When you consider that approximately 85% of people filing bankruptcy in Michigan are entitled to a tax refund, the connection between taxes and bankruptcy begins to become less subtle. Your tax returns from prior years are used as evidence of your adjusted gross income during a bankruptcy case. These are provided to the trustee in bankruptcy before your meeting of creditors.

Taxes deducted from your paycheck are NOT counted as income for purpose of the Schedule I income calculation. This is important in a Chapter 7 where your monthly expenses must exceed your income. It is also important in a Chapter 13 where Schedule I might be used in calculating your plan payment.

Any tax refund you might receive affects and is affected by your bankruptcy as well.

In a Chapter 7, your refund is property of the estate and is subject to seizure if it is received within 90 days before filing or up to 180 days after discharge in many situations. If it is not received in that period, the Eastern District of Michigan indicates that it still has to be prorated and exempted. In a Chapter 7, if you can plan a little ahead, you may be able to prevent this money from being used to repay your creditors.

If you have no home equity to exempt and very little other assets your tax refund will probably be exempt. The key word is probably. It is important to get expert legal advise to find out how your tax refund is going to be handled in a bankruptcy case. Your tax refund amount matters less if you do not qualify for a Chapter 7 and file Chapter 13 instead because that money will likely end up with the trustee.

Please consult Chimko and Associates at 877.334.3922 for details more specific to your case.

Utility services—Public utilities, such as electric company, cannot refuse or cut off service because you have filed for bankruptcy.  However, the utility can require a deposit for future service and you do have to pay bills that arise after bankruptcy is filed.

Discrimination—An employer or government agency cannot discriminate against you because you have filed for bankruptcy. A side note, while Section 525 of the U.S. Bankruptcy Code prohibits discrimination against anyone solely on the basis of insolvency, employers have a right to selectively screen individuals before hiring them, and it is difficult to prove discrimination.

Driver’s license—If you lost your license solely because you couldn’t pay court-ordered damages caused in an accident, bankruptcy may allow you to get your license back.

If you are contemplating bankruptcy, contact us for more information and the expertise you need.

Federal law makes your Social Security benefits exempt from levy, garnishment, assignment by regular creditors, and from the trustee in bankruptcy.

(The federal government can withhold some part of Social Security payments for taxes, student loans, or support, however.)

That means that even a creditor with a judgment cannot intercept your Social Security payments nor can they take the money from you after it has been paid to you.  Once you file bankruptcy, you may still recieve Social Security payments. 

Other exemptions
In addition to the federal exemption for Social Security benefits, each state has law protecting certain assets from the individual’s creditors.  Most retirement plans, pensions, and 401(k) plans are also exempt from collection.  To find out which assest are exempt in your personal case, please call us at 877.334.3922 today.

The short answer to a court hearing is no. Bankruptcy does not affect any court hearing regarding child support in family court: setting it, collecting it, or enforcing an order about it.

If you are sued, with a request that you be held in contempt of court for failing to pay child support, the court may go forward with the hearing even if you file bankruptcy. Child support is considered to be a special obligation and not merely a debt. In contrast, any other litigation regarding settlement or collection of debts are stopped cold by bankruptcy.

The Bankruptcy Code attempts to protect the rights of children and former spouses to collect support.

Any support, whether it is called family support, alimony, or child support, is made non-dischargeable in bankruptcy by the Bankruptcy Code. The spouse who receives the support does not have to file any type of proofs of claims or objections to the Bankruptcy Court to enforce her (or his) rights to continue to receive support.

In most cases, once a debtor files for bankruptcy, all creditors must stop all actions to collect their debts. This block is called an “automatic stay.”  The automatic stay does not apply to the enforcement of the collection of child support or alimony.

These types of obligations have a super priority under the Bankruptcy Code.

With 2010 quickly approaching, many of you are resolving to do things differently in the new year. It’s always a good thing to examine our lives, evaluate our strengths and weaknesses, and set specific, measurable and realistic goals for the future.

If you are struggling with debt problems and would like to know more about how filing bankruptcy may be able to help, Chimko & Associates would be happy to offer you a FREE consultation.

FIrst,we’ll listen to you as you tell us about your current situation. Then we’ll ask you some simple questions regarding your income, expenses, assets and debts so that we can recommend the best option for your specific situation.

To schedule a FREE consultation, simply fill out the Contact Form, click on the “Submit” button, and we’ll get back with you as quickly as we can.

We also recommend that you click on this “Sample Bankruptcy Plan“  link and read the information there to give you an idea of how a bankruptcy may work for you. ]]> http://chimkolaw.com/blog/2009/12/new-years-resolutions-and-bankruptcy.html/feed 0 http://chimkolaw.com/blog/2009/12/college-age-student-bankruptcy-trends.html http://chimkolaw.com/blog/2009/12/college-age-student-bankruptcy-trends.html#comments Mon, 21 Dec 2009 01:14:25 +0000 admin http://chimkolaw.com/blog/?p=66 It is sad, but it is not surprising. People in their early twenties, many of them university students, are among the fastest growing group of bankruptcy filers in Michigan and in the United States. 2009 surveys indicate that 10 % of all teenagers have a credit card of their own and this can be detrimental for many younger spenders. The average college student graduates with about $4000 in credit card debt.  Many young graduates owe even more.  What is worse, is that many of these  students have never had a full-time job.  Many of them just work in the summer or part-time.  

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.

Running up your credit cards prior to filing bankruptcy in Michigan ( in anticipation of filing ) may cause your debt to be non-dischargeable.  It may become non-dischareable on the grounds of “fraud” and you can be fined at a minimum. The bankruptcy trustee can review your purchases prior to filing for bankruptcy and may make these debts nondischargeable.

You should get legal advice concerning large amounts of credit card debt incurred for “luxury goods” right before your bankruptcy. Don’t buy that large screen TV before filing!

The banks themselves may also file for “Adversary proceedings in bankruptcy court” to contest the dischargeability of these debts. Therefore, you may end up being liable on these fraudulent debts despite the bankruptcy filing; and, worse, may also result in having your bankruptcy case dismissed.

Bankruptcy Code presumes it to be fraudulent and therefore nondischargeable: if: (a) a consumer incurs a debt to any single creditor totaling $500 for luxury goods or services incurred within 90 days before the filing; and, (b) cash advances on credit card obtained within 70 days before the filing are also presumed to be nondischargeable.

The bottom line – don’t “Charge it up” before filing and always work with a reputable bankruptcy attorney.

If you are a senior citizen contemplating bankruptcy or if a loved one of yours needs help from large medical or credit card debt, the sooner you understand your options and decide on the best course of action, the better chance we have of preserving your cash and assets and stopping harassing phone calls, foreclosure and repossession.

Don’t delay until the situation becomes unbearable, eats into relationships or causes undue stress.

In many instances, creditors who receive judgment against you can have your wages garnished which means your paycheck will not even reach your bank account but instead go straight to the creditors.

If this is happening to you, then you can understand how negatively this can impact your life. Most of us need our full paycheck to live and to pay for the day-to-day expenses such as food, fuel, clothing, electricity, etc. If this is reduced, then you are likely going to be struggling a lot more than necessary. Furthermore, it also means that your family will suffer. After all, if there is no money for groceries this week, it is not only you who won’t be eating; it is also your children.

Wage Garnishment & Bankruptcy

Federal statute limits withhold up to 25% of disposable earnings per week in Michigan, unless the debtor’s earnings are at or near the minimum wage, 15 USC 1673, in which case no withholding is allowed.

25% of your disposable income may not seem like a lot but, in reality it is!  If you are having difficulty and think bankruptcy may be the right choice, please call Chimko to help you get back on your feet!

We don’t think there is a more misunderstood part of bankruptcy as exemptions.  Exemptions is one of the major reasons a person should file bankruptcy with the help of an experience bankruptcy attorney rather than alone.

Persons in Michigan are allowed to exempt (keep) the basic assets that allow you to continue with a “fresh start”  when filing bankruptcy. The bankruptcy code does not require you to sell off everything and live in financial ruin.

You will still need a place to live, transportation and relief from debt. In some cases, filing bankruptcy in Michigan may allow you to avoid foreclosure on your home. Your home would be considered “exempt property.” 

When filing forms for bankruptcy the debtor (which is you) claims certain property as exempt. If no objections are filed to the exemptions, they become final 30 days after the first meeting of creditors. Your claimed exempt property is then not part of the bankruptcy estate.

The purpose of Chapter 7 bankruptcy is to get a fresh start.  That is possible if the debtor (you) has something with which to start.

Household goods are usually exempt because they have little resale value and offer little to take, sell and pay creditors.

Pension and retirement plans are excluded from bankruptcy  and therefore, not subject to the reach of the bankruptcy trustee.

IRA’s and other retirement savings may be property of the estate but are frequently exempt. The 2005 amendments to the Bankruptcy Code increased the exemption for IRA’s for all debtors, regardless of state of residence.  Check with a bankruptcy attorney in your state to find out your State’s limits