Costs Associated with Filing Bankruptcy

June 3, 2016

Our firm offers a risk free no obligation consultation to go over your options and help you to determine if bankruptcy is the best option for you and your family.  If bankruptcy is the best option, the attorney will quote you fees based on your specific situation.  By being upfront, honest and detailed during your intake meeting you can keep costs to a minimum by limiting unnecessary issues later.

Costs

One cost associated with filing bankruptcy is credit counseling/debtor education.  Credit counseling and debtor education are courses that are required to be completed in order to file a bankruptcy and receive a discharge.  Our firm works with GreenPath.  GreenPath has two ways to complete the courses required.  Either you can call GreenPath over the phone, which is $35.00 for the first course and $20 for the second course or the more cost effective option is to go online to GreenPath’s website, which is $25.00 for the first course and $15.00 for the second course.

The next associated cost is for the Credit Report.  Other firms charge upwards of $50.00 to pull a credit report.  We provide a free credit report once we are retained. Even if you have copies of all of your bills it is important to have a credit report pulled as well to be sure that every creditor receives Notice of your bankruptcy filing.

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The New Value Exception to the Absolute Priority Rule

May 31, 2016

The absolute priority rule is relevant in Chapter 11 cases where the debtor attempts to “cram down” a Chapter 11 plan over the objection of dissenting unsecured creditors. It is best to start with the requirements for confirmation. 11 USC 1129 addresses confirmation of a chapter 11 plan. 11 USC 1129(a) states, in relevant part:        

(a) The court shall confirm a plan only if all of the following requirements are met:

* * *

(8) With respect to each class of claims or interests —

(A) such class has accepted the plan; or

(B) such class is not impaired under the plan.

11 USC 1129(b) allows for nonconsensual confirmation, or "cramdown," if at least one impaired class votes in favor of the plan. 11 USC 1129(b) states:

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Protecting Assets

May 23, 2016

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You are struggling to pay your debts, and you are afraid of being sued.  You own assets and you don’t want to lose them to creditors.  What do you do to shelter your assets from your creditors?  Many people assume that they can transfer the assets to a friend or family member, since the creditor can’t take someone else’s property.  Or they get more creative, and grant a lien or a mortgage to someone close to them to make it appear that there is no equity for the creditors to pursue.  While these may seem like good solutions, and many people see posts online about these methods of protecting assets, these actions can be reversed, and can have terrible consequences.

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The Homestead Exemption Exception

4/13/2016

The homestead exemption is designed to protect the equity in a debtor’s principal residence. When a debtor files for bankruptcy and has an interest in a principal residence, a portion or all of the equity interest in the homestead is protected. The level of protection the homestead exemption offers varies state by state.

Home

While the homestead exemption allows a debtor to protect a portion of his principal residence from bankruptcy creditors, the protection is not absolute. 11 USC 522(o) allows a trustee or creditor to challenge a debtor’s homestead exemption and provides a look back period of 10 years. Stated differently, the Court may look back 10 years to discover how a debtor obtained the money to purchase his or her home. A Section 522(o) action is fact intensive and is decided on a case-by-case approach.

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Refinancing Before Bankruptcy – Timing is Everything

4/11/2016

You have worked hard, made a down payment, and for many years you have been paying on your home. However, due to certain events, you have racked up medical bills, credit card debt, or owe friends and family money. While you continue to make payments on your home, you fall behind in your other obligations. The debt begins to pile up and the interest rates make it impossible for a home owner, like yourself, to get out from the heaping amount of debt. You start to examine your options – refinancing your home or file for bankruptcy. You decide to refinance your home and hopefully obtain a lower interest rate, which in turn frees up money to pay the other unsecured debt. Even after obtaining refinancing, you are still unable to meet your obligation. Can you file for bankruptcy now and keep your home?

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Many homeowners face this very issue and they turn to their bankruptcy attorney for assistance. The bankruptcy attorney is going to need some good information from the homeowner to determine whether he or she qualifies for bankruptcy relief, and whether he or she will be able to keep their home after bankruptcy.

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Exempt Property in Bankruptcy

4/8/2016

Many people fear that they will lose everything if they file a bankruptcy.  This is not the reality.  Certain property is considered exempt under the Bankruptcy Code, meaning it cannot be liquidated by the trustee.  The type of property and the limits for the value that can be exempted depends on a variety of factors, including whether you are taking the state exemptions or the federal exemptions.  An experienced bankruptcy attorney can assist you in determining what exemptions to use, and how it will impact the property you will have when you get your fresh-start.

MI

Some states do not permit you to choose; you simply have to use the state exemptions.  Michigan allows debtors to choose between the state exemptions and the federal exemptions, which allows flexibility and permits some amount of exemption planning prior to bankruptcy.  There are some benefits to each exemption structure, but they cannot be combined.  Michigan exemptions may allow you to protect the entire value of your home if it is jointly owned with your spouse.  If you need that protection, you cannot then choose to take the higher federal exemption for household goods and furnishings.  You can use one set of exemptions or the other.

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Bankruptcy & Your Education: Not All School Debt Is Created Equal

March 29, 2016

In a recent decision from the Second Circuit, the Bankruptcy Court for the Eastern District of New York ruled that law school grads can discharge debt incurred while preparing for the bar exam.

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The case of in re Lesley Campbell involves a Pace University School of Law graduate, Lesley Campbell, who sought to discharge the unpaid portion of a $15,000 loan she took out from Citibank to study for the bar in 2009. After borrowing the money, Ms. Campbell failed the bar exam. This forced Ms. Campbell to take a secretarial job at a hotel-management company with an annual salary of $49,000. She made several payments under the terms of the loan, but was unable to fully satisfy the underlying debt. She filed for bankruptcy in 2014.

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IRS Debt Collection

March 8, 2016

A recently signed infrastructure spending Bill contains some drastic changes to how the IRS collects past due tax debts.  The Bill is known as the “FAST Act.” In certain circumstances, this new law actually requires the IRS to hire private collection companies to collect taxes in difficult cases.  This means that the law now requires, rather than permits, the IRS to use private collectors to collect these debts.  It is also important to know the differences between legitimate collection efforts on behalf of the IRS, and the various fraudulent scam phone calls made by parties pretending to be the IRS.

Money

The following is some helpful information regarding this new tax collection law:

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IRS Phone Scam

March 1, 2016

The IRS continues to warn people to guard against scam phone calls from thieves attempting to steal your money or identity.  You should be aware that there is are criminals who will make phone calls in order to pose as the IRS to trick victims out of their money or personal information.

Phone, Dial, Old, Arrangement, Nostalgic

These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. They may know a lot about you, and they usually alter the caller ID to make it look like the IRS is calling. They use fake names and bogus IRS identification badge numbers. If you don’t answer, they often leave an “urgent” callback request.

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