Category Archives: Chapter 13

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

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

Advantages & Disadvantages to a Michigan Chapter 13 payment plan:

Advantages to a Michigan Chapter 13 payment plan:

  1. If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
  2. While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
  3. You have immediate protection against creditor’s collection efforts and wage garnishment.
  4. More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items immediately prior to filing).
  5. If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
  6. You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
  7. You have more time to pay debts that can’t be discharged by either chapter (like taxes or back child support).
  8. You can file a Chapter 13 at any time.
  9. You can file repeatedly.
  10. You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.

Disadvantages to a Michigan Chapter 13 payment plan:

  1. You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
  2. Legal fees are higher since a Chapter 13 filing is more complex.
  3. Your plan and therefore your debt will last for 3 to five years.
  4. You are involved in the bankruptcy court process for the term of the 3-5 year plan.
  5. Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.

Michigan Chapter 13 Bankruptcy

There are a number of options to consider under the US Bankruptcy Code when it comes to dealing with debt and filing a petition. Chapter 13 Bankruptcy is a more complex form of petitioning and the main difference between it and Chapter 7 is that the former is a “reorganization” or “restructuring” of debt, whereas the latter is straight “liquidation”.
So what are the main characteristics of the Chapter 13 Bankruptcy under Michigan Bankruptcy Laws?
• Chapter 13 Bankruptcy is available as an option only for individuals
• It is an opportunity for them to start afresh and pay-off significant portions of their outstanding debts
• The debtor commits to repaying all or part of what he owns to his creditors under a 3-5 year repayment plan which has to be approved by the Court.
• The individual must be earning a regular income and have sufficient disposable income to apply for Chapter 13 Bankruptcy
• Most commonly people use Chapter 13 when they are late with mortgage, tax or car payments or want stop their tax debt accruing interest.
Typically, debtors who apply under Chapter 13 have valuable secured assets, such as real estate or a car, which they want to protect as the equity in these assets is higher than the protected amount under Michigan bankruptcy exemptions.
How does it work?
The first step is to develop a repayment plan which is the key to a successful Chapter 13 petition as it describes in detail how much each of your creditors will get paid. The next step is to get the plan approved by the court. You then have 30 days after filing the case to make your first repayment.

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Michigan Bankruptcy Facts

Michigan residents who find themselves overwhelmed with debt can seek relief under the federal bankruptcy laws. There are two common forms of bankruptcy for individuals: Under Chapter 7, the courts sell off all non-exempt assets to pay off as much of your debt as possible and under Chapter 13, you keep all or most of your assets but must create a court-approved plan to pay off your debts over time. Although bankruptcy is handled in the federal courts, some of the details vary based on your being a Michigan resident.

District Bankruptcy Courts in Michigan

Michigan’s bankruptcy court is divided into the Eastern District, with the main court in Detroit, and the Western District, with the main court in Grand Rapids. Each district also has divisional offices where you may file so long as you file in the district where you live.

Can I File Chapter 7 Bankruptcy?

You may file Chapter 7 bankruptcy if your average monthly income for the six months before you file is less than Michigan’s median income for a family of your size. For example, if you are married with two children, you must earn less than Michigan’s median income for a family of four, which is $6,037 monthly for 2012. If you make more than this, you must pass a stringent means test to qualify for Chapter 7.

How Long Is a Chapter 13 Repayment Plan?

The amount of time you must spend paying your creditors also depends on your income as compared to Michigan’s median income. For example, if you make less than the median income, your repayment plan will usually be up to three years. If your income matches or exceeds the state median, your plan will be five years, unless you’re able to pay off all unsecured debt in less time.

Can I Keep My House and Car?

Both federal and state laws allow you to exclude certain personal property from your bankruptcy case. Michigan lets you choose whether to use the state or the federal exemptions, but you must pick one or the other, you cannot mix and match from both lists.

The federal and state lists include similar exemptions, although specific items and values vary. Some of these exemptions include:

  • Personal items such as family pictures, clothing, jewelry, and household goods
  • Public benefits
  • Retirement accounts
  • Tools of your trade

Exemption values for your home and car also differ. Michigan adjusts the dollar value of exemptions every three years. As of 2011, the state allows a homestead exemption up to $35,300 of equity or $52,925 for people aged 65 or older or disabled. The federal exemption is $21,625 or $43,250 for married couples filing jointly. The state allows you to keep up to $3,250 of equity in one vehicle, while the federal vehicle exemption is $3,450.

If you have moved to Michigan within two years prior to filing for bankruptcy, you must use the exemptions from your previous home state.

Call us today to get your free consultation 734-722-2999

Michigan Bankruptcy Chaper 7 & 13 facts and requirements.

Michigan residents who find themselves overwhelmed with debt can seek relief under the federal bankruptcy laws. There are two common forms of bankruptcy for individuals: Under Chapter 7, the courts sell off all non-exempt assets to pay off as much of your debt as possible and under Chapter 13, you keep all or most of your assets but must create a court-approved plan to pay off your debts over time. Although bankruptcy is handled in the federal courts, some of the details vary based on your being a Michigan resident.

District Bankruptcy Courts in Michigan

Michigan’s bankruptcy court is divided into the Eastern District, with the main court in Detroit, and the Western District, with the main court in Grand Rapids. Each district also has divisional offices where you may file so long as you file in the district where you live.

Can I File Chapter 7 Bankruptcy?

You may file Chapter 7 bankruptcy if your average monthly income for the six months before you file is less than Michigan’s median income for a family of your size. For example, if you are married with two children, you must earn less than Michigan’s median income for a family of four, which is $6,037 monthly for 2012. If you make more than this, you must pass a stringent means test to qualify for Chapter 7.

How Long Is a Chapter 13 Repayment Plan?

The amount of time you must spend paying your creditors also depends on your income as compared to Michigan’s median income. For example, if you make less than the median income, your repayment plan will usually be up to three years. If your income matches or exceeds the state median, your plan will be five years, unless you’re able to pay off all unsecured debt in less time.

Can I Keep My House and Car?

Both federal and state laws allow you to exclude certain personal property from your bankruptcy case. Michigan lets you choose whether to use the state or the federal exemptions, but you must pick one or the other, you cannot mix and match from both lists.

The federal and state lists include similar exemptions, although specific items and values vary. Some of these exemptions include:

  • Personal items such as family pictures, clothing, jewelry, and household goods
  • Public benefits
  • Retirement accounts
  • Tools of your trade

Exemption values for your home and car also differ. Michigan adjusts the dollar value of exemptions every three years. As of 2011, the state allows a homestead exemption up to $35,300 of equity or $52,925 for people aged 65 or older or disabled. The federal exemption is $21,625 or $43,250 for married couples filing jointly. The state allows you to keep up to $3,250 of equity in one vehicle, while the federal vehicle exemption is $3,450.

If you have moved to Michigan within two years prior to filing for bankruptcy, you must use the exemptions from your previous home state.

Information Is Not Advice

This article provides a general overview of bankruptcy in Michigan, but it is not legal advice. You should contact a Firebaugh and Andrews bankruptcy attorney for specific information related to your unique situation for a free consultation 734-722-2999

How will filing a Chapter 13 Improve my Credit?

 

How will filing a Chapter 13 Improve my Credit?

Chapter 13 is debt management program designed to improve credit over the course of the 36- 60 repayment process.  There are two main functions of credit and this is how the Chapter 13 bankruptcy process addresses each:

1.)  Debt-to-Income Ratio or Leverage:

This accounts for the percentage of your monthly gross monthly income that goes towards paying debt each month.  Your credit is negatively impacted if you are over-leveraged.  This means that too much of your income is going towards paying off debts rather than paying your normal living expenses.

The Chapter 13 process reduces your debt-to-income ratio each month that you are paying into the established repayment plan.  Since all unsecured debts and arrearages are paid back at 0% interest, your monthly plan payments reduce principal balances versus just servicing the interest on the debt.

Since your debt-to-income ratio accounts for 30% of your credit score according to FICO, improving it could have a dramatic impact on your score. As your debt-to-income ratio improves throughout the course of the Chapter 13, so also will your credit score.

2.)  Consistent and timely Payments to Creditors: 

Juggling bills at the end of each month may mean a late or missed payment to some of your creditors.  The Chapter 13 resolves this issue by creating an orderly repayment for all of your creditors.  The Chapter 13 prioritizes your income in the following way:

Payments on secured debts and back-payments on secured debts (first mortgage, vehicle payment, arrearages, etc.)

+  Your monthly living expenses (groceries, gas, utilities, etc.

Payments towards any priority debts such as income tax debts

+  Whatever funds are left over (if any) after the above deductions, are paid towards your pool of unsecured creditors, such as credit cards, medical bills, etc.

Most often, the unsecured creditors are paid back at a reduced rate.  At the end of the program, any remaining balances are eliminated or discharged.

While you are under the court protection of a Chapter 13 personal bankruptcy, there is no more “late” reports to the credit agencies.  Based on your payment into the plan, a court-appointed Trustee makes consistent monthly payments to your creditors based on the above described hierarchy.  This restores and ensures timely payments to your creditors. According to FICO, your payment history has the biggest impact on your credit score, comprising 35% of your credit score.

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Based on an improved debt-to-income ratio and restored timely payments to creditors, 65% of your credit score factors are improved through filing Chapter 13 bankruptcy.

We are here to answer your questions and provide qualified legal advice.  Don’t delay getting your credit and life back on track – call us today at 734-722-2999 for your free consultation.

Michigan Chapter 13 Bankruptcy and Improving Credit

Filing a Chapter 13 Reorganization Plan

Simply put, a Chapter 13 is a court authorized repayment plan with your creditors.  It is:

  • Your best efforts over a 36 – 60 month time period to pay towards your debts;
  • Optimal repayment terms, such as 0% interest on unsecured debts;
  • Ability to balance your budget and restructure certain debts;
  • Legal elimination for any remaining unsecured debt balances at the completion of the program.

This repayment process is designed to help you improve your credit throughout the course of the program.

Call us today at 734-722-2999 for your free consultation.

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Michigan Chapter 13 Bankruptcy: A Complete Debt Consolidation Plan

Chapter 13 is a court authorized debt consolidation plan designed to provide reasonable repayment terms and court protection for your assets such as a home or vehicle.  The purpose of the program is to:

  • Consolidate, prioritize and reduce your debts;
  • Provide a consistent repayment plan with favorable terms;
  • Improve your credit;
  • Provide court protection from your creditors.

Our attorneys specialize in Chapter 13 debt consolidation and are available to meet with you and provide a comprehensive evaluation of your finances.

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What is Chapter 13 Bankruptcy?

In the most simple terms, Chapter 13 means court protection from your creditors while you work through financial circumstances to reduce your debt and improve your credit.  Consider it simply as a ”financial tool” that provides:

  • Optimal repayment terms (i.e. 0% Interest);
  • A way to consolidate, restructure and reduce your debt;
  • The time and breathing room to improve your credit and reach your financial goals in an orderly fashion

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Facing Bankruptcy While Living in Michigan

Michigan residents who find themselves overwhelmed with debt can seek relief under the federal bankruptcy laws. There are two common forms of bankruptcy for individuals: Under Chapter 7, the courts sell off all non-exempt assets to pay off as much of your debt as possible and under Chapter 13, you keep all or most of your assets but must create a court-approved plan to pay off your debts over time. Although bankruptcy is handled in the federal courts, some of the details vary based on your being a Michigan resident.
District Bankruptcy Courts in Michigan

Michigan’s bankruptcy court is divided into the Eastern District, with the main court in Detroit, and the Western District, with the main court in Grand Rapids. Each district also has divisional offices where you may file so long as you file in the district where you live.
Can I File Chapter 7 Bankruptcy?

You may file Chapter 7 bankruptcy if your average monthly income for the six months before you file is less than Michigan’s median income for a family of your size. For example, if you are married with two children, you must earn less than Michigan’s median income for a family of four, which is $6,037 monthly for 2012. If you make more than this, you must pass a stringent means test to qualify for Chapter 7.
How Long Is a Chapter 13 Repayment Plan

The amount of time you must spend paying your creditors also depends on your income as compared to Michigan’s median income. For example, if you make less than the median income, your repayment plan will usually be up to three years. If your income matches or exceeds the state median, your plan will be five years, unless you’re able to pay off all unsecured debt in less time.