Category Archives: Bankruptcy Questions

Michigan Bankruptcy Myths

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Here are 10 myths about the Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 13 Michigan bankruptcy laws:

1. You Cannot File Bankruptcy Under The New Law

Many people believe that the new bankruptcy law passed in 2005 essentially made bankruptcy unavailable to most people. While eligibility for a Chapter 7 bankruptcy may depend on your income, bankruptcy is still available. In many cases, all of the benefits under the old Michigan law remain under the new law.

2. You Will Lose Your House

While you cannot wipe out a mortgage in bankruptcy, if you are able to maintain your payments on your house you can keep it. If you file a Chapter 13 monthly payment bankruptcy, you can use your bankruptcy plan to catch up past due payments over a much longer period than the bank is like.

3. You Will Lose All Your Possessions

People are often afraid that if they file bankruptcy they will lose everything they have. The new Michigan bankruptcy laws generally allow you to keep personal items such as the equity in your home, appliances, furniture, vehicles and similar household property. In most cases, you can also keep your retirement accounts.

4. Your Bankruptcy Will Be Public Knowledge

While anyone in theory can go to the Bankruptcy Court and review case files, this is very uncommon. Most people that file bankruptcy do so without their friends or family knowing anything about it.

5. You Will Never Be Able To Get Credit Again

While bankruptcy has a negative effect on your credit rating, it also reduces your overall debt. Many individuals are able to rebuild their credit over a matter of a few years after filing bankruptcy, and find that bankruptcy itself does not prevent them from obtaining loans for a vehicle or a home.

6. Bankruptcy Cannot Wipe Out Court Judgments

Many people believe that once a there is a court judgment there is nothing they can do. In fact, bankruptcy prevents a court judgment from being collected. However, certain judgments, such as divorce judgments, generally are still collectible.

7. Creditors Will Continue To Call You

Once you file bankruptcy, the law prevents a creditor from contacting you directly or by phone or mail in an attempt to collect a debt.

8. You Can Pick Or Choose Which Debts To Include In A Bankruptcy

When you file Bankruptcy, you need to notify all of your creditors. Some people prefer to leave certain debts off their bankruptcy and “not include” them in the bankruptcy. While on some cases you can agree to pay a debt despite the bankruptcy, you must list all of your debts and creditors in the bankruptcy papers.

9. You Still Owe All The Unpaid Back Taxes

While taxes are sometimes non-dischargeable, you can often discharge personal income taxes as long as they are at least 3 years old and you have filed returns.

10. Filing Bankruptcy Is Difficult

While it is important to carefully review all of the information included in a bankruptcy filing, we strive to make the process very smooth and relatively painless.

Call Firebaugh & Andrews today for your free evaluation. 734-722-2999

5 Bankruptcy Myths Debunked

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While some assume that a bankruptcy filing means the person can’t resist the temptation of credit cards (and in some cases, it may), most people who will file for bankruptcy do so for other reasons. Here’s a look at some of the myths surrounding consumer bankruptcy.

1. People who file for bankruptcy are financially irresponsible. “There’s always going to be some kind of abuse, but it’s far more likely that people run into very serious personal problems in one of three areas: losing their job, going through a divorce, or suffering a serious illness,” says Walter W. Miller Jr., who teaches bankruptcy law at Boston University School of Law.

Long-term unemployment, the legal fees associated with divorce, the cost of running two households following a divorce, or the high cost of medical care have all driven well-intention Americans into bankruptcy. As of April 2012, more than 5.2 million Americans had been unemployed for six months or longer, according to the Bureau of Labor Statistics. Meanwhile, a 2011 survey by the Centers for Disease Control and Prevention found that 20 percent of American families had problems paying medical bills in the past year.

2. Bankruptcy discharges all past debts. Many people file bankruptcy hoping they’ll be able to start fresh afterwards, but several types of debt are not discharged by bankruptcy. “If you have domestic support obligations [such as alimony or child support], those can’t be removed under any circumstances, “If you have to pay restitution because of a crime, that’s another debt that can’t be removed.”

As a result of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, student loan debts also fall in that category, although a Congressional bill called the Fairness for Struggling Students Act would allow private student loans to be discharged in bankruptcy court. According to Epstein, student loans can be forgiven if you’re able to prove a hardship such as permanent disability, but that process is separate from bankruptcy.

Tax debts are sometimes reduced or discharged depending on the circumstances, but as Epstein says, “if you didn’t file tax returns, there’s no way you’re going to get those tax debts removed.”
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Nine Reasons to File Bankruptcy in the New Year

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Is this the year you’ll get your financial house in order? Here are nine reasons why this may be the year you take stock finally do something about that debt you’ve been struggling to manage.

1.  Eliminate Crippling Credit Card Debt

Are you making the minimum payments on your credit card debts?

Are you missing payments on your credit card debts?

Are you taking cash advances or using your credit cards to pay living expenses like groceries, utilities or even car payments?

Have the credit card companies increased your interest rates?

If any of these is true, it’s time to think about how you’re going to retire that debt. If you’ve looked at how to manage the debt to get it paid off, and that doesn’t seem workable to you, consider filing a bankruptcy case. It may be the only way to eliminate the debt once and for all.

2.  Eliminate Unpaid Medical Debt.

Medical debt is one of the major reasons many people file bankruptcy. It’s often not something one can plan for. Even if you have insurance, the co-pays may be unexpected and more than you can handle. You can attempt to negotiate a reduced payment or set up payments, but if you find it a strain to make those payments, bankruptcy might be a viable alternative for you.

3.  Get Rid of Bill Collectors. 

This is a huge reason people file bankruptcy. They just can’t stand the calls and letters anymore. There are laws designed to protect consumers from unscrupulous collection agents, but those laws are ignored every day.

Even when the bill collectors follow the rules, you still may have too many accounts to manage successfully. Filing bankruptcy will stop the calls and letters.

4.  Stop a Foreclosure, Repossession,  Garnishment, Tax Levy, Eviction, Utility turn off or Lawsuit.

The same way that bankruptcy stops bill collectors from calling and demanding payment, bankruptcy can prevent a foreclosure of your house, repossession of your car or other collateral, a garnishment of your wages or bank account, a taxing authority like the IRS from taking your property, or a lawsuit being filed against you or continued.

It can also help postpone an eviction or prevent immediate turn off of certain utilities, like water, power or gas. The automatic stay usually goes into effect when the case is filed. Except for some limited circumstances, the automatic stay will prevent or stop all these collections actions from going forward.

5.  Include 2015 Taxes in a Chapter 13.

If you owe federal or state taxes for 2015, by waiting until January 1st to file, you should be able to include those taxes in a Chapter 13 case. Such recent taxes cannot be discharged in a Chapter 7 case, but their payment can be managed in a Chapter 13 case so that they are payable over a longer period of time than usual.

6.  Purge Holiday Debt.

It’s not pretty, but we know that some people do charge up debt to make their holidays merrier. You have to be careful with this one, however. If you charged debt intending to include it in a bankruptcy case, that could backfire on you. In addition, there are restrictions on the dischargeability of recent debts for cash advances or luxury purchases. You should consult a qualified bankruptcy attorney, who can help you determine the best timing for a bankruptcy after you’ve charged up debts.

7.  Manage Old Taxes.

Many old tax debts can be discharged in a bankruptcy case. The rules for determining which debts are dischargeable and which are not are tricky. Timing is often an issue because the dischargeability may be based on when and if returns were filed, when the IRS takes certain actions, and subsequent actions by the taxpayer. If you file your case too soon, before relevant dates and deadlines have passed, you could be forever barred from discharging that tax debt in a later bankruptcy case.

8.  Manage Student Loans.

Using bankruptcy to manage student loans can be one of the most helpful reasons to file. Student loans are notoriously difficult to discharge in a bankruptcy case, but filing bankruptcy can help in at least two ways. If you file a Chapter 7 case, you might eliminate other debt, like credit card or medical debt.

You can use those resources to pay student loans. In addition, you may be able to use a Chapter 13 case to force your lender to accept lower payments, at least for the short run.

9.  The Stress is Affecting Your Work or Home Life.

Of course financial issues can cause stress. It strains marriages. It causes excessive worry. It can lead to health issues. It can cause you to miss work or even lose your job. Check out these articles to learn more about managing your emotions during a bankruptcy case

Call Firebaugh & Andrews today for your free consultation 734-722-2999

Bankruptcy Myths Debunked: Fact vs. Fiction

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When you think of bankruptcy, what words pop into your head? Failure? Broke? Bottom? The end? Humiliation?

Maybe once upon a time, but not so much anymore. While bankruptcy should never be a first choice, in some cases, it may be the only choice. Before you decide whether or not bankruptcy is right for you, we’re debunking the top five bankruptcy myths to bring you the facts.

1. Myth: All bankruptcy options are essentially the same

Fact: Not true. The three you may have heard of — Chapter 7, Chapter 11 and Chapter 13 – are very different. Many individuals file under Chapter 7, which usually allows them to erase most of their debt in a matter of months. Chapter 7 has a higher success rate and is cheaper to file than Chapter 13, which tends to take a lot longer because it requires individuals to use their disposable income to repay a percentage of their debt over a five year period. Whether you qualify for a Chapter 7 or Chapter 13 is dependent on your state’s median income. Then there’s the Chapter 11 bankruptcy, which involves the financial reorganization of a business and can take many years. To know which option is right for you, consult with a bankruptcy attorney. Most consultations are free and can give you a much clearer picture of which option is most realistic for your situation.

2. Myth: If you file, you’ll lose everything you own

Fact: This may be the most common myth, and, unfortunately, it keeps people from filing when it may be the best option for some. Bankruptcy laws vary from state to state, but all states protect certain assets, such as your house, car, retirement plan, household goods and clothing. Bankruptcy should never be the first option for dealing with overwhelming debt, but it may be the best option depending on the individual circumstances. Before deciding on bankruptcy, research and consider all of your options — from hardcore DIY budgeting,  consumer credit counseling, or negotiating a settlement — bankruptcy should be your last option, but it doesn’t mean that it can’t be the right option depending on your financial situation.

3. Myth: You’ll never be able to qualify for a loan again

Fact: Nope. It’s true that filing for bankruptcy will stay on your credit report card for 10 years, but it doesn’t mean you won’t ever be able to borrow or qualify for a loan again. The best way to recover from bankruptcy is jump back into the game and work at gradually rebuilding your credit — start with a secured card and manage it wisely.  You’ll get credit card offers in the mail long before that 10 year mark. They will be from lenders offering cards with very high interest rates. Resist the temptation. Another tip, if you have a credit card with no balance when you file for bankruptcy, you don’t have to list it as a creditor since you owe it no money, and you might be able to keep that card after you file. Because it will cost you a lot more to borrow money after you file, if you’re planning to buy a house or a car anyway, you might want to consider your options before you file. Having said that, don’t max out all your credit cards and then file for bankruptcy. Bankruptcy judges and the trustee assigned to your case will review your purchases before you file and they very well may conclude that your attempt to file for bankruptcy constitutes fraud.

4. If you file for Chapter 7 bankruptcy, all debts are wiped clean

Fact: Dream on! Certain types of debts cannot be erased, including child support, alimony, government-issued student loans, legal settlements you’ve been ordered to pay and debts incurred as the result of fraud. This is a major issue for consumers defaulting on student loan debt and definitely an important fact to consider before opting to file.

5. Myth: If you’re married, both of you must file

Fact: This is true a lot of the time but not always. If the debt is in one spouse’s name, there is no need for both to file. In fact, in that case, they shouldn’t both file. Before you decide, consult with a bankruptcy attorney for the best advice –initial consultations are usually free and worth the time. More often than not, debt is in both their names, so both must file.

Bonus Myth: Only “losers” file for bankruptcy

Fact: Most people who file didn’t do anything risky or reckless that led to their financial mess. They file because fate has dealt them a blow – divorce, loss of a job, identity theft or a serious illness – that wreaked havoc other finances. Most file after months — or even years — of struggling to pay their bills and falling more and more behind. Bankruptcy is not always the answer, but for some it may be the only answer.

Call Firebaugh & Andrews today for your free consultation  734-818-0948

Do I Have to List All My Credit Cards in my Bankruptcy?

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The Bankruptcy Code requires a debtor to treat all like creditors alike. This means  you cannot chose to list some creditors in a bankruptcy while keeping other creditors out of the bankruptcy. The Bankruptcy Code requires a debtor to list all creditors or people they owe money to in the bankruptcy.

However, if you have a zero balance on a credit card at the time you file the bankruptcy then that particular company is not a current creditor of yours because you do not owe them any money. Therefore, you are not required to list them as a creditor in your bankruptcy.

However, just because you do not list a particular credit card does not necessarily mean you can keep using that account. Credit card agreements almost always have provisions that allow the credit card company to close the account in the event of a bankruptcy or may close or suspend an account for any other reason permissible by law.  So even though you do not list a particular credit card on your bankruptcy if they discover you have filed a bankruptcy (and they do have ways of checking for bankruptcy filings) they may close your account.

Questions call Firebaugh & Andrews for your free consultation 734-722-2999

Two ways to buy a house being after bankruptcy in Michigan.

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Being declared bankruptcy under one of the bankruptcy-protection act prove to be devastating to many. This “many” includes the home owners or buyers. The buyers dream get shattered being declares a bankrupted personal. No banks or mortgage firm will allow him or her to have the house he or she wants to purchase. But there’s a couple of ways which can let them to have their dream home.
1. Be Patient: Wait for one or couple of years before buying a house. In the period one should either pay off the debt completely or in maximum. A retirement plan or 401(k) assets is also helpful in this matter. The individual, also need to remember, should save as much as possible during this period as the down payment will be high and paying that needs a deposit not a loan or credit as it will become added-burden on them.

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Facing Bankruptcy While Living in Michigan

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Michigan residents who find themselves overwhelmed with debt can seek relief under the federal bankruptcy laws. There are two common forms of bankruptcy for individuals: Under Chapter 7, the courts sell off all non-exempt assets to pay off as much of your debt as possible and under Chapter 13, you keep all or most of your assets but must create a court-approved plan to pay off your debts over time. Although bankruptcy is handled in the federal courts, some of the details vary based on your being a Michigan resident.

District Bankruptcy Courts in Michigan

Michigan’s bankruptcy court is divided into the Eastern District, with the main court in Detroit, and the Western District, with the main court in Grand Rapids. Each district also has divisional offices where you may file so long as you file in the district where you live.

Can I File Chapter 7 Bankruptcy?

You may file Chapter 7 bankruptcy if your average monthly income for the six months before you file is less than Michigan’s median income for a family of your size. For example, if you are married with two children, you must earn less than Michigan’s median income for a family of four, which is $6,037 monthly for 2012. If you make more than this, you must pass a stringent means test to qualify for Chapter 7.

How Long Is a Chapter 13 Repayment Plan?

The amount of time you must spend paying your creditors also depends on your income as compared to Michigan’s median income. For example, if you make less than the median income, your repayment plan will usually be up to three years. If your income matches or exceeds the state median, your plan will be five years, unless you’re able to pay off all unsecured debt in less time.

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Solve Your Personal Bankruptcy with Chapter 7 In Westland Michigan

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Solve Your Personal Bankruptcy with Chapter 7
Chapter seven of the bankruptcy cases are very popular amongst individuals too who either own a business or run a corporate house. When such enterprises fail, it is then that a Westland Michigan Bankruptcy Lawyer is often hired by an individual to try and save as much of property as can be saved. In fact, these professionals have specialized in chapter seven and know about the pros and cons of such a filing. Also, additionally, the Westland Michigan Chapter 7 Bankruptcy Attorney has fought many such cases and knows the variations which can affect an individual fighting such a case.

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Types Of Bankruptcy Situations

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Moving into the twenty first century, many Americans aren’t sure of what to expect.  Many businesses have begun to outsource labor to Mexico and India.  With the loss of jobs comes unemployment to the employees.  Most people caught up in a company’s decision to search for lower waged employees cannot find suitable jobs in the same geographic area in which they live.

They have worked at a job for many years and had higher wages.  Finding new work with the higher wages is almost impossible.  This can begin to have a financial impact on the family and having bill collector’s call only adds to the already stressed out situation.  One option that people may decide on is choosing to file one of the types of bankruptcy.  For the homeowner there are two different types of bankruptcy.

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For your Information (FYI) – Bankruptcy Michigan

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Many people have a spending problem, especially when using ‘plastic’ or a line of credit. We all need to know that creditors and the collection agencies they hire should follow strict rules when attempting to collect on loans.

People view bankruptcy as a wake up call and well they should because that means they hit the bottom of the barrel and are now scratching the bottom – for more cash! If you believe misery loves company, be secure in the knowledge that there are at least 1.5 million people in there with you, that’s how many filed for bankruptcy in the last year. Anyone can over-extend themselves and many do for more reasons than I could count.

Filing for bankruptcy is not only used by the lower and middle class but the rich as well. Famous people have fallen into the hole and climbed out, people like:
Donald Trump, Filed in 1990 – Kim Basinger, in 1993 – Burt Reynolds, in 1996 Rembrandt, in 1656.  I am not sure about the last one; he may still be trying to dig his way out!

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