If you are a college student and are contemplating filing bankruptcy, please give us a call or fill out our confidential bankruptcy form.

Marketing credit cards to college students has increased in recent years and many experts argue that colleges should not allow credit card companies on campus to market to students.  Many college students are learning to manage money for the first time in their lives and credit cards can escalate a mis-management problem in these young adults. The stores and credit card companies reap the benefits of our misguided ways. 

Credit card debt can make it more difficult to obtain graduate school loans.  

Although, bankruptcy may be an option for you, it is important to note that your student loans may not be discharged with a bankruptcy. In 1998, there was a change to the bankruptcy law under Chapter 7 and Chapter 13 that made it much more difficult to have your student loan discharged. This means that even if you declare bankruptcy, you may still have to pay back those student loans.

It is always best to talk to an experience bankruptcy attorney to ensure that you are making the right long-term bankruptcy decisions.

The means test is also used in Chapter 13. The test is slightly different in Chapter 13 bankruptcy and allows a Debtor to include deductions for pension contributions and pension loan repayments as well as administrative expenses. In Chapter 13, the amount available after the means test calculation is used as a starting point on how much unsecured creditors should be paid under the plan. However if the Debtors schedules show that the Debtor can afford to pay more that the means test calculation, the Trustee will require the greater amount be paid.

The means test is interpreted differently in different jurisdictions and even differently among Judges in the same jurisdiction. Judges have different opinions as to what constitutes income and allowable expenses. A Debtor can affect the results of the means test in a variety of ways. The Debtors household size affects the means test. The Debtor can wait to file, if his income was substantial during the prior 6 month period and has now decreased. The Debtor may incur certain allowable expenses such as health insurance that they had previously not had.

The means test is a threshold test to determine whether a Debtor should file a Chapter 7 or Chapter 13 bankruptcy. The means test is a complex test which requires considerable analysis of a Debtors income and expenses and familiarity with its interpretation by the Trustees and Judges in the Debtor’s jurisdiction . It is wise to seek the opinion of an expert before proceeding to file bankruptcy.

DEBT COLLECTION MISTRUTH -TYPE A: “We’ve researched your financial situation, and you won’t qualify to file bankruptcy.”

This makes you (the debtor) feel like you don’t have any other options.  Maybe you remember the media coverage of the 2005 bankruptcy reforms – which makes this statement seem like it should be true. You may have a broad understnding of the new bankruptcy laws  – and you make “think that the debt collector is right on target”.  The truth is, it only sounds like the truth. Debt collectors do not legally have enough information to know whether you “qualify for bankruptcy”.

The Chapter 7 means test is a calculation involving income, the median income in Michigan, and expenses based on a combination of IRS, local, and actual numbers. Reports from U.S. Trustee certified Credit Counseling agencies show that more than 96% of the people who come to them considering bankruptcy qualify for Chapter 7 bankruptcy, and even those few who don’t can likely file under Chapter 13.

DEBT COLLECTION MISTRUTH -TYPE B: “You can’t file bankruptcy on that type of debt anymore.”

This outright mistruth serves two purposes: To convince you (the debtor) that you are stuck with your debt, and that you must make “this particular debt” a priority. Another words, they are trying to make you think that the “debt in question” is different than your other debts and you better pay it special attention.  Most debt collection calls relate to credit card and other unsecured debt, nearly all of which is dischargeable in bankruptcy

• Credit card debt is still dischargeable in bankruptcy.
• Medical bills are still dischargeable in bankruptcy.
• Deficiency judgments relating to repossessions or mortgage foreclosures are still dischargeable in bankruptcy.

Debt collectors are not a good source of information about bankruptcy law and options.

The best source of information about bankruptcy is a local bankruptcy attorney like Chimko &Associates. Consumers can also take advantage of the extensive general information about Chapter 7 bankruptcy, Chapter 13 bankruptcy, debt collection practices, dischargeable debts, and more at Chimko & Associates.

In many cases, a person can keep thier home. It depends on whether you can afford it and the amount of equity in your home. The Bankruptcy Code provides for a homestead exemption that protects the equity a debtor has in their home up to a certain amount. If the exemption amount is exceeded, a Chapter 7 Trustee may be able to sell the property for the benefit of the bankruptcy estate. In that type of situation, a Chapter 13 may be an option. Chapter 13 allows a debtor to catch-up on missed payments while reorganizing their other debts, over a 3 to 5 year period. 

There is “Credit” after Filing

In most cases, a person will be able to develop credit after filing bankruptcy. While a bankruptcy filing has a negative impact on your credit, it generally does not mean that you will never be able to obtain credit again. It may mean you will need a co-signer or may have to pay a higher interest rate. It is up to the lender to decide on the terms based on each person’s circumstances.

There is Safety from Harassing Phone Calls

The Bankruptcy Code requires creditors to immediately stop attempting to collect on debts once a bankruptcy case is filed. Creditors who are owed nondischargeable debts such as taxing authorities must also stop collection efforts while a bankruptcy case is pending but can start again after discharge is entered by the court.  The peace of mind that you get from the stopped calls can help you focus on resituating your life.

Filing for Bankruptcy with a lawyer can be Expensive

The cost of filing depends on which chapter applies to your case as well as the complexity of your case. Chimko & Associates is happy to provide you with a free initial consultation to assess your situation.  One of the biggest problems we have seen is with people that tried to file their own cases and didn’t understand the law.  Each case is different and you can get into a lot of trouble.  If things go wrong, it can be very expensive and you may wish you had hired a lawyer to start

In fact, bankruptcy-filing rates have risen in all 50 states including Michigan from the same time last year.

Considering more than one million Americans filed bankruptcy in 2008, that’s a significant statistic.

Many Michigan folks are turning to bankruptcy because it provides the protection of the automatic stay.

The automatic stay is a court order that’s typically issued immediately after the bankruptcy petition is filed. 

The stay prohibits creditors from further pursing debt collection efforts and has the power to:

1. STOP Foreclosure
2. PREVENT Repossession
3. HALT Lawsuits & Wage Garnishments
4. STOP Utility Shutoffs

If this sounds like the kind of relief you are looking for, read on to learn more about the two main types of personal bankruptcy: Chapter 7 and Chapter 13.

Michigan Chapter 7 Bankruptcy

This type of personal bankruptcy offers filers a discharge (elimination) of many types of unsecured debts. Unsecured debts are considered debts that aren’t tied to property, such as:

1. credit card bills
2. utility bills
3. payday loans
4. medical bills
5. parking tickets, etc.

Under Chapter 7 bankruptcy, the bankruptcy trustee has the right to liquidate (sell) a debtor’s non-exempt property in order to repay creditors. 

For this reason, Chapter 7 is typically best for people who have little or no income and rent or own a home with little equity.

A person must qualify to file this type of bankruptcy by taking the Chapter 7 means test, which determines whether a person really needs to file Chapter 7 or whether they can afford repaying their debts through Chapter 13 bankruptcy.

Michigan Chapter 13 Bankruptcy

The other form of Michigan bankruptcy is Chapter 13 bankruptcy, which deals with setting debtors on a repayment plan. This repayment plan is agreed upon by the debtor, his or her bankruptcy lawyer, the bankruptcy court and the debtor’s creditors. Under the Chapter 13 repayment plan, the debtor makes one lower monthly payment to the bankruptcy court. There is no direct contact with creditors.

During the repayment period, the debtor is typically allowed to keep his property (such as his home or cars), as long as he remains current on payments.

At the end of the repayment plan (which generally lasts between three and five years), the bankruptcy court has the option to discharge the debtor’s remaining unsecured debts.

Chapter 13 is often an attractive bankruptcy option for people facing foreclosure of their home or repossession of their cars or other property.
 
Unlike Chapter 7, there’s no test a person must take to file Chapter 13, but they will likely need a steady income so they can keep current with their repayments.

Bankruptcy Questions?

If you’re considering filing bankruptcy, a bankruptcy lawyer can be a good person to talk to about your options. 
A Michigan bankruptcy lawyer can help you determine which type of personal bankruptcy (if any) may be best for your circumstance.