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What Bankruptcy Records And Documents Are Needed?

The documents listed on this page provides an overview of the type of information we will need to get the bankruptcy completed.  Each case is different variations are common.

There are some differences between the documents required for a Chapter 7 bankruptcy petition and those required for a Chapter 13 bankruptcy petition.

Typical documents and information taken into account during a Chapter 7 bankruptcy case include:

  • A list of your current personal property and its value. This includes assets such as:
    • Cash
    • Checking or savings accounts, certificates of deposit or annuities
    • Qualified educational or tuition accounts
    • Pension or profit sharing accounts
    • Household goods, furniture, electronics and computer equipment
    • Deposits with utility companies, landlords, phone companies, etc.
    • Collectibles such as books, art, antiques, etc.
    • Automobiles, trucks, trailers and other vehicles
    • Boats, motors and accessories
    • Aircraft and accessories
    • Clothing
    • Furs and jewelry
    • Firearms, sporting equipment, photographic or other hobby equipment
    • Interest in insurance policies
    • Stocks and business interests
    • Government or corporate bonds
    • Moneys due you by others, including tax refunds
    • Alimony, maintenance, support, or property settlements to which you are entitled
    • Interests in the estate of a decedent, life insurance or trust
    • Patents, trademarks and copyrights
    • Licenses and franchises
    • Office equipment, furniture and supplies
    • Machinery, fixtures and equipment used in business

A bankruptcy lawyer can help you determine which of this property can be included on the schedule of claimed exemptions and protected from liquidation.

  • A list of real property (real estate), including your interest in the property, the current value and the amount of any secured claim.
  • A list of your creditors, the amount that you owe them and any security on those accounts

A bankruptcy attorney can help you determine which debts belong on the secured schedule and which of your unsecured debts belong on the priority schedule and which on the non-priority schedule.

  • A list of any current contracts or unexpired leases, whether the debtor is the lessor or the lessee of the property
  • A list of the names and addresses of any co-debtors on any accounts, along with the names and addresses of the creditors on those accounts

Co-debtors can be affected by your filing. The impact on a co-debtor is different depending upon whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. A bankruptcy lawyer can explain how each one affects any joint account holders or co-signers on your accounts.

  • The name and address of your employer, along with your occupation and the length of your employment
  • Documentation of your income from employment, including payroll deductions
  • Income from other sources, including alimony or maintenance
  • In some cases, a list of current monthly expenses
  • A list of any payments made to creditors during the past 90 days
  • A list of all payments made during the past year to creditors who are ‘insiders’. (Creditors with whom the debtor has another relationship, like family members)

A bankruptcy lawyer can provide you with the exact legal definition of ‘insider’ and help you determine whether or not you have made any payments that fall within this classification.

  • A list of any lawsuits or administrative proceedings the debtor was a party to within the year preceding filing
  • A description of any and all property that has been seized, garnished, attached, repossessed, foreclosed or returned during the preceding year
  • A list of any property that has been assigned for the benefit of creditors within the 120 days preceding
  • Any property that has been in the hands of a receiver, custodian or court-appointed official during the preceding year
  • Any gifts or charitable contributions you made within the preceding year
  • Losses from fire, theft, casualty or gambling during the preceding year
  • Payments related to debt counseling or bankruptcy within the preceding year
  • Any property transferred during the two years immediately proceeding filing
  • A list of any financial accounts closed, sold, or transferred within the preceding year
  • A list of safe deposit boxes (along with locations and contents) held presently or within the past year
  • A list of any set-offs by any creditor in the past 90 days
  • Any property held or controlled by the debtor for another person
  • All addresses at which the debtor has lived during the preceding three years
  • Nature, name and location of any businesses owned during the preceding six years

Having these items ready will help speed up the process.  Call us today for your free consultation 734-722-2999

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How Long Does Filing Chapter 7 Take?

How Long Does Filing Chapter 7 Take?

For those who are struggling with debt and experiencing harassment from creditors, time is of the essence. This can be especially true when it comes to getting finances back on track and restoring a sense of normalcy to life. You, or someone you know, may be considering filing Chapter 7 bankruptcy but are unsure about how long the filing process takes.

Typically, a Chapter 7 bankruptcy case is relatively quick to complete. Your bankruptcy case could be completed and discharged within 3-6 months of filing bankruptcy.

However, there are some important dates that can affect your right to file a case and obtain relief. The following filing timeline illustrates the relevant dates in a typical Chapter 7 bankruptcy case.

6-8 Years Before Your Bankruptcy
If you received a Chapter 13 or Chapter 12 discharge in a case filed within the previous six years, you will be eligible for a Chapter 7 discharge generally if, in the prior case, you paid at least 70 percent of your allowed unsecured claims, and your plan was proposed in good faith and was your best effort.

You are ineligible for a Chapter 7 discharge until eight years from the date you filed a prior Chapter 7 and received a discharge.

1 Year Before Your Bankruptcy

  • If you have tried to delay or defraud your creditors by transferring, hiding, or destroying your property within the 1-year period prior to your bankruptcy, the court may deny you a Chapter 7 discharge and even allow your creditors to recover the property that you transferred.
  • Also, if you pay back one of your creditors who is also a relative or close business associate (“insider”) at any time within the 1-year period prior to the filing of your bankruptcy case, the payment may be deemed an unlawful preference and the court may recover all such payments and distribute them to your other creditors.
  • If you had a prior bankruptcy case dismissed within one year of the time you file a Chapter 7 case, the Automatic Stay entered in the Chapter 7 case will be terminated within 30 days unless you can demonstrate that the Chapter 7 case was filed in good faith.
180 Days Before Your Bankruptcy
If within 180 days before your bankruptcy you had a prior bankruptcy case that was dismissed because you failed to obey court orders or you voluntarily requested a dismissal, then you may not file your bankruptcy case until this 180-day period expires.

Also, within the 180 days before your bankruptcy filing, you must receive an individual or group briefing from an approved nonprofit budget and credit counseling agency.

90 Days Before Your Bankruptcy

  • You must be a resident of the state in which you intend to file your bankruptcy case for at least 90 days before the filing. If you have not lived in the state in which you intend to file your case for at least 90 days, you may only file your case in the state where you have resided, or which has been the location of your principal assets, for a majority of the prior 180 days.
  • Also, if you pay back any of your creditors, even one who is not a relative or close business associate (“insider”), at any time within the 90-day period prior to the filing of your bankruptcy case, the payment may be considered an unlawful preference and the court may recover all such payments and distribute them to your other creditors.
  • If you incurred new credit of $500 or more for “luxury goods or services” within the 90-day period before your bankruptcy, or if you obtain a cash advance in the amount of $750 within 70-day period before your bankruptcy, the debt is presumed to be non-dischargeable.
Your Case is Filed!

  • Your case is formally commenced when you file your bankruptcy petition with the appropriate bankruptcy court. In most cases, as soon as you file your petition, the court will enter an Automatic Stay order prohibiting your creditors from taking or continuing any collection or legal action against you. This means no more harassing letters or phone calls for as long as the automatic stay remains in effect, generally for the duration of your bankruptcy case.
  • Next, the court will send a notice of your case to all of the creditors listed in your petition.
  • Additionally, the bankruptcy court will assign a bankruptcy trustee to oversee your case. The trustee is a federal employee appointed by the court to monitor your case and make sure you are eligible for bankruptcy. The trustee will review your petition, make sure that it is complete, and then schedule a meeting of your creditors.

15 Days After Your Case is Filed
You have a deadline of 15 days after you file your petition to file certain financial “schedules” with the court-documents declaring your assets, liabilities, expenses, income, and a statement of your affairs. In most case, however, your attorney will file these schedules with your petition.

Approximately 15 Days After Your Case is Filed
Within approximately 15 days after you file your case, the court will mail the Notice of Commencement of Case to you and to all of the creditors listed in your petition. This notice will inform you of the date set by the court for the meeting of your creditors, and the deadlines for your creditors to object to your case and file their claims against you.

Approximately 30 Days After Your Case is Filed

  • Within 30 days after you file your case, or before the meeting of your creditors if that occurs first, you are required to file a Statement of Intention. In this document, you advise the court whether you intend to keep your property that serves as collateral for your debts, or whether you intend to surrender it to your creditors.
  • If you intend to keep the property, you must indicate your intention to: (1) reaffirm your debts and continue making all of your payments on those debts; or (2) redeem the property by paying the fair market value for it, in which case you will receive a discharge of debt owed over the fair market value of the item.
  • You must serve a copy of your Statement of Intention on the bankruptcy trustee and your creditors at the time you file it with the court.

    45 days After Your Statement of Intention is Filed
    You have 45 days after your Statement of Intention is filed to surrender or keep your property as you indicated in your Statement and make all necessary payments.

Approximately 3 to 6 Weeks After Your Case is Filed

  • The court will hold the Meeting of Your Creditors about three to six weeks after your bankruptcy case is filed. At least seven days before this meeting, you are required to provide to the trustee and any creditor requesting it a copy of your most recently filed tax return.
  • The court-appointed trustee will preside over this meeting. At the meeting, which you are required to attend, you will be asked to testify under oath as to the accuracy of the statements in your petition. However, most creditors typically do not appear at the meeting, and you will not be before a judge. The meeting is very informal, and in most cases will last no more than 10 minutes. If you do not attend the meeting, your case will be dismissed.
  • Within 45 days after you file your petition, you must file a statement containing a certificate from your attorney that you received an explanation of the various chapters available to you under the bankruptcy code, evidence of any payments you’ve received from any employer within 60 days of your filing, an itemized statement of your monthly income, and an estimate of any increase income or expenditures you expect over the next 12 months.

    30 Days After The Meeting of Your Creditors
    The bankruptcy trustee and your creditors have to 30 days after the conclusion of the Meeting of Creditors in which to make objections to your exemptions.

    60 Days After The Meeting of Your Creditors

    • Your creditors have 60 days after the date first set for the Meeting of Your Creditors to object to the discharge of any of the debts listed in your petition and schedules.
    • Your creditors can object to your request to discharge a debt if the debt was obtained or incurred as a result of any of the following types of misconduct: fraud; embezzlement or larceny; and any willful or malicious injuries you have caused others; or a divorce or separation (this does not include debts for child support and spousal maintenance, which are non-dischargeable by law).
    • Additionally, your creditors can object to the discharge of all your debts if you have engaged in any of the following conduct: concealment or destruction of property or financial records; false statements; withholding information; failing to explain losses; failure to respond to material questions; or a discharge in a prior Chapter 12 or 13 case filed within the previous 6 years or a Chapter 7 case filed within the previous 8 years.
    • The trustee must move to dismiss your case within this time period if he finds that the granting of relief would be an abuse of the provisions of Chapter 7. You will receive your Chapter 7 discharge 60 days after the meeting of your creditors You will receive your discharge as soon as the 60-day time period for objecting to discharge or moving to dismiss your case expires. Even if you receive your discharge, the trustee may, however, move to set it aside if you do not turn over nonexempt property or if you commit other bankruptcy violations.

    The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 imposes one last hurdle before you’re eligible for your discharge–the financial education requirement. This requires you to complete an instructional course concerning personal financial management. Your attorney can refer you to an approved financial management class.

    90 Days After The Meeting of Your Creditors
    All of your creditors (except for government entities) must file their proofs of claim (these are documents your creditors submit to the court specifying how much you owe them) within 90 days after the first date set for your creditor meeting if they wish to share in the payments from your case if any assets are available for liquidation.

Government entities that have claims against you (such as the IRS) have 180 days after the filing of your case to submit their proofs of claim.

 

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Chapter 13 Bankruptcy is it Better for My Credit Than Chapter 7?

Chapter 7 and Chapter 13 bankruptcy will stay on your credit report for the same amount of time; about ten years. Although they both have the same effect on your credit score, a particular creditor reviewing your report to decide whether to lend you money might view one chapter more favorably than the other. In particular, a creditor might be more willing to lend to you if you filed for Chapter 13 rather than Chapter 7.

Bankruptcy &Your Credit Report and Score

Your credit report is important if you want to borrow money – the potential lender will review the report to determine if lending to you would be risky. Those with good credit are a low risk and are more likely to get loans with good terms; those with poor credit are high risk and may have more difficulty.

These lenders will look at your credit score and your overall credit history when deciding whether to lend to you. Your credit score is based on a multitude of factors, including the amount of available credit you have, the ratio of your balances due to your credit limits, your total amount of debt and any judgments or bankruptcies you have on record.

Chapter 7 and Chapter 13 bankruptcy both affect your credit score the same – having a Chapter 13 bankruptcy on your credit report will not be any better for your score than a Chapter 7. However, the individual reviewing your report will look at more than your score.

Some Lenders Take Into Account the Difference Between Chapter 13 and Chapter 7

A Chapter 13 bankruptcy involves repaying some or all of your debt over a three- to- five-year period, while a Chapter 7 bankruptcy involves wiping out most of your debts without paying them back.

Both Chapter 7 and Chapter 13 theoretically leave you in a good position to take on new debt, as they both free you from the burden of old debts and give you a fresh start. Beyond that, if you have a Chapter 13 on your credit report, a lender looking at your report may see it as a responsible way to handle your debt, because you made a good faith effort to repay your debts despite your financial hardship. In that way, a Chapter 13 may be better for your credit than a Chapter 7.

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

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Keeping your auto: car loans in bankruptcy

If you’re considering bankruptcy, it can be hard to decide what to do with your car loan. You may have difficulty paying all your debts, but at the same time, you want to keep your vehicle.

In fact, it could be nearly impossible to get back on your feet financially without the use of a car, which is often needed to travel to a job and earn money, says Roberta Andrews, a bankruptcy attorney with Firebaugh & Andrews Westland Michigan 48185

Fortunately, it is possible to keep a car in bankruptcy. “For people who have a vehicle, are financing it and want to keep it, there’s a method that can be used for them to continue to make payments and maintain the car they own,” says Andrews

The exact method to use depends on the type of bankruptcy that’s filed, Chapter 7 or Chapter 13. Here’s a look at the options for car loans under each type of bankruptcy.

Auto loans in Chapter 13 bankruptcy

Under Chapter 13, the borrower would continue to pay off some of his or her debts in a reorganization, or restructuring, of what he or she owes, says Andrews. The borrower would repay the car loan debt as part of the repayment plan, but the total amount repaid would depend on how old the car loan is, Andrews says.

Newer car loans. If the vehicle loan is less than 910 days old, the borrower must pay the full value of the car loan, says Andrews. However, there is a chance under the bankruptcy guidelines that the interest rate could be reduced, she says, which might lower the monthly payment.

Older car loans. If the car loan is older than 910 days, the courts would give the borrower a prorated payment amount based on how much the car is worth, says Andrews. “They’ll take a look at the car’s current fair market value, and they’ll create a payment plan from that,” he says.

Borrowers who are already behind on their auto loan payments may be able to work out an additional financial arrangement with the lender, says Andrews. “You would not only make the regular payments, but whatever the arrears are, you could also make up those payments in a Chapter 13 framework,” she says.

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Should I go to a credit counselor, or to a debt consolidation service?

It all depends on your exact circumstances. Many people can be helped by credit counseling, but be careful who you go to.. Your church or neighborhood group may also have a good credit counseling program.

In my opinion, most people will not be helped by a debt consolidation service. In fact, there are many people who have paid for debt consolidation services, only to end up owing a lot more money than they did when they started. You have probably seen a lot of commercials advertising “nonprofit” services, promising to negotiate your debts with all of your creditors and to solve all of your problems. Many of those “nonprofit” services were created by credit card companies and finance companies, and most of their counselors are not properly trained. None of them can offer the absolute results that federal bankruptcy law does. On top of that, there are certain creditors who absolutely refuse to work with consolidation services. They don’t have that option in bankruptcy, where creditors have to follow the same rules as everyone else.

Firebaugh & Andrews can help you figure out what is the best course of action to take, Call us for your free consultation. 734-722-2999

What kinds of collection actions does bankruptcy stop?

Bankruptcy stops any sort of collection action that you can think of, except for criminal trials and child support matters. The list is too long to spell out in full, but here are some examples: Foreclosures, evictions, garnishments, lawsuits, state or federal tax collections, tax liens or penalties, harassing letters and phone calls, and anything else that might in any way be interpreted as an attempt to collect on a civil debt. Depending on your exact situation, some of those debts may still have to be dealt with after filing, but at least you will now have some control over the process. There are certain debts that can almost never be discharged, such as criminal fines, certain taxes, and child support. But even those debts can be spread out over time in a Chapter 13 plan.  Call Firebaugh & Andrews for a free consultation 734-722-299

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Can I keep my jewelry if I file for bankruptcy in Michigan?

You can use Michigan bankruptcy exemptions to keep jewelry, watches, and wedding rings, up to a certain dollar amount.

Whether you can keep jewelry, watches, and wedding rings in Michigan depends on what type of bankruptcy you file (Chapter 7 or Chapter 13), whether you use the Michigan or federal bankruptcy exemptions, how much the jewelry is worth, and whether you need to protect other assets as well.

Keeping Jewelry in Chapter 13 Bankruptcy in Michigan

In Chapter 13 bankruptcy, often called a reorganization bankruptcy, you enter into a repayment plan for three to five years. Your creditors get paid through the plan – some in full and some in part. Although a Chapter 13 plan requires a long commitment, the advantage is that you get to keep your property, including jewelry.

If you have very expensive jewelry however, that will probably affect how much you will be required to repay unsecured creditors.

Keeping Jewelry in Chapter 7 Bankruptcy in Michigan

Chapter 7 bankruptcy works differently. In Chapter 7, you must give up certain items of property. The bankruptcy trustee sells this property and uses the proceeds to repay (at least in part) your unsecured creditors.

Michigan Bankruptcy Exemptions

Not all of your property is up for grabs, however. Michigan (and all of the other states) has enacted laws that protect certain types of property. These laws are called exemptions. Some property is exempt no matter what the value, and other property is exempt only up to a dollar amount. The idea behind exemptions is that someone filing for bankruptcy should not be stripped of basic things needed for living – like shelter, clothing, furniture, a car, and the like. (Learn more about how bankruptcy exemptions work.)

In Michigan, you can choose to use either the Michigan bankruptcy exemptions or another set of exemptions called the federal bankruptcy exemptions (17 other states and the District of Columbia also allow you to use the federal exemptions). Whichever set you choose, you must stick with it — you cannot mix and match from each set. For this reason, it’s important to review all of the exemptions in each system. You wouldn’t want to pick one system in order to keep jewelry, only to lose your house. (Review the Michigan bankruptcy exemptions and the federal bankruptcy exemptions.)

Keeping Jewelry, Watches, and Wedding Rings Under the Federal Bankruptcy Exemptions

There are several provisions of the federal bankruptcy exemption system that you can use to keep your jewelry. If you are married and filing a joint bankruptcy, you can double these amounts.

  • Jewelry exemption. You can keep up to $1,550 of your jewelry.
  • Wildcard exemption. You can keep up to $1,225 of any type of property, including your jewelry. If you don’t want to use the wildcard to protect other property, you can put the full $1,225 towards your jewelry.
  • Unused homestead exemption.  If you don’t use the homestead exemption, or only use part of it, you can use up to $11,500 of the remaining amount for anything you want, including your jewelry. The federal homestead exemption is $22,975.

Keeping Jewelry, Watches, and Wedding Rings Under the Michigan Bankruptcy Exemptions

In Michigan, you can keep jewelry using the below exemptions. If you are married and filing a joint bankruptcy, you can double these amounts.

  • Jewelry exemption. Michigan allows you to keep up to $600 per item of the following: appliances, books, furniture, household goods, and jewelry. The only caveat is that the combined total of these items cannot exceed $3,775. This means that if you want to keep an antique sofa worth $3,700, you’ll only have $75 left for jewelry.
  • Wearing apparel. Michigan allows you to exempt wearing apparel. A few courts across the country have included watches in the definition of wearing apparel. If you want to use this exemption to protect a watch, check with a local bankruptcy attorney to see what your local court might do.

How to Value Jewelry in Bankruptcy

The value of your jewelry for exemption purposes is the amount you would have to pay on the date you file for bankruptcy to replace each item with a used item of similar age and in similar condition. There are various methods of determining the replacement value, but for expensive jewelry you will almost always need an appraisal. (Learn more about how to value personal property in bankruptcy.)

Other Ways to Keep Jewelry in Michigan Bankruptcy

If you want to keep nonexempt items of jewelry, the trustee may accept other items of exempt property in exchange for the jewelry. The trustee would then sell these items instead of your jewelry to repay your creditors.

Similarly, if you have some cash, you may be able to reimburse the bankruptcy trustee for the value of the jewelry you want to keep. Again, the trustee would use this money (instead of selling the jewelry) to repay unsecured creditors.

Firebaugh & Andrews can help call them today to set up a free consultation 734-722-2999

 

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Should you file for bankruptcy before or after a divorce?

Many people cite divorce as a leading reason for their bankruptcy filing.  However, planning ahead can make both your bankruptcy and your divorce less complicated and more cost effective.  Whether you should file a bankruptcy before or after a divorce depends on where you live, how much property and debt you have, and what type of bankruptcy you wish to choose to file.

Bankruptcy and Divorce Costs

Bankruptcy filing fees are the same for joint and individual filings.  So filing a joint bankruptcy with your spouse before a divorce can save you a lot on court fees.  Also, if you decide to hire a bankruptcy attorney, your attorney fees will likely be much lower for a joint bankruptcy than if each of you filed separately. However, you should let your bankruptcy attorney know about your upcoming divorce as there may be a conflict of interest for him or her to represent you both.

Filing for bankruptcy before a divorce will simplify the issues regarding debt and property division and lower your divorce costs as a result.

Chapter 7 vs. Chapter 13 Bankruptcy

A Chapter 7 is a liquidation bankruptcy designed to get rid of your unsecured debts such as credit card debt and medical bills.  In a Chapter 7, you usually receive a discharge after only a few months.  So it can be completed quickly before a divorce.

In contrast, a Chapter 13 bankruptcy lasts three to five years because you have to pay back some or all of your debts through a repayment plan.  So if you were looking to file a Chapter 13, it may be a better idea to file individually after the divorce because it takes a long time to complete.

Property Division

Wiping out your debts jointly through a bankruptcy will simplify the property division process in a divorce.  However, before filing a joint bankruptcy you must make sure that your state allows you enough exemptions to protect all property you own between you and your spouse.  Certain states allow you to double the exemption amounts if you file jointly.  So if you own a lot of property, it may be a better idea to file a joint bankruptcy if you can double your exemptions. 

If you can’t double your exemptions and you have more property than you can exempt in a joint bankruptcy, it may be more advantageous to file individually after the property has been divided in the divorce.  Also, keep in mind that if you file bankruptcy during an ongoing divorce the automatic stay will put a hold on the property division process until the bankruptcy is completed.

Allocation of Debts

Litigating which debts should be assigned to each spouse in a divorce can be a costly and time consuming process.  Further, ordering one spouse to pay a certain debt in a divorce decree does not change the other spouse’s obligations toward that creditor.

For example, let’s say your ex-husband was ordered in the divorce to pay a joint credit card you had together.  If he doesn’t pay it or files bankruptcy then you are still on the hook for the debt and the creditor can come after you to collect it.  If you end up paying the debt, you have a right to be reimbursed by your ex-husband because he violated the divorce decree. This holds true even if he filed bankruptcy because he can discharge his obligation to pay the creditor but he cannot discharge his obligations to you under the divorce decree.

However, trying to collect from your ex will usually mean spending more money to pursue him in court.  As a result, it may be in both spouses’ best interest to file bankruptcy and wipe out their combined debts before a divorce.

Income Qualification for Chapter 7

If you intend to file a Chapter 7, the decision to file before or after a divorce can come down to income if you maintain a single household.  If you wish to file jointly, you must include your combined income in the bankruptcy.  If your joint income is too high, then you may not be able to qualify for a Chapter 7.

This can happen even if each spouse’s income individually is low enough to qualify on his or her own.  This is because Chapter 7 income limits are based on household size and the limit for a household of two is not twice that of a single person household (it’s usually only slightly higher).  In that case, it may be necessary to wait until each spouse has a separate household after the divorce to file bankruptcy.

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

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How To Avoid Debt Relief Scams

If you’re having a problem with debt, sit back and relax as there are ways to achieve debt relief. However, it pays to be careful because the Internet is home to many debt relief scams. If you were to get caught up in one of these, you could lose hundreds of dollars and end up in worse financial shape.

What is a debt relief scam?

The simple answer to this question is that a debt relief scam is where a company makes promises that it does not keep. However, these scams are much more complicated than this. They generally start when a debt relief company contacts you and claims it can get your interest rates reduced to help you get out of debt in no time at all. Some of these companies even say they can get your credit card debts eliminated. Many of them also claim to be nonprofits. The person who contacts you will probably sound very professional and very reassuring.

Upfront fees

The first sign that the company may be a debt relief scam artist is if it requires an upfront fee. Legitimate debt relief companies charge nothing until they’ve settled your debts and you’ve signed off on a payment plan.

Legitimate debt relief companies are known by the company they keep

If you are contacted by a debt relief company, the first thing you should do is go to its website. Legitimate debt relief companies are members of the Better Business Bureau and probably the US Chamber of Commerce. They also usually belong to associations such as the American Fair Credit Council and display the BSI Certificate of Registration, showing that its services are in accordance with all the requirements of the Best Practices For Accredited AFCC Members Checklist.

How legitimate debt relief companies operate

A legitimate debt relief company charges no upfront fees (as noted above) and won’t make promises that it can get you out of debt in just a few months. It will require you to provide documentation of exactly how much you owe and to which creditors. You will be required to provide copies of your statements showing how long it has been since you’ve made payments to your creditors.. You will be given a contract to review or even take to your attorney that will spell out exactly what the debt relief company will do for you and how much it charges for its services. Nothing more will happen until you sign and return the contract.

You will begin paying the company

Once you have signed off on your contract, you will begin making payments to the debt settlement company. If it’s legitimate, it will deposit the money in a trust account that only you can manage. The debt settlement company will then start contacting your creditors and offer to settle your debts, probably for about half of what you owe. When all your creditors have agreed to the settlements proposed by the debt relief company, the money you have put in trust will be used to pay them off. You will have an affordable payment plan that should enable you to become debt free in 24 to 48 months.

If it seems too good to be true, it probably is

Don’t fall for promises from debt relief companies that seem to be just “too good to be true.

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What is Michigan chapter 11, and who may qualify?

Chapter 11 is frequently known as the reorganization chapter of the bankruptcy code because it allows a debtor to reorganize financial obligations while retaining assets, generally through the sale of certain assets to pay down debt and refinance existing debts. Chapter 11 is available to both individuals and businesses.

The following is a brief description of the relief afforded to individuals and businesses through Chapter 11, for more information please call Firebaugh & Andrews for a few evaluation at 734-722-2999

Chapter 11 Overview

Filing a Chapter 11 petition grants a debtor what is known as an automatic stay from the enforcement actions of creditors. This precludes creditors from continuing collection efforts, from bringing a lawsuit, or from filing liens against property or foreclosing on property.

In Chapter 11, a debtor generally remains in control of their estate. A trustee may be appointed for cause (i.e., fraud, dishonesty, incompetence or gross mismanagement) or if such appointment is in the best interest of creditors; however, this relief is relatively rare. A Chapter 11 debtor-in-possession generally has the same rights as a trustee would have if appointed, thus any reference to rights or authority of a debtor would apply to a trustee, if appointed, as well.

Exclusive Time Periods

A Chapter 11 debtor is granted the exclusive right to file a plan of reorganization for a period of 120 days and to solicit a plan of reorganization for a period of 180 days. A debtor can seek an extension of these “exclusive periods” for cause. Otherwise, once an exclusive period lapses, any creditor or party in interest can file a plan of reorganization for the debtor.

Similarly, if a creditor or party in interest can show that a debtor is mismanaging the estate, not negotiating in good faith with creditors or using the exclusive period as leverage in negotiation with creditors, they can seek to terminate exclusivity to allow non-debtors to file a competing plan. Competing plans are rare; however, the threat of a competing plan is often sufficient to keep negotiations between a debtor and its creditors active.

Committee of Unsecured Creditors

Another tool available to balance creditors’ powers of negotiation is an official committee of unsecured creditors. The purpose is similar to that of a class action lawsuit – while each individual creditor may not have a large enough claim to justify retaining counsel, aggregate creditors’ claims can be quite large and their collective voice could benefit from legal representation. The creditors’ committee is made up of three or more volunteering unsecured creditors selected by the United States Trustee. The creditors’ committee can retain legal counsel and financial advisors to assist in the case, with the cost of such professionals carried by the debtor.

A creditors’ committee is not formed in every case and is usually limited to large, complex or highly contested Chapter 11 cases.

The Reorganization Plan

A Chapter 11 plan of reorganization provides debtors with important tools for rearranging financial affairs. For example, a plan may allow a debtor to reject certain contracts or leases with a cap on damages. This is helpful where a debtor has signed an expensive, long-term contract that is no longer beneficial.

A debtor may also refinance existing loans including increasing the time in which it must be repaid (i.e., stretching a two-year loan to five years), decreasing the interest rate if interest rates have declined since the loan was entered into, or changing/removing other arduous terms. Through Chapter 11, as with other bankruptcy chapters, a debtor can also sell an asset free and clear of all liens either through a plan or through what is a called a 363 sale. The ability to sell an asset free and clear of liens can garner a greater sale price as purchasers are assured that the property is unencumbered and the purchaser is subject to less liability.

Regardless of who files a plan of reorganization, certain creditors are entitled to vote to approve or disapprove a plan. Only those creditors that are determined to be partially impaired (e.g., reduced payments or payments over time) are entitled to vote on a plan. Creditors that are unimpaired are deemed to accept the plan and creditors that are fully impaired (i.e., will not recover) are deemed to reject the plan. However, even if they are not allowed to vote on a plan, a creditor still has the right to object to its treatment under the plan. In order for a plan to be accepted, two-thirds of creditors in number and fifty percent of creditors in dollars must vote in favor of the plan.

A Chapter 11 debtor can cramdown a plan over the negative vote of creditors in certain circumstances. Even if creditors vote to accept a plan, the bankruptcy court will review the plan and ensure that it meets statutory requirements before the plan can be confirmed. If a debtor is unable to get a plan of reorganization confirmed, the case may be converted to a Chapter 7 filing or dismissed. After a plan is confirmed, the debtor’s bankruptcy is essentially over. However, the bankruptcy court generally retains jurisdiction over the case at least until the last plan payment is made.

Chapter 11 for Individuals

Given the complexity and cost of Chapter 11, it is most often used by businesses. On the other hand, Chapter 11 may be the only option available to an individual debtor with income greater than that allowed by the Chapter 7 means test, and secured debt in excess of that allowed by Chapter 13. This is often the case where an individual owns large amounts of real property, but does not have sufficient liquidity to pay his or her debts as they come due.

The major benefit of Chapter 11 for individuals is the ability to keep assets beyond just the statutory exemptions available under Chapter 7 and Chapter 13. Given that Chapter 11 individual cases are relatively infrequent and the language of the chapter is better applied to corporations, the law applied to Chapter 11 consumer cases has been largely unsettled. If you are considering an individual Chapter 11 you would be best served to give us a call for a free consultation at 734-722-2999 Firebaugh & Andrews