Supplemental Adoption Assistance Needs Assessment in Minnesota

In a previous post, I provided a brief overview of the Adoption Assistance program. One part of Adoption Assistance is the Supplemental Maintenance Payment. This payment is “available when a child has a diagnosed physical, mental, emotional, or behavioral disability that requires care, supervision, and structure beyond that ordinarily provided in a family setting for a child of the same age. The amount of payment for supplemental maintenance is based on the severity of the child’s needs and the effect of the child’s needs on the adoptive family.”

I think of this as being similar to a Difficulty of Care (DOC) payment that foster parents receive. 

This form is an example of what is used to determine a child’s “level.” In order for this form to be properly filled out, there needs to be a lot of documentation of the child’s behaviors and diagnosis/diagnoses. Additionally, it should be noted that there has been a “tightening” by the Minnesota Department of Human Services recently when it comes to Adoption Assistance, and so adoptive parents should be ready for some “pushback” when they submit their Adoption Assistance Agreement. It is SO important to advocate for your child when it comes to this part of the Adoption Assistance process. 

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Adoption Assistance in Minnesota

Some children who are adopted in Minnesota are eligible for Adoption Assistance. This makes adopting an older child (or sibling group) with special needs more affordable for prospective parents. The Minnesota Department of Human Services website has a helpful outline of the Adoption Assistance program.

Adoption assistance includes many different pieces, which I will talk about in greater detail in future posts. One way to get an overview of what Adoption Assistance can include is by looking at a sample Adoption Assistance Agreement. Please note that the sample to which I have linked is slightly outdated.

Here is a quick list of what adoption assistance may include:

 

Basic maintenance payment- to assist in meeting the basic needs of the child (such as food, clothing and shelter)

Supplemental maintenance payment - available when a child has a diagnosed physical, mental, emotional, or behavioral disability that requires care, supervision, and structure beyond that ordinarily provided in a family setting for a child of the same age

Medical care - Medicaid/Medical Assistance

Non-medical needs including child care (during the hours of employment, training or education of the adoptive parents), family counseling to meet a child’s needs, post adoption counseling to promote a child’s integration into the adoptive family, respite care, camping programs adapted to meet the child’s special needs, and alterations to the family home or vehicle to accommodate a child’s special physical needs. There are also other non-medical needs that adoption assistance may cover, as you can see on pages 3 and 4 of the sample Adoption Assistance Agreement that I linked to above.

 

Additionally, once the adoption is finalized, parents may be reimbursed up to $2,000 for nonrecurring adoption expenses. Nonrecurring adoption expenses may include things like court filing fees, legal fees, agency fees, transportation, food, and lodging during the “transition” phase, etc. This booklet from Hennepin County also does a good job of walking parents through the Adoption Assistance program. 

 

My advice to prospective adoptive parents is to consult with an attorney about the Adoption Assistance piece. To many people, it feels weird and “icky” to be thinking about the financial aspect of adopting children – and to think about receiving Adoption Assistance. However, when you adopt a child with special needs, there will be additional financial costs vs. raising a child without special needs. Your future children deserve every opportunity to have the brightest future they can have and to be the best that they can be. By the time they are with us and in the adoption process, they have likely experienced abuse, neglect, and trauma  - – they have suffered through these things through no fault of their own. They have been inappropriately parented. They have likely been in multiple foster care placements. It takes time, energy, love, patience, commitment, therapy, and (it is the ugly truth) money to help these children reach their potential. I am so thankful for the Adoption Assistance program because it helps adoptive parents help their children reach their potential. Do not be afraid to advocate for yourself, your family, and your child during the Adoption Assistance negotiation process.

 

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Is Adoption Affordable?

I try not to get too “political” on my blog, but I have no problem coming right out and saying that I am a major advocate for  the Making Adoption Affordable Act (HR 4373 and S. 3616). For more information on the Making Adoption Affordable Act (also known as the Adoption Tax Credit), you can click this link. The adoption tax credit certainly helps to make adoption affordable.

Additionally, if you are adopting from the foster care system, there is an Adoption Assistance program that helps make adoption affordable. In Minnesota, if you adopt through the Minnesota Waiting Children Program, you will not likely have any significant out-of-pocket costs such as agency fees, home study fees, application fees, etc. Many of the costs (up to $2,000) that you will have to pay up front – such as background check fees, fingerprinting, attorney’s fees, court filing fees – may be reimbursed once the adoption finalizes through the Adoption Assistance program. Additionally, you may be eligible to receive Adoption Assistance for your child (once the adoption finalizes) which can help you afford their medical care, therapy appointments, and help you pay for the costs of their food, clothing and shelter.

Should you adopt a child through the Minnesota Waiting Children program for the money? Absolutely not and if there are people out there who do this, I do not agree with it at all – it is wrong. However, the assistance helps make it affordable and possible for people to be able to adopt children – so money is not an obstacle for children who need stable, permanent, and loving families. If you have it in your heart to adopt a waiting child or a sibling group, look into the Adoption Assistance program and see if it makes it “doable” for you. That is what the program is there for. I believe that all waiting children deserve a permanent family and that money should not be an obstacle towards these children  finding homes.

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In Honor of National Adoption Day

Today is National Adoption Day and I am pleased to  announce 2 things today:

1) My husband and I are in the process of finalizing the adoption of our two daughters (both in elementary school) through the Minnesota Waiting Children Program :-P  ; AND

2) the title of this blog has been changed from “Minnesota Bankruptcy and Housing Blog” to “Minnesota Adoption, Bankruptcy, and Housing Blog” because I am expanding the focus of my law practice to include adoption and adoption-related issues.

This also means that I plan on blogging more often.

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Parents and their children’s student loans

This article in the New York Times, in my opinion, makes a good case for why student loans should be more easily dischargeable in bankruptcy (since the discharge of student loans in bankruptcy is practically impossible – that is my “life advice” and not my “legal advice” – by the way). Additionally, if you are a parent who is considering taking out student loans in your name for your child to attend college, I advise you to proceed with caution. The student loan and higher education systems in our country are in need of some major changes. 

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Updated means test numbers – effective November 1, 2012

The new means test numbers went into effect on November 1, 2012.

Here is a link to the updated median incomes for the means test:

http://www.justice.gov/ust/eo/bapcpa/20121101/bci_data/median_income_table.htm

There was a slight decrease in the median income for household sizes of 1 and 2 in Minnesota. This means that it may be more difficult for some people to qualify for a Chapter 7 bankruptcy in Minnesota. There was, however, a slight increase in the median income for household sizes of 3 people and up, making it a little easier for others to qualify for a Chapter 7 bankruptcy in Minnesota.

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Updated means test numbers – effective May 1, 2012

The news means test numbers went into effect on May 1, 2012. The median incomes for Minnesota increased; this means that it may now be easier for some people to qualify for Chapter 7 bankruptcy than it previously had been.

Here is a link to the updated median incomes for the means test:

http://www.justice.gov/ust/eo/bapcpa/20120501/bci_data/median_income_table.htm

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Get it in writing!

In Wentzel v. CitiMortgage, Inc., the Honorable Michael J. Davis, of the United States District Court, District of Minnesota, provides us with a reminder of why it is SO important to “get it in writing.” In this case, the Plaintiffs (Richard & Debra Wentzel), experienced financial difficulty and contacted CitiMortgage to see whether they qualified for a loan modification.

(Sidenote: Plaintiffs contacted CitiMortgage because they had received notice that their loan was being transferred to CitiMortgage, but later on CitiMortgage told the Plaintiffs that they were waiting to receive an Assignment from the previous company. So, the Plaintiffs made an unjust enrichment claim against CitiMortgage based in part on Plaintiffs’ allegations that CitiMortgage had not demonstrated that it is assignee of their mortgage and note.)

In August 2008, Plaintiffs were told they qualified for an adjusted payment of $832.58/month. In July 2009, Plaintiffs spoke with a CitiMortgage representative who told them they were not in danger of foreclosure, but the next week they were told by someone else that they had to pay $1,332 in July and August to avoid foreclosure. In February 2010, Plaintiffs were told they qualified for a lower payment of $1,250.74, and that the paperwork for the loan modification would arrive by UPS. Plaintiffs made those payments in March 2010 through November 2010, but they never received the promised paperwork. When Plaintiffs sent in their December 2010 payment, CitiMortgage refused to accept it, and allegedly told Plaintiffs that they were waiting for an assignment from Harmonic Mortgage (who Plaintiffs originally obtained their loan from in April 2006) before proceeding further.

In February 2011, CitiMortgage wrote to Plaintiffs and told them that they had been pre-approved for a modification in February 2010, but that the modification was closed in April 2010 due to not receiving a response from the Plaintiffs. Plaintiffs claimed that they responded to ALL of CitiMortgage’s requests.

On March 17, 2011, when CitiMortgage refused to accept their monthly payment, CitiMortgage told them, “As you know, your loan is in foreclosure.”

Plaintiffs sued CitiMortgage for breach of contract, promissory estoppel, fraud and misrepresentation, consumer fraud pursuant to Minn. Stat. 325F.69, and unjust enrichment. CitiMortgage moved to dismiss, using Rule 12(b)(6) – failure to state a claim upon which relief may be granted.

The Court dismissed all of the Plaintiffs’ claims EXCEPT their claim for unjust enrichment. The reason for the dismissal of the breach of contract, promissory estoppel, and fraud and misrepresentation claims was based on the Plaintiffs not having their loan modification agreement in writing, and the fact that Minn. Stat. 513.33 requires credit agreements to be in writing. Plaintiffs’ claim for consumer fraud was dismissed because a public benefit is required to use the Private Attorney General Statute (Minn. Stat. 325F.69) and the Plaintiffs’ claim was based solely on the communications between Plaintiffs and CitiMortgage; there were no allegations by Plaintiffs that CitiMortgage made misrepresentations to the public.

The Court found that Plaintiffs had properly asserted a claim for unjust enrichment, and thus that claim was not dismissed.

The major lesson in this case, for a homeowner who is in the process of getting their loan modified, is to do everything possible to get something in writing from the bank. Until you have something in writing, the bank can change the terms of your modification at its own whim (or let your house go into foreclosure after it has told you your loan is modified and after it has accepted many modified payments from you). The phone conversations that you have with the bank are not enough –  you need to get it in writing!

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Bank of America – possible principal reductions for up to 200,000 borrowers

According to a recent CNN Money article, up to 200,000 borrowers with Bank of America mortgages could obtain a reduction in the amount of principal that they owe on their mortgage, thanks to a recent settlement between the five major mortgage servicers, the federal government, and the attorneys general of 49 states and District of Columbia. According to the article, the possibility of obtaining a principal reduction  ”only applies to the mortgages [Bank of America] owns and some that [Bank of America] services for private investors. Loans backed by government-controlled agencies like Fannie and Freddie or insured by the Federal Housing Administration are not eligible for the program.” The article goes onto say that Bank of America has already identified the borrowers who may qualify and plans on reaching out to them as soon as the settlement is approved by the court. This could be great news if you are one of the lucky 200,000 borrowers.

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Will the Mortgage Forgiveness Debt Relief Act be renewed?

Will the Mortgage Forgiveness Debt Relief Act be renewed? I wish I knew the answer to that question. Right now, there is a lot of uncertainty about the renewal of the Mortgage Forgiveness Debt Relief Act. According to the IRS website, the Mortgage Forgiveness Debt Relief Act “applies to qualified principal residence indebtedness forgiven in calendar years 2007 through 2012.”

Any time that you owe a debt to someone (or an entity – such as a corporation), and that debt is forgiven or canceled, the IRS says that the amount of debt that is forgiven or canceled is income.  You also usually “get” to pay taxes on that income.

The Mortgage Forgiveness Debt Relief Act provides some homeowners with tax relief. If your home is encumbered by an underwater mortgage and you lost your home to a short sale, deed in lieu of foreclosure, or foreclosure, then the Mortgage Forgiveness Debt Relief Act might apply to you. If it applies to you, then you can exclude certain cancelled debt on your principal residence from your income (and that means you wouldn’t have to pay taxes on that “income”).

Unfortunately, the Mortgage Forgiveness Debt Relief Act expires at the end of this year (2012), and no one knows yet whether it will be renewed. My hope is that it will be renewed, because without its renewal, there could be a lot more former homeowners in serious financial trouble (owing a significant tax debt after losing their home).

If the Mortgage Forgiveness Debt Relief Act is not renewed – or if it doesn’t apply to you – there are still other ways (proving insolvency and bankruptcy) to possibly prevent owing as much in taxes. My advice is that if you are having difficulty paying your mortgage and you think that you may be losing your house to foreclosure, deed in lieu of foreclosure, or a short sale, consult with an experienced CPA or accountant as soon as possible. That way you can do everything possible to reduce the amount that you could owe.

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