6 More Bankruptcy Myths

June 9, 2016

1. There is a minimum amount of debt required to file for bankruptcy

  • Bankruptcy laws have not set any minimums on the amount of debt needed in order to qualify for bankruptcy. If your debt is beyond your ability to pay, you can opt to file for bankruptcy, however, if your debt exceeds certain amounts, you may  be required to file a certain type of bankruptcy.

2. You will not be able to file for bankruptcy if you work a “good paying” job

  • Just like there are no limits on the minimum debt required to file for bankruptcy there are also no income limits on who can file for bankruptcy. The amount of money you have left over to pay your creditors after subtracting allowable expenses does determine the type of bankruptcy you can file. This is referred to as disposable income.

3. If you are married both spouses must file for bankruptcy

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7 Bankruptcy Myths

June 6, 2016

1. It is extremely difficult to file for bankruptcy

  • Under the changes in the law it can be extremely difficult to file for bankruptcy on your own. There are many new requirements that did not exist prior to 2005. However having an experienced bankruptcy attorney on your side will help you navigate the process, and alleviate any confusion or stress you may have.

2. Everyone will know you’ve filed for bankruptcy

  • Unless you are a large corporation and the filing is covered by the media chances are extremely good that the only your creditors will be made aware of your filing.

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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

Risk

 

 

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?

Clock

 

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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