Common Mistakes that DIY Bankruptcy Filers Run Into

November 13, 2009 – 12:58 pm

The bankruptcy paperwork looks simple at face value and many Michiganders are tempted to do it themselves because they may feel that they cannot afford an experienced and compassionate bankruptcy lawyer or that they don’t have anything to lose anyway.  This is unfortunate because a person may lose a lot more and an attorney can make the process less stressful and not as expensive in the long run.

Errors that a DIY bankruptcy filer will commonly make mistakes on:

  • Exemptions may not be selected or applied to preserve assets
  • Property may be omitted from the schedules
  • Debtors forget to schedule intangibles like stock options
  • Partnership interests; interest in pending probate estates; trust funds and lawsuits (filed or potential) are commonly omitted
  • Tax refunds; or retirement funds may be forgotten or not included.

Creditors are erroneously omitted, either because DIY filers think that only a certain kind of creditor can be discharged, or omit a creditor because they want to repay the debt.

Debtors may not understand the seriousness about transferring assets to others before filing or deliberately not disclosing assets, on the grounds “no one will know”. 

These mistakes can lead to the loss of assets that could have been saved if an experienced bankruptcy lawyer was involved. At the very least, you may get less relief than was available by law.

By admin | Posted in Filing Bankruptcy on your Own | Comments Off

 

Michigan Senior Citizens Filing Bankruptcy

November 7, 2009 – 12:34 pm

The economy in Michigan, increased healthcare costs and reduced medical benefits from a declining automotive industry, and the threat of foreclosure may cause senior citizens to consider Bankruptcy during their retirement years. Many senior citizens do not want to lean on thier children during these tough economic times – because their children are having financial problems too, in many cases.

Retired Michiganders on a fixed income may not want to take money from a retirement account to pay off large amounts of medical or credit card debt. Doing so can have long term effects as your nest egg will dwindle down and the money that you withdrawal will be taxed as income.

For seniors with pressing medical bills and credit card debt, it may make more sense to file for Bankruptcy in Michigan.  Bankruptcy has helped many people by giving them a fresh start to their new lives without the burden of overwhelming debt. Senior citizens may even be able to keep their homes during a bankruptcy filing.

Up to one million dollars in assets in IRAs and other qualified retirement accounts are exempt property when filing for bankruptcy. Exemptions or exempt property are part of what creditors are not entitled to take from you to satisfy a debt. Seniors can discharge their debts through bankruptcy while keeping their retirement income for basic living expenses.

This is increasingly important as the number of people who retire is increasing (automotive and non-automotive) and there is a concern that social security payments will  be reduced.

Many Michigan senior citizens have rapidly increasing credit card debt that has spiraled upwards in the last few years. Bankruptcy is available to seniors  and can not be overlooked for those about to retire or for improving the quality of life for those already in retirement.

By admin | Posted in Bankruptcy Expertise | Comments Off

 

Filing Bankruptcy on your Own?

November 2, 2009 – 4:34 pm

The thought of filing Bankruptcy may seem like the end to your financial life. While in fact, the exact opposite may be true. The purpose of filing bankruptcy is to help you to come out from under your debt to create a new future. It’s not prospect that should be taken lightly, but many people may want to attempt it on their own. 

Bankruptcy is indeed, an effective method to gain a financial fresh start. A second chance to a solid financial future. When you successfully file bankruptcy, the debts that you have collected will be relieved to a great degree, but filing without extensive knowledge of the legal system may cause undo stress and is not advised for most people.

The main benefits of bankruptcy are:

  • Automatic Stay: The automatic stay in bankruptcy stops creditors from debt collection. Creditor’s harassing phone calls stop, threatening mail ceases, repossessions are stopped, mortgage foreclosures are stopped and law suits as well.
  • Exemptions: By law, certain exemptions are allowed which means that you may keep personal property outside of creditor’s claims. Types of exempt property are clothing, family heirlooms, furnishings etc. These are just a few examples and are subject to certain monetary or value limits.

Although bankruptcy records are public, it is still fairly easy to keep your bankruptcy private. You probably know people who have filed bankruptcy, they just didn’t tell you. When you file bankruptcy, it is not embarrassing or demeaning. In fact, these tough economic times have made filing bankruptcy more prominent than ever.

Each state has different rules and regulations, so if you are filing bankruptcy in Michigan, please contact Chimko for a helping hand.

By admin | Posted in Filing Bankruptcy on your Own, Uncategorized | Comments Off

 

The traditional stigma of bankruptcy has faded

October 27, 2009 – 12:59 am

The traditional stigma of bankruptcy has faded and been replaced by the view that it is a fresh start after a time of  emotional and or physical stress.

Many people filing for bankruptcy have experienced unexpected  financial shock, such as that caused by sudden events such as job loss, business failure, death, divorce or illness.

Filing for bankruptcy can be the right answer. If you are facing serious financial challenges, it is very important to seek the counsel of an experienced bankruptcy attorney.

Credit Counseling Requirement in Bankruptcy
In 2005, Congress passed and the president signed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), a bankruptcy reform law. One of the new requirements BAPCPA imposes on a new bankruptcy debtor is to receive credit counseling from an approved credit counseling agency before the bankruptcy filing. Chimko  and Associates are attorneys experienced in consumer credit and bankruptcy law and we can help educate debtors about these new counseling requirements.

 Please call us today and get started on that “Fresh Start” – whether it is filing for bankruptcy or taking the steps to get your credit in order.

By admin | Posted in Bankruptcy Expertise | Comments Off

 

Foreclosure and Bankruptcy – Getting your Questions Answered

October 23, 2009 – 12:46 am

According to the RealtyTrac U.S. Foreclosure Market Report for August 2009, the nation’s foreclosure activity decreased fractionally from July but was still 18% above the level reported for August 2008. One in every 357 U.S. housing units received a foreclosure filing during August. 

If you are reading this, you may be affected. With these unfortunate statistics, homeowners need to know their legal rights and options.

If a person is struggling to make home payments and may be facing foreclosure, the most obvious way to save his or her home, is to work out a mutually beneficial payment plan with your lender, or to revise the terms of original loan agreement in order to make manageable mortgage payments to the lender.

Loan modifications can be done whether or not a person is behind in the loan payments, based on his or her financial situation, current hardship, and ability to make smaller payments.

Additionally, there are a number of state and federal laws in place that are meant to protect borrowers from engaging in unfair lending practices. Unfortunately, many borrowers are unaware that they have been the victims of predatory lending practices. The best way to determine whether or not a person have been the victim of predatory lending is to have a forensic loan audit done on your original loan documents.

If someone have been a victim of predatory lending, he or she may have the right to file a lawsuit against the lender and to put a stop to the foreclosure process for the duration of the suit. When combined with a loan modification, predatory lending violations provide leverage to homeowners in their negotiations with the lenders as well.

Finally, if a person is finding it difficult to make your monthly mortgage payments because he or she is drowning in additional debt, and he or she may not even be able to make a modified payment amount, bankruptcy may be the best option. Bankruptcy not only puts an immediate stop on the foreclosure process, but it also gives the opportunity to start fresh on the finances.

Please give us a call today to find out if bankruptcy is the right solution to your foreclosure and/or debt problems.

By admin | Posted in Foreclosure and Bankruptcy | Comments Off

 

Chapter 13 bankruptcy and Second Mortgages

October 21, 2009 – 12:26 am

Declining home values in Michigan have caused home values to depreciate or go “underwater,” which means below the amount that some homeowners owe. Now there is a new form of relief available in Michigan Bankruptcy Court.

For homeowners with second mortgages, if the value of your home has declined to less than the total value of your first mortgage, the second mortgage has, in effect, become an unsecured loan.

When filing a Michigan Chapter 13 bankruptcy, which is a repayment plan, the bankruptcy filers usually pay 100% of secured mortgage debts only. If the second mortgage is entirely unsecured, it can be “stripped” of its lien on the property and pay only the same percentage amount as all other unsecured debts, which is usually a smaller percentage than a secured debt.

Treatment of unsecured debts varies from individual Chapter 13 bankruptcy plan depending upon the bankruptcy filer’s income, debts and allowable expenses. 

However, unsecured debts may be paid even as little as 10% or even just 1% under the right circumstances. Which is based of the bankruptcy filer’s income throughout the course of a Chapter 13 bankruptcy plan, and discharged of remaining liability upon completion of the plan of debt reorganization.

How a second mortgage is stripped varies from the Eastern and Western District of Michigan, and from courtroom to courtroom in procedure, but not in the end result. Some judges will allow the second mortgage to be stripped in the Chapter 13 bankruptcy plan itself. Some require the value of home to be proved or disproved at an adversary proceeding. The most important determining factor remains, however, what the value of your home is at the time of filing for a Michigan Chapter 13 bankruptcy.

Sometimes, however, bankruptcy is not the answer. The best solution may be to have your bankruptcy attorney negotiate directly with your creditors, for a reduced amount, a debt consolidation or repayment plan you can live with.

Call Chimko and Associates today to find out more on how this affects you.

By admin | Posted in Bankruptcy Expertise | Tagged | Comments Off

 

Is everyone required to take the bankruptcy means test?

October 11, 2009 – 12:29 am

Not everyone is required to take the means test. One major exception to excuse the means test is if the debts are not primarily consumer debts. If a person debts are primarily business related, they are excused from taking the means test. There are also exceptions for military personnel in some circumstances.

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.

By admin | Posted in Understanding Bankruptcy | Tagged | Comments Off

 

An Overview of the Bankruptcy Means Test

September 20, 2009 – 12:38 am

The Means Test was part of the Bankruptcy Reform Act of 2005. Its purpose was to devise an income test to determine eligibility to file a Chapter 7 bankruptcy. The means test is a backward looking test which averages the Debtor’s income over the six month period prior to filing the case. 

It compares that income to the median household income in Debtor’s county for a household of a similar size. If the income is below the median income, the Debtor is presumptively eligible to file a Chapter 7. If the income is above the median, it requires additional analysis to determine if a Debtor is eligible to file Chapter 7. If the Debtor’s income is over the median, he may still be able to file Chapter 7 depending on his expenses. 

The IRS has developed certain allowances for housing, transportation, medical expenses etc. which may be deducted from the Debtor’s income. There are also additional IRS allowances based on taxes, insurance, child care, telecommunications needs, charitable contribution etc. In addition, the Debtor may also subtract payments for secured loans such as mortgages, vehicles and other secured property. Priority debts such as child support and alimony may also be deducted from the Debtors income. A Debtor fails the means test, if after deducting all of the allowable expenses from their average current income, he has approximately $100.00 or more available to pay creditors. Failing the means test creates a presumption that the case should not be eligible for Chapter 7. 

If the Debtor fails the means test, the U. S. Trustee will generally bring a motion to dismiss the case. The motion can be defended against by showing special circumstances. Special circumstances can be a reduction in income or job loss. Other special circumstances could be a long commute, high medical bills, student loan payments etc.

Even if a Debtor passes the means test, the U.S. Trustee may file a motion to dismiss the case. The U.S. Trustee reviews the Debtors current income and expenses listed on the bankruptcy schedules to determine if the Debtor has available income to pay creditors. For example if the Debtor passed the means test because he was out of work during the period used to calculate his income and now has returned to work with a substantial income and an ability to repay creditors, the Trustee will file a motion to dismiss. In fact most of the motions brought by the U.S. Trustee are the result from this type of case.

By admin | Posted in Other Debt Solutions | Tagged | Comments Off

 

Caution is Recommended with Debt Solution Centers

September 15, 2009 – 6:56 pm

We just saw an advertisement for a debt solutions center that promises to settle your debts for pennies on the dollar. Many of these agencies are hogwash!

What they do is have you pay in hundreds of dollars a month, charge huge fees, and then occasionally get a creditor to accept a lump some payment for less than you owe – usually for sixty pennies or more on the dollar (rather than just a few pennies).

All too often, your money just disappears into a black hole and your debt situation ends up worse rather than better.

Even when you do get a debt forgiven for less than what you owe, you get a nice surprise in January of the next year. Any debt forgiveness over $600.00 gets reported by the creditor as income to you. You have to pay taxes on forgiven debt and chances are money is still really tight for you and you don’t have the cash to cover the extra taxes. So, you have paid huge fees to convert dischargeable credit card debt into non-dischargeable tax debt.

There are legitimate debt help agencies. Good agencies will sit down with you and tell you what relief you can expect and what your monthly fee would be and where it would go.

The fees are distributed to creditors monthly. If, instead, the agency wants to just collect a large pool of cash with the notion that they may work out a lump sum payout, run away – run far, far away.

Debt Solution Centers can be the right solution and bankruptcy can be the right solution for you.  There is one thing that is common though when plagued with financial difficulty – make sure you talk to an experienced lawyer first.

By admin | Posted in Uncategorized | Comments Off

 

Why consider hiring a bankruptcy lawyer instead of DIY?

September 11, 2009 – 12:34 am

Let’s face it, no matter what our political leaders are saying – the economy doesn’t seem to be getting much better in Michigan.

call: 877.334.3922
For a NO-obligation consultation
For many, making sense of their financial issues and deciding on how to solve them is confusing.

Not only are we facing layoffs, reduced wages and escalating gas prices. These things are causing a ripple effect and making other basic commodities more expensive. Nobody seems to want to talk about the inevitable for many people – they have to research options that may include filing for bankruptcy.

It’s tough to talk about – but there are many professional bankruptcy consultants and lawyers that will not judge you, will understand your difficulties and suggest the right plan for you and your family.

You need guidance to make sure that whatever financial choices you make are right for you, your kids and your spouse, and that the choices you decide on are made with accurate, impartial and balanced advice from a bankruptcy attorney or consultant.

Why would you consider hiring a lawyer and not doing this yourself? Because it is difficult to get through the slew of information out there and determine is bull and what is true.

When you pick a bankruptcy or credit lawyer, you want someone whose law practice has a high enough concentration of bankruptcy cases to be knowledgeable about the changes in the laws in Michigan. Only a bankruptcy attorney who is licensed in Michigan can give you the correct legal advice.

An experienced consumer bankruptcy attorney has a lot developed a tremendous amount of resources and knowledge over the years. Many options are available to a consumer that is considering bankruptcy and it is essential that you are presented those options in a clear and definitive manner by an experienced lawyer.

Way too often, credit professionals and counselors who offer “debt management programs” are focused on paying debts, but that is not necessarily the right or best option for you, the client. You need a lawyer that will meet with you in person and study the specifics of your case in order to recommend a solid plan for your particular situation. That recommendation may not always be bankruptcy.

If it is bankruptcy, then the next step is to make sure that you get the correct advice during bankruptcy process so it goes as smoothly as possible and there are no surprises. It is also important to note that the bankruptcy lawyer that you are dealing with needs to explain to you WHY he or she is recommending a particular plan of action!

You should speak to an attorney who is licensed in Michigan to practice law, and is experienced with bankruptcy – CLICK HERE to fill out a short information form.

By admin | Posted in Bankruptcy Expertise | Comments Off

 

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