually or less than $20,600 if filing jointly with your spouse. You also still have to meet the general EITC rules; you can’t be someone else’s dependent and you have to be between the 25 and 65 years of age.

The IRS can audit you for the past three years or even longer if there is a reasonable belief that there is fraud involved. Remember that if you sign a tax return, you are agreeing that everything on it is correct.  If there are fraudulent items on your return, you will be held responsible.  Don’t be fooled by tax preparers who promise to get you a higher refund – your refund should only reflect what you are actually eligible for.

Do research on your tax preparer and make sure they are reputable.  If you make less than $55,000 a year, you are eligible for free tax preparation assistance through the IRS’s Volunteer Income Tax Assistance programs.  You can find one in your area by going to www.irs.gov/vita or by calling 800-906-9887.  The AARP also runs a Tax Counseling for the Elderly program for people 60 and over.  These programs are staffed by trained volunteers.  Most people who make under $55,000 have fairly simple returns, so you should not be paying hundreds of dollars for tax preparation.

Visit our Low Income Taxpayer Clinic‘s page for more information on how we can help as well as other resources and IRS tax tips.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media contact: Clarissa Ayala

This release was written by our Low Income Taxpayer Clinic Director, Karyna Lopez.  Ms. Lopez holds a B.A. from Miami University, a J.D. from Loyola University New Orleans School of Law, and an LL.M. in Tax Law from University of Houston Law Center.

W.M. Keck Foundation Awards Lone Star Legal Aid $250,000 Hurricane Harvey Relief Grant

For Immediate Release

Houston, TX — The W.M. Keck Foundation has awarded Lone Star Legal Aid a $250,000 grant to support LSLA’s program-wide Hurricane Harvey relief efforts by providing additional staff and resources in its Disaster Relief Unit. The attorneys and paralegals in this unit assist survivors with the complex legal issues that arise after a disaster.

The W.M. Keck Foundation was established in 1954 in Los Angeles by William Myron Keck, the founder of The Superior Oil Company. “Mr. Keck envisioned a philanthropic institution that would provide far-reaching benefits to humanity.”[1] Today, the Foundation continues Mr. Keck’s vision and primarily supports science, engineering, and medical research as well as undergraduate research programs.

Although the Foundation does not usually fund legal services are outside of the Los Angeles area, it decided to make a special Hurricane Harvey relief grant to Lone Star Legal Aid as a way of giving back to the hometown of Superior Oil.  W.M. Keck founded Superior Oil Company in Houston, Texas in 1921.  The company was sold to Mobil Oil in 1984, and the proceeds funded much of the W.M. Keck Foundation’s endowment.

The W.M. Keck Foundation’s generous gift to Lone Star Legal Aid will result in critically important benefits for Hurricane Harvey survivors. With disaster legal services, Lone Star Legal Aid attorneys and paralegals are able to assist survivors with relocation and transitional housing; evictions and lease terminations; foreclosures; home repair scams; insurance claims and appeals; property rights, title-clearing, property related probate or tax problems, and of course a large number of FEMA appeals.

Lone Star Legal Aid’s Director of Disaster Legal Services, Saundra Brown, stated that “providing us with valuable resources we wouldn’t normally be able to afford, including the opportunity to add additional staff, will allow us to assist greater numbers of Harvey survivors and successfully resolve the short- and long-term legal problems they face. We’ve spent years over 15 years helping tens of thousands of disaster survivors and we are ready to help survivors of Harvey as well.”

The W. M. Keck Foundation seeks to generate far-reaching benefits for humanity by supporting pioneering discoveries in science, engineering and medicine, and organizations that enrich the lives of children, youth, and families.  For more information about the W. M. Keck Foundation, visit http://wmkeck.org.

Lone Star Legal Aid is a 501(c)(3) nonprofit law firm focused on advocacy on behalf of low-income and underserved populations. Lone Star Legal Aid serves the millions of people at 125% of federal poverty guidelines that reside in 72 counties in the eastern and Gulf Coast regions of Texas, and also 4 counties of southwest Arkansas. Lone Star Legal Aid focuses its resources on maintaining, enhancing, and protecting income and economic stability; preserving housing; improving outcomes for children; establishing and sustaining family safety and stability, health and well‐being; and assisting populations with special vulnerabilities, such as those who have disabilities, or who are elderly, homeless, or have limited English language skills. To learn more about Lone Star Legal Aid, visit our website at www.lonestarlegal.org.

Media Contact: Clarissa Ayala

 

[1] http://wmkeck.org/about-us/history