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Bankruptcy, Chapter 13 Facts

US corporate bankruptcies rise to highest Q1 level since 2010

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S&P Global Market Intelligence reported that from January through the end of March, there were 188 bankruptcies filed among large U.S. companies, an increase from 139 bankruptcy filings in the first quarter of 2024, which was a 14-year high at the time.

The 188 bankruptcies in the last three months are the most in the first quarter since 2010, when there were 254 bankruptcy filings as the economy reeled in the wake of the financial crisis.

“Companies, particularly those with weaker balance sheets, continue to face challenges as debt matures and needs to be refinanced at higher interest rates than at the time of issuance,” S&P Global wrote.’

The report noted that for non-investment-grade companies, financial metrics based on Market Intelligence data showed that those firms are dealing with rising debt pressure and also that companies are slightly less able to pay interest with cash on hand.

The largest number of bankruptcies in the first quarter of this year occurred in the industrials sector with 32, followed by consumer discretionary with 24. Those sectors combined to account for nearly 30% of bankruptcies in Q1.

S&P Global noted that the industrials and consumer discretionary segments of the S&P 500 were down 0.53% and 13.97%, respectively, in the first quarter.

Notable companies that filed for bankruptcy in the first quarter with more than $1 billion in liabilities were F21 OpCo LLC, owner of the Forever 21 apparel chain, along with electric vehicle-maker Nikola and crafts retailer Joann.

Other notable firms that entered the bankruptcy process include restaurant chain Hooters and genetic testing company 23andMe.

Despite the uptick in corporate bankruptcies in the first quarter relative to last year, they remained well below the levels of bankruptcies seen during the financial crisis — which peaked at 1,836 in 2009.

Since 2020, the highest monthly total of bankruptcy filings was in July 2020, when there were 74 bankruptcies.

Bankruptcy

Americans considering filing for bankruptcy hits highest level since pandemic

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Why are bankruptcy inquiries rising?

Why you should care:

Bankruptcy filings spiked 14.2% by the end of 2024 with LegalShield inferring that inquiries by Americans are connected to concerns about new tariffs, mortgage worries, uncertainty in the housing market, consumer debt and rising interest rates.

LegalShield’s Consumer Stress Legal Index monitors roughly 150,000 calls monthly from people searching for legal assistance related to bankruptcy, foreclosure, and consumer finance.

How many bankruptcy filings are there currently in US?

By the numbers:

BankruptcyWatch.com, an online platform for automating bankruptcy operations, reported that so far in 2025 there have been 144,034 reported bankruptcy filings in the U.S. with an average of 10,288 weekly bankruptcy filings this year compared to 9,687 in 2024.

Bankruptcy, Bankruptcy Questions

Michigan Bankruptcy Exemptions Set to Rise on April 1

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As we reported last year, every three years on April 1, the dollar amounts in the Bankruptcy Code are adjusted to account for inflation. The federal dollar amounts last were increased on April 1, 2022, and are not slated for another increase until April 2025.

Michigan bankruptcy exemptions also increase every three years to adjust for inflation, and on March 1, 2023, they will increase by 14%. (For reference, the increase three years ago was approximately 6%). A bankruptcy debtor in Michigan may choose whether to use the exemptions provided under either federal or state law to “exempt” a certain amount of property from the bankruptcy estate and use it for a fresh start.

Most Michigan debtors who file for bankruptcy protection rely on the federal Bankruptcy Code exemptions because they usually provide the most protection in aggregate. Some, however, will opt for the state-specific exemptions because they provide greater protection for specific assets the debtor wishes to shield. For example, the federal exemption for equity in a debtor’s residence is currently $27,900. The corresponding Michigan state exemption for most debtors is currently $40,475 and will rise to $46,125 on March 30, 2023. The Michigan exemption for those who are over age 65 or disabled will rise from the current value of $60,725 to $69,200. Thus, unmarried debtors with home equity sometimes find the state exemptions more favorable. The comparison is slightly more complicated for married couples, but similar logic applies. For these and other similar reasons, both debtors and creditors should take notice when the Michigan exemption limits are adjusted.

Questions? Call us for a Free Consultation 734-722-2999

 

Bankruptcy & Retirement

How You Can Lose Retirement in Bankruptcy

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Don’t lose retirement in bankruptcy. If you have a standard kind of retirement account, like a IRA, 401K, 403b account, it is almost certainly protected in both Chapter 7 and Chapter 13 bankruptcy.

Unfortunately, many people do end up losing their retirement accounts. This can be avoided by proper planning and knowing what to do, and what not to do, with your retirement funds.

Loss of Retirement Account Due to Poor Planning

Not thinking ahead is the number one way people end up losing their retirement accounts in bankruptcy. More specifically, they don’t lose the retirement account itself. They take the money out of the retirement account first, then then they file bankruptcy.

This is understandable, but the problem can be avoided. This situation happens mainly when you want to avoid filing bankruptcy. Your plan is to use the retirement funds to pay down debt to a manageable amount, which you think you will be able to handle.

What happens next? You get hit with the taxes. Seems that they never withhold enough tax, so you end up with a big tax bill the following years. Then you have another bill you can’t pay. And, this bill is not dischargeable in bankruptcy.

Or, you get hit with an unexpected expense. The strategy of using your retirement to avoid bankruptcy works, if everything goes “just right.” You might even have had enough taxes taken out of the retirement to avoid a tax hit. (this significantly reduces the amount of money you actually receive, often as much as 40% is lost!)

When you get the unexpected expense, you may need to file bankruptcy. Of course, taking money out of your retirement before filing bankruptcy does not keep you from being able to file. It’s just sad, heartbreaking actually, when you realize you have depleted your retirement to avoid bankruptcy. You used it to pay bills you could have wiped out in the bankruptcy, so, you lose retirement in bankruptcy.

 

 

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Will Bankruptcy Affect My Job or Future Employment?

If you plan to file for bankruptcy, you may be worried about what affect it might have on your job. Will your employer find out about your Chapter 7 or Chapter 13 bankruptcy? Can you be fired because of the bankruptcy? And what if you are applying for a job — can a  employer deny you a job because you filed for bankruptcy?

Although in some cases your employer will find out about your bankruptcy filing (especially with Chapter 13 bankruptcies), rest assured that in most situations your bankruptcy won’t affect your current employment. However, it may come into play if you are applying for a non-government job.

Will You Lose Your Job?

No employer — government or private — may fire you because you filed for bankruptcy. Nor may an employer discriminate against you in other terms and conditions of employment  — for example, by reducing your salary, demoting you, or taking away responsibilities — because of your bankruptcy.

However, if there are other valid reasons for taking these actions, the fact that you filed for bankruptcy won’t protect you. In other words, an employer who wants to take negative action against you can do so provided there are other valid reasons to explain the action — such as tardiness, dishonesty, or incompetence. But if you are fired shortly after your bankruptcy is brought to your employer’s attention, you may have a case against the employer for illegal discrimination because of your bankruptcy.

How Employers Find Out About Bankruptcy Filings

In practice, employers rarely find out about a Chapter 7 bankruptcy filing. However, if a creditor has sued you, obtained a judgment, and started garnishing your wages, your employer will get the news. The bankruptcy will stop the wage garnishment, and your employer will be notified about it. In such a situation, your employer (or at least the payroll department) already knew you were having financial problems and will probably welcome the bankruptcy as a way for you to take affirmative steps to put your problems behind you.

If you file for Chapter 13 bankruptcy, your employer is likely to learn of your bankruptcy case. If you have a regular job with regular income, the bankruptcy judge may order your Chapter 13 payments to be automatically deducted from your wages and sent to the bankruptcy court. (This is called an “income deduction order.”) In effect, your employer will be pressed into service as a sort of collection agency, to make sure you honor your Chapter 13 plan.

Security Clearances

Many jobs require a security clearance. If you are a member of the armed forces or an employee of the CIA, FBI, another government agency, or a private company that contracts with the government, you may have a security clearance. Do you risk losing your security clearance if you file for bankruptcy? Probably not — in fact, the opposite may be true. According to credit counselors for the military and the CIA, a person with financial problems — particularly someone with a lot of debt — is at high risk for being blackmailed. By filing for bankruptcy and getting rid of the debts, you substantially lower that risk. Bankruptcy usually works more in your favor than to your detriment.

Effect of Bankruptcy on Job Applicants

No federal, state, or local government agency may take your bankruptcy into consideration when deciding whether to hire you. There is no corresponding rule for private employers, however, and some people find that having a bankruptcy in their past comes back to haunt them, particularly when applying for jobs that require them to deal with money (book­keeping, accounting, payroll, and so on).

Many private employers conduct a credit check on job applicants as a matter of course and will find out about your bankruptcy from the credit report. While employers need your permission to run a credit check, employers can also refuse to hire you if you don’t consent. If you’re asked to give this authorization, consider speaking candidly about what the employer will find in your file. Being honest up front about problems that are truly behind you may outweigh any negative effects of the bankruptcy filing itself.

 

Advantages of bankruptcy, Bankruptcy, Bankruptcy Questions

A Look At Personal Bankruptcy & What To Expect

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One of the most difficult decisions that you can face is whether or not to file for bankruptcy. For individuals, there are basically two types of personal bankruptcy, which includes Chapter 7 and Chapter 13. Designed to give the filer a fresh start in life by wiping out certain debts, a Chapter 7 bankruptcy will rid the filer of credit card and other unsecured debt. A chapter 13 bankruptcy, on the other hand, is a court-approved payment plan in which the filer is required to repay a predetermined percentage of their debt. The determination of which chapter to file will be based on the filer’s disposable income, if any, after paying their necessary monthly bills.

When many people file for bankruptcy, their first thoughts are of their assets and whether or not they may lose their home. In a Chapter 13 repayment plan, the majority of filers are allowed to keep their property in exchange for repaying a portion of their debts. A Chapter 7, however, is designed to be a liquidation process that often results in the sale of non-exempt property. Which property is non-exempt in a bankruptcy proceeding? Each state has it’s own laws pertaining to the amount of property that an individual or married couple can keep without having to worry about it being liquidated.

The official bankruptcy process begins upon filing a petition with the local bankruptcy court. This can either be done individually, also known as pro se, or with the help of an attorney. For most, hiring Firebaugh and Andrews  is the best way to make sure that every form is completed accurately and in order to make sure their assets are protected as much as possible. Upon the filing of a bankruptcy petition, the court will assign a trustee to the case and will set a date for a Meeting of the Creditors. Although creditors of the filer are invited to attend, they are not required to do so. The filer, however, is required to attend and will be questioned by the trustee, under oath, while having the meeting recorded. This meeting is typically the only appearance required of the filer unless special circumstances are present.

Following the Meeting of the Creditors, often referred to as the 341 meeting, the creditors will have 30 days to object to the filers property exemptions and another 30 days to object to the discharge if the filing is a Chapter 7 bankruptcy. In a Chapter 13 proceeding, creditors may object to the payment plan but the discharge will not be granted until the payment plan is complete. A Chapter 13 bankruptcy can last for up to 5 years before the payments are completed and a discharge is issued. Following the discharge, the bankruptcy case will be closed and the process will be complete.

We offer free consultation, call us today 734-722-2999

After Bankruptcy Tips, Bankruptcy and your Mortgage, Bankruptcy Questions, Rebuilding credit after Bankruptcy

A Few Helpful Tips On How To Buy A House After Bankruptcy in Michigan.

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There is hope still for those that have had a recent bankruptcy on their credit and who still wish to buy a home, but it may require financing to own the house. One should realize that all is not lost when it comes to learning how to buy a house after bankruptcy. The effect of having bad credit is that it only serves to put more emphasis on the other two factors governing how to buy a house after bankruptcy, which are income verification as well as a down payment.

You Must Wait Two Years Following Bankruptcy if one has become bankrupt, lenders normally require the borrower to wait for a minimum of two years from when he or she went bankrupt before making their application for a mortgage loan. Once this two years waiting period has been served out, lenders will normally offer loans and finance should not be difficult to obtain.

Of course, it does require affirmation from the credit bureau to attest that the debtor’s payments have been paid on time after the discharge of his or her bankruptcy. However, if the debtor wishes to obtain a mortgage loan prior to the two years waiting period having been completed, he or she will need a flawless payment history from the time of his or her bankruptcy discharge.

Thus, how to buy a house after bankruptcy will require having a good and certified credit standing that has been consistent ever since the bankruptcy was discharged, and it may even be helpful if the debtor is able to pay a down payment, which even as small an amount such as three to five percent as a down payment will help to further the cause adequately.

Other methods open, when one is considering how to buy a house after bankruptcy, are to borrow or ask for a gift from relatives. Having financed a house, it is always possible to go and take out a second or third mortgage up to the total value of the house, and then pay back the loan from relatives. However, one should always be honest with lenders about the source of the down payment; otherwise dishonesty could lead to it being treated as defrauding the lender.

Another option one can consider regarding how to buy a house after bankruptcy is down payment assistance programs such as Neighborhood Gold or the Nehemiah program, which basically aid sellers in helping the debtor with down payments. It is legal to receive a down payment from these sources but it is illegal to receive down payments from the seller of the property.

Finally, with regard to how to buy a house after bankruptcy, one may also consider cashing out a 410K or another investment, and repay with a second or third mortgage after the loan gets closed. These days, mortgage loans following bankruptcy are not so hard to come by, and there are many bad credit mortgage lenders who will provide loan assistance in this regard.

Call Firebaugh and Andrews for a free evaluation today at 734-722-2999

Bankruptcy Questions, Tax, Tax Refunds & Bankruptcy

Taxes And Bankruptcy. Can You Eliminate Tax Debts in Bankruptcy?

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In many cases, a debtor is still liable for tax debt after bankruptcy. However, bankruptcy law allows the discharge of tax debt only in some circumstances. A debtor is more likely to have tax debt discharged in Chapter 7 than in a Chapter 13 bankruptcy. In Chapter 13, tax debt, along with other debt, enters a repayment plan. Chapter 7 bankruptcy, on the other hand, allows a debtor to discharge certain kinds of debt, such as credit card debt and medical bills, and in some instances, federal tax debt.

Bankruptcy and Taxes: Qualifying for Discharge

The determination of whether a debtor can discharge tax debt will depend of the type of tax, how old the tax debt is, if the debtor filed a return, and the type of bankruptcy. Federal income taxes in Chapter 7 are dischargeable if the debtor meets all of the following conditions:

  • The discharge is for income taxes: Payroll taxes and penalties for fraud are not eligible for discharge.
  • The debtor filed a legitimate tax return: The debtor filed a tax return for the relevant tax years at least two years before filing for bankruptcy.
  • The tax liability is at least three years old: The tax debt is from a tax return that was originally due at least three years before filing for bankruptcy.
  • The debtor is eligible under the 240-day rule: The IRS assessed the tax debt at least 240 days before the debtor filed for bankruptcy. If the IRS suspended collection activity during negotiation, the applicable date may be extended.
  • The debtor did not commit willful tax evasion: Possible evasive actions include changing your Social Security number, your name, or the spelling of your name; repeated failure to pay taxes; filing a blank or incomplete tax return; and withdrawing cash from a bank account and hiding it.
  • The debtor did not commit tax fraud: The return contains no information that was intended to defraud the IRS.

Penalties on taxes that are dischargeable are also eligible for discharge. After the discharge of tax liability, a debtor is no longer responsible for paying the taxes and the IRS may not garnish a debtor’s wages or bank accounts.

Bankruptcy and Taxes: Federal Tax Liens

Even if the discharge of tax debt occurs under Chapter 7, if the IRS placed a federal tax lien on the debtor’s property prior to the bankruptcy case, it will remain after discharge. As a result, it is necessary to clear the title by paying off the lien before selling the property.

Bankruptcy and Taxes: Tax Debt Not Eligible for Discharge

The following types of tax debt are not dischargeable in Chapter 7 bankruptcy:

  • Tax penalties from tax debt that is ineligible to be discharged
  • Tax debts from unfiled tax returns
  • Trust fund taxes or withholding taxes withheld from an employee’s paycheck by the employer

A debtor unable to discharge tax debt under Chapter 7 may consider other arrangements, such as entering into an installment agreement with the IRS or making the IRS an offer in compromise which will result in the settlement of the tax debt for less than the amount owed.

Call Firebaugh & Andrews to get a free consultation. 734-722-2999

Bankruptcy

Is Bankruptcy a Good Idea for You?

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Filing for bankruptcy is a complicated, emotional process. It involves more work than most people realize and can have serious effects on your financial life for years to come. To determine whether or not filing for bankruptcy is the best option for you, you should review information on what bankruptcy can and cannot do to improve your financial situation. After taking a look at the resources below, you may find that your situation doesn’t require filing for bankruptcy, or that bankruptcy won’t have the effects that you desire. On the other hand, you may find that filing for bankruptcy could help you out of a difficult financial bind.

Is Bankruptcy a Good Idea for You?

The decision to file for bankruptcy is a serious one and there are a number of considerations worth examining closely before getting started. At outset it is worth considering whether a bankruptcy is appropriate at all. Because of the serious impact on your future ability to access credit and the potential loss of assets bankruptcy may be best avoided, where that is possible.

Those considering bankruptcy should also carefully consider the kinds of bankruptcy available. As a threshold question it is important to determine whether you are even eligible for one or another form of bankruptcy. Also, depending on which form of bankruptcy you choose important and valuable assets may be lost or retained. There are also significant differences in the time and expense associated with one or another form of bankruptcy.

Considering other impacts can be critical in deciding whether to file for bankruptcy or which form is a better option. Some bankruptcies may fail to discharge credit card debts, impact your pension plans or other assets, or create financial issues for co-signers. Finally, bankruptcy involves a significant invasion of your personal privacy and the exposure of your financial life may impact the desirability of the relief provided.

What Happens After a Chapter 7 Bankruptcy?

Those who pursue a Chapter 7 bankruptcy should be aware of some potential problems or concerns. Many forms of debt cannot be discharged under Chapter 7 bankruptcy, including government funded student loans, some forms of tax debt, federal tax liens, child support, alimony, spousal support, debts for personal injury or death arising from a motor vehicle accident, fines and penalties for violating the law, certain tax-advantaged retirement plans, and cooperative housing fees are among the debts that cannot be discharged.

15938211 – credit card with handcuffs 3d concept

Potential applicants for Chapter 7 bankruptcy should be aware that even private student loans are rarely discharged without a special showing of undue hardship, such as may arise where a debtor has become permanently disabled and cannot work. Applicants for this and other forms of bankruptcy should also carefully consider the impact the bankruptcy will have on their credit.

Following a bankruptcy, debtors may need to engage in a process with the credit bureau in order to correct any inaccurate reports from former creditors. This can entail contacting former creditors for verification of the satisfaction of debts. Even when these issues are resolved those who have completed a bankruptcy can still expect to pay higher credit rates, higher down payments, or need to produce a co-signer when attempting to secure new credit. These complications may necessitate the retention of a mortgage broker when seeking to purchase a house.

Have Questions About the Benefits of Bankruptcy? 

Contact Firebaugh & Andrews today for a free evaluation 734-722-2999

Bankruptcy, Bankruptcy Questions

Is bankruptcy the end of the world?

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Filing for a bankruptcy is never an easy task. It is not an easy decision to make either. The decision to file for a bankruptcy comes from the fact that something has gone wrong and this is the time where you are not only worried and stressed-out but also emotionally vulnerable. Actually filing for a bankruptcy on the other hand is an extensive process that requires specialized knowledge and skills.

The first challenge for most people is whether to choose chapter 13 or chapter 7 bankruptcy and this is a very difficult choice to make all by yourself. F&A Firebaugh Andrews P.L.L.C Bankruptcy Law Firm is the one you can bank on at such a time. Its attorneys and staff understand that you don’t just need a cookie-cutter solution but something that is customized to get you the maximum benefit based upon your unique circumstances. This is why they provide case-by-case basis evaluations by highly qualified attorneys that will help you get just that. The firm will provide you with legal support and expertise from the first call you make until the time your case is completed.
To get you started, the distinction between the benefits of filing a chapter 13 and a chapter 7 are not quite that clear for everybody. Here’s what both of these mean:
Chapter 13: This lets you reorganize your debts into one affordable payment plan by using the powerful provisions of the bankruptcy code to force creditors to accept much less than they have been getting. You can choose from payment terms between 3 to 5 years and work with your attorney to decide the amount of money you can afford to pay in that time period so that you don’t have to worry about those huge payments coming up each month to various creditors and don’t have to be worried each time your phone rings. This plan can be used for your mortgage payments, student loans, credit card payments, pay-day loans, past dues taxes, or even if you want to restructure your car loan.
How do I Qualify?
To qualify for chapter 13, you need to have a regular flow of income and your debts cannot exceed a very high maximum amount.
How does it work?
When you file for a chapter 13, your lawyers will help you to prepare your budget, fill out all the forms, and appear with you at the court hearings. This is done after you have sat down with your lawyer and discussed your financial goals with your lawyer to make sure the Plan is meeting your individual needs and safeguarding your interests to the maximum extent allowed under the law.
What happens after my payments are made?
After all of your payments are made and you have complied with all of the terms of the Plan, the payment plan is terminated and you receive a discharge from debts.
Chapter 7: Chapter 7 is filed when people can’t afford to pay creditors. The idea is to sell the non-exempted assets and to use that money to pay off the debtors. Many people are able to exempt all of their assets and therefore keep everything that they own and get rid of their debt. Chapter 7 is commonly known as straight bankruptcy and allows a person be relieved from debt while still keeping enough property to make a fresh start.
How does it work?
With chapter 7, a trustee is assigned to your case. The trustee’s duty is to collect and sell all the non-exempted assets and use the money to pay off your creditors. The Trustee also has a duty to make sure that you have been truthful in disclosing your complete financial circumstances and in good faith you can’t afford to pay your creditors.
What can I not use Chapter 7 for?
You cannot use chapter 7 to get rid of student loans, most of the taxes, and child support.
The best part is, you can visit the website bankruptcyfilingfees.com to get all the information that you need.