Should I File For Bankruptcy?
Are you unable to pay your bills? If so, you may be a candidate for bankruptcy. However, whether or not you should file and which type of bankruptcy is best for you are difficult decisions. The truth is, there’s no clear cut answer for deciding if bankruptcy is the right choice for your. Here are some examples of situations in which filing might make sense:
You’re paying only minimum amounts on your credit card accounts.
You aren’t able to budget yourself out of debt within 5 to 10 years.
You’re getting foreclosure notices.
You also need to realize that there are some things that bankruptcy probably won’t help you with. These may include:
Alimony
Child support
Fines or penalties of government agencies
Fraudulent debts
As an individual, you may be able file for bankruptcy in Michigan under either:
Chapter 7 (Fresh Start Bankruptcy) or Chapter 13 (Payment Plan)
Do I Really Need Credit Counseling Before Bankruptcy?
Yes.
If you’re thinking about filing for personal bankruptcy, it’s important to know ahead of time what you’ll need to file properly. In 2005, many modifications were made to U.S. bankruptcy guidelines, and some of these may have an effect on how and which Chapter you choose to file. Just one of the biggest differences concentrates on pre-filing obligations, which now call for finishing a credit guidance program.
At some point in the 180 days (six months) leading up to filing, a debtor has to locate a government-approved company offering the right credit counseling program. This needs to be an agency located in your judicial district, the same area in which you will file for bankruptcy. The counseling session typically costs around fifty dollars, depending on the services offered; for people who cannot afford it, one could request a free counseling session from the institution before the counseling session takes place.
Even though this requirement may sound overwhelming, it generally lasts within an hour and a half, and might be accomplished via phone, on the web or at the credit counseling office. The whole course usually consists of a detailed look at your present economic condition, and a discussion about whether or not personal bankruptcy is the best choice for you at this time. It also helps to think of the counseling as a resource, instead of a chore. A reasonable budget can be devised at this time with the help of the credit counselor. This may be convenient later on as the initial outline of your monthly payment program, and help you to stay on track.
What, exactly, will you need to be ready for the counseling course? You might want to have pay stubs, a record or estimate of regular bills and valuable assets, and a recent and comprehensive outline of all (both secured and unsecured) debts owed. Having these documents prepared prior to the appointment will be a big help. You’ll also want to take time when selecting a counseling agency, as they can range in skills, certification status and accessible programs and services.
Once you’ve participated in the course, you need to receive a certificate of completion. This is going to be filed along with your petition; without the inclusion of the certificate, which is provided by the U.S. Trustee, your case will be dismissed. Check with the Trustee’s office or your area bankruptcy clerk’s office to locate an accredited, trustworthy, and supportive consumer credit counseling organization.
Role of a bankruptcy lawyer in filing business bankruptcy
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If you own a business and if you have incurred a huge amount of business debts, you must be thinking of filing Chapter 11 bankruptcy. Filing bankruptcy is a difficult decision to make and since the year 2009, there has been a sudden increase in the business bankruptcy rates in the United States. Most businesses file bankruptcy to improve their financial condition. A bankruptcy mostly marks a new financial beginning. Most business organizations go for business debt settlement and when they fail to achieve desired results, they file a Chapter 11.
Chapter 11 bankruptcies are considered as the most complicate among the three most common bankruptcies, Chapter 7, Chapter 13 and Chapter 11. As included in the United States bankruptcy code, it is regarded as the most complex and the most difficult. Thus, consulting a bankruptcy lawyer will be the most beneficial for you as he can guide you through the process of filing it. Have a look the ways a bankruptcy lawyer can help you throughout the process of Chapter 11 bankruptcy.
1. Pre-case counseling: The most prominent and outstanding job of the bankruptcy lawyer is that he provides you with a pre-case counseling. Any business can file bankruptcy under Chapter 7 and Chapter 11. A Chapter 11 bankruptcy will demand a debt settlement, rather a re-settlement while a Chapter 7 will declare complete insolvency that will lead to the liquidation of the non-exempt assets. According to the subtle difference between the two types, a bankruptcy lawyer will play an important role of assessing your finances and recommending you about which form of bankruptcy suits the best interest of your business.
2. Guides you through the bankruptcy process: The chief job of a bankruptcy lawyer is to guide you through the process of bankruptcy. It will direct the client company’s management throughout the procedure of filing a bankruptcy. For instance, he will ask the client to go through a credit counseling process, which is always necessary before filing a Chapter 11 bankruptcy. The lawyer will develop a debt resettlement plan in accordance with the legal standards. He arranges all essential documents and represents in the court on behalf of the client.
3. Suggest an alternative to bankruptcy: While you are knee deep in business debts and are on the verge of filing Chapter 11 bankruptcy, you may hire an attorney for better results. He may examine and analyze any alternative option to filing bankruptcy. Not all attorneys will help you formulate and explore any alternative option but only good lawyers will do so. They can come up with several alternatives like out-of-court settlement to make the client company get rid of the hassles of the court. It may extend the deadlines of the payment, restructure debt plans and also strive to reduce the interest rates on the loans.
Thus, if you’re the owner of a business and you are up to your eyeballs in debt, seek the help of a bankruptcy lawyer before filing a Chapter 11. Seek the help of the lawyer and make your debt settlement process a success under expert guidance.
If You’re Considering Filing for a Michigan Bankruptcy
If you’re considering filing for a Michigan bankruptcy, you’ll likely want to do some research regarding the different types of bankruptcy and how they work. The choice you make will affect your future and that of your loved ones, so it’s important to have all the facts before you proceed. However, the ‘facts’ you know about bankruptcy might be wrong, as myths regarding the process have been around for almost as long as bankruptcy itself. Here are a few of the most commonly-accepted myths, and the realities behind them.
Since I’m married, my spouse has to file, as well.
This depends on what kind of debt you have. If you’ve got overdue credit card payments in your name only, there’s no need for your spouse to file, though certain debts may still be exempt from the automatic stay that prevents debt collectors from looking to them for the payments. In the event of joint ownership on a house or car that you cannot pay off, your spouse will likely be held accountable. Because everyone’s particular case and needs are different, it could benefit you to consult a lawyer for advice.
If I file bankruptcy, my credit will be ruined!
This is almost as far from the truth as possible. As your debts are a huge problem, bankruptcy is a solution, and may actually improve your chances of obtaining credit in the future, though it may come at a higher interest rate. While the bankruptcy will appear on your credit report for ten years, credit can be available almost immediately, sometimes even during the proceeding. This can be a great opportunity to reestablish your credit, little by little, by making sensible financial choices and taking care to pay off your bills before they have the chance to build up.
Because my income is more than the amount specified by the Means Test, I can’t file for bankruptcy.
The Means Test is designed to find out whether someone needs to file for bankruptcy, based on family size and current income. Depending on your personal finances and future needs, however, scoring above the means test formula (which is a comparison of your household income to the state median) doesn’t necessarily disqualify you, although it may imply a change from one Chapter of bankruptcy to another.
My boss and friends will know I filed for bankruptcy.
Unless you personally inform them of your situation, there’s very little chance that they will find out. In most cases, the only people aware of your bankruptcy are you, your lawyer and any creditors involved.
Filing for bankruptcy will drain my 401k.
In most cases, you’ll be able to retain your retirement funds. Most pensions and 401ks are protected by ERISA, the Employee Retirement Income Security Act, and are therefore separate from the rest of one’s assets. Some people consider taking money out of their 401k to pay off their bills, which could in the end do more harm than simply filing bankruptcy.
Since I intend to pay off some of my debts, I don’t have to list those creditors in the schedule.
It doesn’t exactly work that way, and believe it or not, listing all your creditors can be better for you, as the automatic stay will apply to them. Instead of keeping only half your creditors from bothering you, why not keep them all at bay? Even if you intend to pay off a certain debt on your own, it must still be included in the bankruptcy, with valid contact information for the debt collectors so that they can be informed of the proceeding.
Bankruptcy will get rid of all my debt!
While bankruptcy exists to give you a fresh start, it’s good to keep in mind that not all debts are dischargeable, and you should be prepared to include payments for certain things in your court-approved payment schedule. Just a few of the non-dischargeables you may run into are spouse or child support, back taxes, student loans, or any penalties due to criminal activity.
These are just some of the myths we hear most frequently from concerned debtors. If you’re in need of assistance regarding the details of your potential bankruptcy, Ardelean & Dunne, PLLC has the knowledge and experience to see you through the process and on your way to financial freedom.
Questions and Answers About Co-Debtors
Have you ever had a co-signer for a lease, house, car purchase or student loan? Do you have a joint bank account with a parent, child or spouse? The need to protect any current co-signers can be a leading factor not only in whether you file for bankruptcy, but what type of bankruptcy you choose. During this careful decision process, there are many things to consider regarding co-signers.
If you and your spouse co-signed for a home, he or she will only be exempt from pressuring from creditors if you file for a joint bankruptcy. This does not apply if you’re filing but they are not. Your spouse as a co-debtor can be held responsible for at least partial payment of the debts in question.
If you’ve opened a joint bank account with an elderly parent or a grown child, Michigan law assumes that half of the funds, if called into question, belong to each person. To deter this, one must properly explain the circumstances in court, and provide proof that none of the supposed half belongs to them. Judges recognize that every bankruptcy case is different, and will give due consideration to the specifics of your case.
In Michigan, the only type of bankruptcy likely to protect a co-debtor is Chapter 13. Chapter 13 allows a Co-Debtor Stay, which protects your co-signer from creditors for as long as the case is open. It applies only to consumer debts and excludes those accrued through the average course of business.
Depending on the details of your bankruptcy, the co-debtor stay can be lifted for a number of reasons, including but not limited to your refusal to pay off your debts in a timely manner. A creditor must get permission in court to lift a stay, and pursuing the co-debtor without doing so can result in fines for the creditor.
If your Chapter 13 bankruptcy becomes a Chapter 11 or Chapter 7, the co-debtor stay no longer applies.
It can be difficult to discern in every case whether your co-signers will be affected by your filing for bankruptcy. If you’re considering moving forward with your bankruptcy and require clarification regarding your co-signer or joint bank account, contact us with any questions.
The Advantages to Hiring a Detroit Debt Law Firm
Debt law can be tricky business. When you owe somebody a large amount of debt, laws may be broken by the lender or the collections agency that you may not even be aware of. Hiring a Detroit debt law firm may be a good idea to aggressively counter the actions of the collections agency, who are known for being deceptive and very aggressive in their collections tactics.
Before you call a firm, however, understand that nothing can be done while your account is current. If you are making your payments every month, no company will negotiate with you. Negotiating your debt is impossible if you are making your payments. After all, the lender wants you to keep making minimum payments. The point of the settlement is to save years and thousands of dollars in interest. In order for them to be willing to settle with you, you will need to show that you are not able to pay back the debt in full. Only then will a company begin to talk with you.
While going through this process, start socking as much money away as possible. Any good Detroit debt law firm will tell you that you need to have a bulk sum available to negotiate with. If you can tell the collector, “I owe $3,000, but I have $1,000 in cash – can I settle it with that?”, you are in much better shape than those who call and say, “I can’t afford the payments. Can we cut a deal?”
And the most important advantage of them all is that you will be able to dig yourself out of debt quicker. This will clean up your credit report and start giving you access to the benefits of good credit once again. Start calling around and find your Detroit debt law firm now – if you need one.
Why Hire A Michigan Bankruptcy Lawyer?
In the United States, the bankruptcy process can be filled with complicated twists and turns. While you can technically file for bankruptcy on your own, in the overwhelming number of situations, this is a really bad idea.
There are several filing requirements that, if not met, could jeopardize your ability to obtain bankruptcy protection. These requirements include forms being processed and the meeting of various deadlines throughout the bankruptcy proceeding.
Typically, the most important reason to hire a bankruptcy lawyer is to make sure that you are selecting the correct bankruptcy option for your situation. The Code provides various chapters under which to file. Your bankruptcy lawyer can guide you into the most appropriate chapter for your situation.
United States Bankruptcy Court Eastern District Of Michigan 2010 Statistics
The US Bankruptcy Court for the Eastern District of Michigan lists the court’s filing statistics over the last several years.
So far, in 2010 the numbers look like this:
| Chapter 7 | Chapter 11 | Chapter 12 | Chapter 13 | Totals | |
| January | 2912 | 16 | 0 | 622 | 3550 |
|---|---|---|---|---|---|
| February | 3824 | 17 | 3 | 638 | 4482 |
| March | 5153 | 12 | 0 | 844 | 6009 |
| April | |||||
| May | |||||
| June | |||||
| July | |||||
| August | |||||
| September | |||||
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| December | |||||
| Total Year | 11889 | 45 | 3 | 2104 | 14041 |
As you can see, bankruptcy filings in the Eastern District of Michigan have continued to rise at least for the first three months of the year.
While there is much talk of recovery and economic improvement, these statistics don’t support those conclusions.
Filing bankruptcy is a difficult decision that each individual or business must make for themselves. However, they don’t need to make it alone.
When you’re facing serious debt issues, like so many other Michigan residents, your best option is to discuss your situation with a local Michigan bankruptcy attorney.
What Property Can I Keep If I File For Bankruptcy In Michigan?
Generally speaking, Michigan debtors may select from one of two exemption schemes. Please be aware that amounts and exempted items are constantly changing and may not be the same in the future. You should refer to a Michigan bankruptcy lawyer or official Michigan state bankruptcy website for updated information.
Exemptions Under The First Option Debtors Generally Able To Keep:
- Your home, including co-op or mobile home, to $20,200
- Life insurance payments for person you depended on, needed for support
- Life insurance policy with loan value, in accrued dividends or interest to $10,775
- Unmatured life insurance contract, except credit insurance policy
- Alimony, child support needed for support
- Pensions and retirement benefits, ERISA – qualified benefits needed for support
- $550 per item in any household goods up to a total of $10,775
- Health aids
- Jewelry to $1,350
- Lost earnings payments
- Your motor vehicle to $3,225
- Personal injury compensation payments to $20,200, wrongful death payments, crime victims’ compensation, public assistance, Social Security, unemployment compensation, and veterans’ benefits
- Tools of trade up to $20,200
Under Michigan Exemption Option 2 Debtors Are Usually Able To Keep:
- Your home, if you do not have more than $34,450 ($51,650 if elderly or disabled) in equity in the house (today’s value less costs of sale less payoff balances on all liens and mortgages)
- Family pictures and clothing
- Food and fuel to last six months
- Household goods, furniture, appliances, utensils, books, up to $3,450 total (maximum $525 per item)
- Burial plots; church pew, slip, seat
- Crops, farm animals and feed for the farm animals to $2,300
- Food and fuel to last family for six months
- Arms and accouterments you’re required by law to keep
- Tools of trade and farm equipment, up to $2,300 in value
- Building and loan shares to $1,150 par value if you did not claim a homestead exemption
- Disability, mutual life and/or health benefits; fraternal benefit society benefits; and life, endowment or annuity proceeds if a clause in the policy prohibits the proceeds from being used to pay the beneficiary’s creditors
- Private retirement benefits
- ERISA-qualified pension benefits
- Public employees’ pensions
- Property of a business partnership
- Alimony and child support
- Crime victim’s compensation, veterans’, AFDC, social welfare, worker’s compensation and unemployment compensation benefits
- 60% of earned but unpaid wages (not less than $15 per week, plus $2 per week for each dependent) if you are a head of household with a family; 40% of earned but unpaid wages (not less than $10 per week) if you are not a head of household with a family
Please remember that these items and amounts are subject to change and may not be accurate at the time you read this post. To find out what the current exemptions and amounts are, please contact a Michigan bankruptcy law firm or an official Michigan state bankruptcy website.
Chapter 7 or Chapter 13 Bankruptcy?
Bankruptcy is a course of action provided by Federal Law created to give you with a fresh start free from unwanted creditor phone calls, lawsuits, repossessions and garnishments. It is a freedom given to you under the United States Constitution. It is an exceptionally powerful law for the reason that it forces your creditors to completely wipe out your debts (chapter 7) or to accept a repayment program which you have suggested (chapter 13).
Ought to I file for Bankruptcy?
Financial difficulties lead to tremendous stress and can affect one’s personal and family relationships, but lots of individuals are worried at the idea of needing to file for bankruptcy protection. This is really what your creditors want you to feel. They do not want you to employ your right under the law. They would much rather you pay the minimum monthly fee for the rest of your life.
Will I forfeit my Property?
As long as you notify the court what exactly you own and what you think it’s worth, the law will let you to keep your property as the basis for your “fresh start” subject to certain restrictions. The rules is incredibly generous in permitting you to exempt your home equity, automobiles, household goods and furnishings, clothing, jewelry, bank accounts, stocks and bonds, pension and 401k plans, etc. The most essential thing to do is make an exact list of what you own and what you think it is worth (at a garage sale or auction.)