On March 11, 2021, the President signed the American Rescue Plan Act. So, you ask, how does it help me, the average consumer? Will you be rescued?
- Stimulus payments
By now, you should have gotten $1400.00 for each adult, and each child in your house. It should have come either by electronic payment, or by paper check. If you haven’t gotten it, check here to find out: https://www.irs.gov/coronavirus/get-my-payment. If you owe on your bills, creditors in most states can seize it. See my article on this here: https://bankruptcylawchicago.com/third-stimulus-check-protected-from-collectors-or-not/
- Cancelled Student Loans are not Taxable Income
This is HUGE! It may not sound like much, but if you are trying to get your student loans forgiven—for instance, if you are disabled and can’t pay, or if the school closed before you could get a degree, or if you were in some other Federal Program, and your loan is cancelled, ordinarily, you’d have to pay taxes on the amount forgiven. So, for example, if the Federal Government cancels $20,000.00 of your student loans, you’d have to pay taxes on that amount. That would amount to a lot of money! This provision applies to loans that are discharged for any reason after December 31, 2020 and before January 1, 2026.
- Mortgage Debt Forgiveness also not Taxable Income.
If your mortgage is partially or fully forgiven by way of a short sale or loan modification or otherwise, you don’t have to pay tax on that. This law has been in effect since the 2009 recession, and is now extended through January 1, 2026. Again, it may not sound like much, but if you get a $100,000.00 mortgage forgiven, ordinarily, you’d be on the hook for a huge tax bite.
Do you feel rescued yet? I didn’t think so! Call us if you have more questions about this or need financial help. We are here to help.
Daniel J. Winter
BankruptcyLawChicago.com
djw@Dwinterlaw.com
