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File Your Bankruptcy Remotely, From Home

online bankruptcy attorney

** We are able to handle all cases remotely and telephonically, so even if you are home quarantined, we can still represent you fully throughout the bankruptcy process **This is some text!

In this most turbulent of times, we are here for you, even if you are unable to come to us.

  • We would start by sending you an online questionnaire, which will take 10-20 minutes to complete.
  • We can then have our initial consultations over the phone, where we will discuss the questionnaire, and how a bankruptcy will work for you, given your circumstances
  • You can then (1) email, (2) fax or (3) mail us required documents
  • Then when it is time to file the case, we can have a Zoom, Skype, Google Hangout or Facetime conference to review and sign the documents together.
  • There is one hearing that will need to be held, and at this time the Court is allowing us to hold these remotely as well.

If you are struggling because of COVID-19, or because of any other financial issue, please give us a call today at (616) 920-0555. We are here for you.

 

We’re debt relief agents. We help people find relief under the Bankruptcy Code.

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IRS: Offer In Compromise

IRS Offer In Compromise

Offer In Compromise – Doubt as to Collectibility

There are three types of Offer In Compromise (OIC). The most commonly utilized OIC is the “Offer In Compromise, Doubt as to Collectibility,” or OIC-DATC. This OIC is geared towards those individuals who are unable to pay their current tax obligation and wish to settle for a payment that is less than the amount they actually owe.

For OIC-DATC, taxpayers will need to:
— File Offer in Compromise
— Attach financial statements
— Submit supporting documentation to prove the value of their assets, liabilities, and monthly income and living expenses.

Once submitted, the exact time it takes for the entire process varies from case to case, but we see on average it takes somewhere between  4 weeks to 8 months, all depending on who gets assigned as the examiner and the complexity of the situation.

Offer In Compromise – Effective Tax Administration

Offer In Compromise – Effective Tax Administration is reserved for taxpayers who can pay the tax they owe, but it would cause (1) undue economic hardship, or (2) there are other public policy or equity grounds

1) Undue economic hardship

Economic hardship is a consideration for clients who have the ability to pay their tax debt in full, but doing so would place them in severe economic hardship.

2) Public policy or equity grounds

Public policy and equity offers are for situations when “collection in full would undermine public confidence that the tax laws are being administered in a fair and equitable manner.

Offer In Compromise – Doubt as to Liability

The Pro is that this is more straightforward and less negotiation is needed.  The Con is that this is only available when the taxpayers can provide proof as to why the validity of the tax obligation should be questioned.

 

Give us a call at (616) 920-0555, or use the email form below, for information on our Offer In Compromise service.

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Can criminal restitution be discharged in bankruptcy?

criminal restitution and bankruptcyUnfortunately no, criminal restitution cannot be discharged in bankruptcy. However, the automatic stay will prevent any creditor or court from forcing a payment while your bankruptcy is pending. This could last up to 5 years.

The Automatic Stay protects clients from any collection efforts, while his bankruptcy case is still pending. 11 U.S.C. § 362(a)(1) of the Bankruptcy Code protects the Debtor/Defendant from any attempt ‘to recover a claim against the debtor that arose before the commencement of the case under this title.”  11 U.S.C. § 362(b) then goes on to list any exceptions to this rule, none of which apply in the present circumstances.

The closest exception comes under 11 U.S.C. § 362(b)(1) which states the stay does not operate as a stay against “the commencement or continuation of a criminal action or proceeding.”  However, In re: Storozhenko, 458 BR 905 (ED Michigan), states “criminal restitution must be deemed to be relief that is civil in nature, not criminal, for the purpose of 11 U.S.C. § 362(b)(1) exception to the automatic stay.  In re: Storozhenko goes on to say “at most, the federal statute would, temporarily (i.e. only until the automatic stay terminates under 11U.S.C. §362(c)), prevent the state court from complying with the state statute that mandates restitution as a condition for probation.

Westlaw’s Keynote #3 for In re: Storozhenko goes on the summarize the case by saying “bankruptcy court’s action did not prevent state court from placing debtor on probation, assuming that state court had determined that probation was appropriate, but merely prevented it from ordering restitution payable to state court receiver as a condition for such probation while stay was in effect.”

This is true for whether a Chapter 7 or Chapter 13 bankruptcy is filed. However, by filing a Ch 13 bankruptcy, you are afforded more time to put together a plan to resolve the debt.

If you are struggling with a criminal restitution payment, and live in West Michigan, please give a call to discuss what we can do to help.

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Inheritances in Bankruptcy

Chapter 7

Under a Chapter 7 bankruptcy, the trustee looks to the timing of the inheritance. If the inheritance was before filing, any amount on hand at the time of filing will become part of the estate. When it becomes part of the estate, an individual will have to exempt it in order to protect it. Any portion of the inheritance that is nonexempt will allow the trustee to take it and distribute it to creditors. If an individual is entitled to receive an inheritance 180 days after filing the bankruptcy, the inheritance will not become part of the estate and the trustee will have no claim to any of it. However, if an individual is entitled to receive an inheritance within 180 days of filing for bankruptcy, they will need to amend their bankruptcy paperwork regardless of whether the court closed the case or not. Similar to an inheritance prior to filing for bankruptcy, the inheritance will need to be exempted through an amendment, if it cannot be exempted then the trustee will be able to take that portion and distribute it to creditors.

Chapter 13

Under a Chapter 13 bankruptcy the individual may still need to exempt the inheritance, similar to a Chapter 7. If the case is a 36-month ACP, then if the client becomes entitled to receive the funds after successfully making payments for 36 months, then the inheritance becomes the clients. A case becomes a 36-month if they pass the means test and were eligible for a Chapter 7, but regardless, filed a Chapter 13.

In any other scenario, the client will need to exempt as much of the proceeds as possible, then put forth an application outlining what unexpected expenses they have to retain the inheritance for, much like they would for a tax refund.

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Chapter 13 Bankruptcy: Liquidation Analysis

In a Chapter 13 Bankruptcy, if you are unable to exempt all of your assets, you will need to perform a liquidation analysis (LA).  The purpose of a liquidation analysis is to ensure the general unsecured creditors are receiving at least the amount they would be receiving if the unexempted assets were liquidated in a Chapter 7 bankruptcy. As such, cost of sale, trustee’s compensation, and priority debts are to be taken into consideration.

For example, let’s say that a client has $5,000 in unexempted assets and owes $1,500 to the IRS. Under this scenario, the Chapter 7 trustee’s fee would be 25%, reducing the amount to be actually distributed to $3,750. Of that, the first $1,500 will go to the priority class of creditors (IRS), leaving the remaining amount of $2,250 available for the general unsecured creditors. Therefore, $2,250 would be the result from the LA.

If we were dealing with a home where some of the equity is not able to be exempted, you may also deduct the cost of sale, typically 6% of the FMV.

For more questions about Bankruptcy or the Liquidation Analysis, please give us a call at (616) 920-0555.

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Chapter 13 Bankruptcy: Save the Home

When an individual falls behind on their mortgage, they have the benefit of filing for a Chapter 13 bankruptcy in order to prevent a foreclosure. A unique feature of a Chapter 13 bankruptcies is that junior mortgages, a second or third mortgage, can be eliminated if the house is worth less than the balance of the first mortgage. How this works, when an individual gets behind on their mortgage payments. The first mortgage could start a foreclosure procedure. Instead of going through with the foreclosure, that individual can file for a Chapter 13 bankruptcy, thereby stopping any foreclosure proceeding.

Additionally, if the individual’s home is worth less than the first mortgage, any junior mortgages would not receive anything from that potential foreclosure. Under a bankruptcy, those junior mortgages would be considered “wholly unsecured” and as such they could be stripped. Those junior mortgages would be treated the same as other unsecured debts and at the end of the bankruptcy, would be discharged the same as the other unsecured debts. At the end of the bankruptcy, the lien for the junior mortgages would be removed from the individual’s property and the individual would no longer need to worry about having multiple mortgages on their properties.

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Chapter 13 Bankruptcy: What is a Cramdown?

 A “cramdown” essentially reduces the principal balance of a secured debt from the outstanding loan amount down to the Fair Market Value. This is most often used with car loans, mobile home loans, household goods, and other personal property in a Chapter 13 Bankruptcy. This will allow an individual to pay the fair value of the property and the remaining balance would be lumped into other unsecured debt.

The most common example is a vehicle, if the vehicle is work $6,000 but there is a $13,000 loan on the vehicle, the individual would be required to pay the $6,000 as secured debt and the remaining $7,000 would be seen as unsecured debt which would be paid in proportion to all other unsecured debt. Any portion of the unsecured debt that was still due and owing on the loan would be discharged at the end of the bankruptcy.

The huge benefit of cramming down the loan is to be able to reduce interest rates, reduce the amount owed, stretch payments out over a longer term, and lower the monthly obligation. This “cramdown” is allowed in Chapter 13 cases, as opposed to a Chapter 7. In order to utilize this process, the loan must have been acquired at least 910 days prior to the bankruptcy. This way, an individual who goes out and buys a new car and acquires a loan cannot turn around and file for bankruptcy in order to lower the loan.

If you have questions about this process, or if you want to know what Russell can do for you, feel free to give us a call at (616) 920-0555.

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Why file a Chapter 13 Bankruptcy when you qualify for Chapter 7?

A Chapter 7 bankruptcy is a liquidation bankruptcy, which in essence wipes out most of an individual’s general unsecured debts (i.e., credit card and medical bills) without a need to pay the balances through a repayment plan.  A Chapter 13 bankruptcy is a bankruptcy that reorganizes an individual’s debt and creates a monthly repayment plan that repays at least a portion of the debt over a period of three to five years.  The easiest way to qualify for a Chapter 13 bankruptcy is to not qualify for a Chapter 7, meaning, an individual would need to make more than the median income. In Michigan, the median household income from 2017 was $54,909. However, a Chapter 13 bankruptcy is not limited to only individuals who do not qualify for a Chapter 7 bankruptcy.

A Chapter 13 bankruptcy has a few more advantages than a Chapter 7 bankruptcy. For example, an individual who is behind on their mortgage has the ability to catch up on missed mortgage payments and prevent the possibility of a foreclosure action. An individual behind on car loan payments also has the option to restructure their debt to get caught up on missed car payments and prevent a possible repossession. This is not true under a Chapter 7 bankruptcy, in a Chapter 7 bankruptcy an individual is not able to catch up on missed payments. Therefore, the possibility of repossession or a foreclosure is still possible. Under a Chapter 13 bankruptcy, an individual is able to restructure their debt in a way to keep maintaining their payments as well as pay any possible arrears in order to get caught up and avoid the possible repossession or foreclosure.

When an individual falls behind on their mortgage, they have the benefit of filing for a Chapter 13 bankruptcy in order to prevent a foreclosure. Additionally, if the individual’s home is worth less than the first mortgage, any junior mortgages would be “stripped” away. Under a bankruptcy, those junior mortgages would be considered “wholly unsecured” and as such they could be stripped. Those junior mortgages would be treated the same as other unsecured debts and at the end of the bankruptcy, would be discharged the same as the other unsecured debts.

Another benefit to a Chapter 13 bankruptcy is that an individual will be able to keep all of their property under the bankruptcy, even if some is unexempted. In a Chapter 7 bankruptcy, property would need to be exempt in order for the individual to be able to keep their property. If an individual’s property cannot easily be exempt, for example, if an individual has a lot of valuable property or a lot of equity in their homes, then the individual’s total property may not be exempt. Any amount that is not exempt, the individual is required to either hand the property over to the trustee so that the trustee can sell it, or pay the trustee the monetary value in order for the individual to be able to retain possession. Whereas an individual filing for a Chapter 13 bankruptcy is able to retain possession of all property but must pay unsecured creditors an amount (typically pennies on the dollar) equal to the value of nonexempt assets through a process called the Liquidation Analysis.

Additionally, if someone owes significantly more on a vehicle than it is worth, they can “cramdown” the debts to its’s Fair Market Value (FMV).  This “cramdown” is allowed in Chapter 13 cases, as opposed to a Chapter 7. In order to utilize this process, the loan must have been acquired at least 910 days prior to the bankruptcy. This way, an individual who goes out and buys a new car and acquires a loan cannot turn around and file for bankruptcy in order to lower the loan.

So while there are a ton of advantages to filing a Chapter 7 bankruptcy, an individual may be more inclined to file a Chapter 13 bankruptcy, especially if a foreclosure or repossession is possible. It is good to check each individual’s needs in terms of what they are looking to get out of the bankruptcy, and not just to get out of debt.

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Chapter 13 Bankruptcy: Examples of Disposable Income

Disposable Income in the bankruptcy world will be whatever is left over after taxes, insurance, and any necessary household expenses. This disposable income must then be turned over to the Chapter 13 trustee.

However, there are additional forms of income that can come into when calculating disposable income:

  • Bonuses – If these were not already factored into the Schedule I, then the funds must be turned over to the trustee. However, one can submit an application to retain.
  • Tax Refunds – This is the most common form of “disposable income” that is turned over to the trustee. However, please review our article on how you can keep you tax refunds.
  • Inheritance – The amount deemed disposable could be reduced by available exemptions
  • Life Insurance Proceeds – The amount deemed disposable could be reduced by available exemptions

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Chapter 13 Bankruptcy: Can I Keep My Tax Refunds?

Short answer, yes, as long as the paperwork is handled correctly.

In a Chapter 13 bankruptcy, tax refunds are treated as disposable income, and as stated in other articles, by default all disposable income is to be turned over to the trustee. However, the following are the most common avenues we take to ensure our clients are able to retain some, or all of their tax refunds.

Application to Retain:  If a client has unexpected expenses, not already accounted for in their budget, we often submit an application with the trustee’s office to retain some or all of their refund.  Examples of this is home repairs, vehicle repairs, vehicle replacement, and post-petition medical expenses. We sit down for a meeting which takes approximately 30 minutes, we review the tax returns, and documentation for these unexpected expenses and submit the application that day. Often, we can have the refund request approved within a week.

100% Plan:  Bankruptcy plans where the client is already paying their creditors back at 100% are automatically approved to retain 100%  of their refund. However, clients may turn over some or all of their refund in order to reduce their plan length.

More than 36 months into a 36-month ACP Plan:  A 36-ACP is a case where the client passed the Means Test, but decided to file a Chapter 13 for another reason. In those cases, after the client successfully completed 36 months of their plan, the client is able to keep any future disposable income.

Built into Budget: Clients can list a proration of their tax refund on their Schedule I. For example, the client can list “ProRated Tax Refunds” under miscellaneous income for the amount of $500. By doing so, the client automatically gets to retain $6,000 from each tax refund. If they need to keep more, they may submit an Application to Retain with the trustee.

 

If you have questions about this process, or if you want to know what Russell can do for you, feel free to give us a call at (616) 920-0555.

 

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Grand Rapids Bankruptcy Attorney – Bankruptcy’s Effects On Credit

A common fear among individuals considering bankruptcy, is what the bankruptcy will do to their credit record and how long they will be affected.  It is true that under the Fair Credit Reporting Act, this notation on your credit report will last for ten years, but the effects it may have are not always clear cut.  In many cases, creditors view the bankruptcy as a step up from an individual’s prior credit conditions and some creditors may even view the bankruptcy as favorable, since, after discharge, the debtor will be free of other financial obligations and be more able to make payments on new lines of credit.

To better understand if filing for bankruptcy is the right action for you, it is recommended to set up a consultation with a local bankruptcy attorney.  

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Bankruptcy: Debt owed to the unemployment agency?

If you owed money to the Michigan Unemployment Agency, you might want to give my office a call.

First off, if a determination was made between Oct. 1, 2013, and Aug. 7, 2015 that you owe for back unemployment compensation, Michigan will no longer attempt to collect these alleged “over-payments,” unless the cases were individually reviewed by a human and affirmed with a new notice to the claimant. So if that is you, take a deep breath.

For all others, you can file either a Ch 7 or Ch 13 bankruptcy and one of two things will happen: (1) Michigan does nothing, and the full amount is forgiven under the Bankruptcy Code, (2) Michigan files a Complaint, and then we enter into a settlement.

But how much would the settlement be for? As you may already know, if Michigan is claiming an over-payment, they will demand that you repay them that amount, plus a x5 penalty. So if Michigan claims you were over-payed $5,000, they will also demand you pay them a $25,000 penalty, for a grand total of $30,000. If we enter into a settlement, by default Michigan will accept the original over-payment amount, plus a x1 penalty. As a result, you would owe $10,000 instead of $30,000.  And we can negotiate a manageable repayment amount, based on your circumstances.

More questions, contact me today.

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Bankruptcy: My mother has is mentally incapacitated, can she still file for bankruptcy? Yes.

It is possible for there to be a situation where a parent needs to file for bankruptcy, but has severe dementia, and therefore mentally incapacitated.

Dementia can come on gradually, limiting their ability to make wise financial decisions.  By the time you realize their mental health is affecting their finances, it could be too late. So how do they voluntarily file for bankruptcy?

The first step would be to have someone appointed to represent them. The most common approach is going through Probate Court and having a family member appointed Guardian and Conservator.  Although there is much debate whether having a valid Power of Attorney would be sufficient, having one appointed by the courts is as close to iron-clad as one can get. Then, the individual appointed would work closely with their bankruptcy attorney to draft the requisite paperwork, and would then sign on behalf of the incapacitated individual. Additionally, you will want to attach the Guardianship and Conservatorship paperwork attached to the petition.

Additionally, you can motion to the Court for a waiver for the Credit Counseling Course. You will want to file this concurrently with your Petition to avoid having a MTD filed by the U.S. Trustee’s Office.

If you or a family member are considering filing for a Chapter 7 or Chapter 13 Bankruptcy, you will want an experienced attorney that has already faced virtually any situation that you can throw at them. Give me a call today at (616) 920-0555.

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Mobile Home in Bankruptcy? What are the benefits? A LOT!

If you currently have a loan for a mobile home, there is a chance you are paying a high interest rate for for a loan where you owe significantly more than what the home is worth. If that is the case, then I want to meet with you.

Section 506 of the bankruptcy code allows an individual in a Chapter 13 Bankruptcy restructure personal property loans in situations where they had the loan for more than 910-days by dropping the loan amount down to the Fair Market Value of it. Further, regardless of how old the loan is, you can drop the interest rate down to 4.5%. Let’s look at a few scenarios.

So let’s say you have a trailer that you purchased 10 years ago for $50,000, at 20% interest, with a 30 year loan. Your payment would be $836 a month, for the next 20 years. But let’s assume that due to depreciation, that trailer is only worth $15,000 in it’s current condition. I could restructure that loan for you, for $280 a month, and have it paid off in 5 years.

Please give me a call today if you have a mobile home. I would like to sit down and see how much I can drop your payment for you.

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How Often Can I File For Bankruptcy?

The answer really depends on which Chapter of Bankruptcy you previously filed (Chapter 7 and Chapter 13), and which Chapter you wish to file. Additionally, these restrictions only apply if you received a discharge in your previous filing.

Ch 13 -> Ch 13: You must wait at least 2 years after the filing of your initial case before you may refile and receive another discharge. Fortunately, more than likely you were in the first case for at least the 3 year minimum, so theoretically you could refile the day after you receive your discharge.

Ch 7 -> Ch 13: You must wait at least 4 years after the filing of your initial case before you may refile and receive another discharge.

Ch 13 -> Ch 7: You must wait at least 6 years after the filing of your initial case before you may refile and receive another discharge. There is an exception to this 6 year waiting period in instances where your initial Ch 13 was a 100% plan or where it was at least a 70% plan and proposed in good faith and your best efforts.

Ch 7 -> Ch 7: You must wait at least 8 years after the filing of your initial case before you may refile and receive another discharge.

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Bankruptcy: Can I Keep My Home?

Some people think that if you file for bankruptcy that you will lose your home. This is not the case in 99.9% of filings.

If you have less than $11,850 in equity in your home, you can keep your home, and your other assets will not be affected at all. If you have between $11,850 – $23,700 then you can keep your home, but your D5 Wildcard exemptions may be limited.

If you have between $23,700 – $37,775 in equity, then you will want to use your Michigan Exemptions. If you have more than $37,775 then you will want to contact my office. There are still a few more exceptions that you can take advantage of. Give me a call at (616) 920-0555 or email me at Travis@RussellGR.com

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Wildcard Exemption

As discussed in a prior article, think of an exemption as a credit you can use to buy back your property. If you have a loan or lien on a piece of property, then you only need to use your credits to buy back you ‘equity’ in the property (Equity = Value – Loan Amount). Most exemptions can only be used to protect a certain category of property. A “Wildcard” exemption, however, can protect ANY asset. So the question becomes, how much does one receive of Wildcard exemption?

At a minimum, you will receive $1,250.00 in Wildcard.  Additionally, you will receive whatever federal homestead exemption you have left over, capped at $11,850.00. This means, if you have a home with little to no equity in it, you can potentially receive $13,100.00 in D5 Wildcard exemptions to apply towards protecting your assets.

If you have any further questions on D5 Wildcard exemptions, or any other bankruptcy matter, please do not hesitate to contact me at (616) 920-0555 or Travis@RussellGR.com

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Protecting an Education 529 Plan in Bankruptcy

Qualified state tuition programs, also known as “529 plans,” are growing in popularity as a way to save for your child’s future education.  Given the rising costs of college, having this plan waiting for your children can be one of the best gifts that you can give them.

What if you have a plan established at the time of filing for bankruptcy?

What occurs to these funds will hinge on when the funds were deposited into the account. So let’s take a look at the three time periods that matter.

Funds deposited less that 1 year prior to filing for bankruptcy: These funds are afforded no special protection. You will only have your D5 “wildcard” exemptions to protect those funds.

Funds deposited between 1 & 2 years prior to filing for bankruptcy: Under 11 USC 541(b), the first $5,000.00 deposited 12-24 months prior to bankruptcy is protected. The remaining would need to be protected with whatever D5 Wildcard exemptions you have left over.

Funds deposited more than 2 years prior to filing for bankruptcy: Under 11 USC 541(b), anything deposited into a 529 plan more than 2 years prior to filing for bankruptcy is fully protected.

Additionally, some states have special exemptions, with more loose rules, that you can use to protect these 529 plans.  Unfortunately, Michigan in behind the curve in that respect. If you have any further questions regarding 529 plans or other bankruptcy questions, please do not hesitate to contact me at (616) 920-0555 or Travis@RussellGR.com

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What are the benefits of filing for bankruptcy with my spouse?

You could receive Double Exemptions: If you live in a state that allows you to use federal bankruptcy exemptions, you can double your property exemptions when you file with your spouse. (If your state doesn’t allow federal exemptions, you might want to seek the double exemptions option on joint filing, if your state allows that). Filing for double exemption only works if you and your spouse own property together.

 

Saves time and money: Since filing fees for individual and joint applications cost the same, a couple saves money when they file together. Also , the couple would  pay attorney fees for consultancy on only one application as opposed to two.

Time wise, this process is more efficient as the couple would provide only one set of documentation.(Documentation for filing for bankruptcy needs to be extensive and detailed, going through it once is definitely less tedious). The couple would also go for hearings with a trustee together as opposed to going individually.(Only one trustee hearing is required).

 

Gets Rid of  all dischargeable debts: When only one spouse files for bankruptcy, the other would still responsible for his/her individual debt and debt incurred jointly. In a case where the couple files jointly, all the debts could be dischargeable.

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Is the Trustee a friend or a foe?

Trustees are neutral. They are supposed to be unbiased in their work, solely ensuring that the bankruptcy estate is maintained and in order. However, depending on the situation, they may seem to be a friend or a foe. Take for example, a case of fraudulent activities. Trustees are known to take fraud very seriously. If they suspect you are engaging in any fraudulent activities that undermines the bankruptcy estate, they will take action against you. In this case, they would seem to be a foe. However, in a case where they are pursuing a creditor for fraudulent activity, they may seem to be a friend as it benefits you, the filer.

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Can a Chapter 7 Bankruptcy status stop my foreclosure?

Chapter 7 bankruptcy cannot permanently stop your foreclosure, but it is helpful in other ways that can help you manage a foreclosure you are facing.

Chapter 7 bankruptcy can delay your foreclosure – When you file for bankruptcy you gain an automatic stay. Fortunately, automatic stays apply to foreclosures. So then, throughout the period of your bankruptcy, a creditor cannot pursue a foreclosure. However, after your bankruptcy is completed, he/she can proceed with a foreclosure. In most cases, the creditor can request for an automatic stay to be lifted before your bankruptcy is over. The creditor would most likely have this granted by the court if he/she is able to prove they are the legal holder of a the mortgage or deed of trust to your house.

If your home is facing issues that cannot be resolved in the 3-4 months that your Chapter 7 is pending, you may want to consider filing Chapter 13 Bankruptcy to Stop the Foreclosure.

Give us a call at (616) 920-0555, for information on our $999.00 Flat-Fee Bankruptcy Service where you can get started with only $500.00 down.

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Bankruptcy: My spouse doesn’t want to file, is that okay? Yes.

One spouse may file a bankruptcy with or without their spouse. How much the the non-filing spouse (NFS) is involved, depends on the circumstances.

NFS is Living in the Home: Under this scenario, when the means test is completed, we must use both spouses’ income.  This doesn’t mean the NFS is actual a part of the case. We will not disclose to the court the NFS’s SSN or in most cases, even their name.  We simply have to disclose to the court what the income & expenses are for both.

NFS is NOT Living in the Home: Under this scenario, when completing the means test, we only include the your income. We will disclose to the court that you are married, but we will have to file a statement that your NFS is not living in the household with you.

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Can I prevent an eviction by filing for Bankruptcy? Yes

If you file for bankruptcy BEFORE your landlord has a Judgment For Possession, the Automatic Stay triggers protection from an unwanted eviction. At this point, your landlord would be required to file a Motion to Lift Stay in order to proceed with the eviction in Michigan Courts.

If you file for bankruptcy AFTER your landlord has a Judgment For Possession, the Automatic Stay will not automatically give you protection from an unwanted eviction. To get this protection you would need to make a deposit with the court in an amount sufficient to cure the default.

The rules above only apply in situations where  a landlord is trying to evict you from a residential property. If you are (1) being evicted from you home by your lender, post foreclosure, or (2) being evicted from a commercial property, then it does not matter whether or not a Judgment For Possession exists, the party attempting to evict you would need to lift the automatic stay before they are able to proceed with any action.

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Automatic Stay: How long does it last?

When determining how long the automatic stay will last, the first thing that needs to be determined is whether a prior bankruptcy case was dismissed in the year before the filing of the current bankruptcy.

1. If no case was dismissed in the year prior, the stay lasts until the earliest of the following:

  • The date in which an order of the court terminating the automatic stay
  • The date the case is closed
  • The date the case is dismissed
  • The date a discharge is granted or denied

2. If at least one case was dismissed in the year prior, then you must look at how many. If one case was dismissed, then the automatic stay terminates after 30 days, unless it is extended by the court after a showing the case was filed in Good Faith.

If more than one case was dismissed in the year prior to filing, no automatic stay goes into effect until Debtor files a motion with the Court requesting the stay, and they are able to show the filing was in Good Faith.

I invite you to email me at Travis@RussellGR.com with any questions you may have regarding the automatic stay, or any other bankruptcy related matter. I would love to discuss what my office can do to help you achieve long term financial stability. 

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Bankruptcy: Can I Keep My Tax Refund? Yes!

Bankruptcy: Can I Keep My Tax Refund? Yes!

A question often asked is whether they can keep their tax refund. The potential client heard stories from others that by filing bankruptcy you forfeit your tax refund to the court, or trustee. That is simply not the case.

If you are filing a Chapter 7 bankruptcy and you use your federal exemptions, you may be entitled to keep 100% of your refund by using your D5 Wildcard exemptions. If you are filing a Chapter 13 there is a little more legwork, but you may keep your refund as well as long as your properly draft your Schedule I and Plan. Preparation is key.

I invite you to email me at Travis@RussellGR.com with any questions you may have regarding exempting your tax refund, or any other bankruptcy related matter. I would love to discuss what my office can do to help you achieve long term financial stability.

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Bankruptcy: Gave an automobile away to a family member or friend?

We often have potential clients come to our office, and after going through their circumstances we come to realize they transfer an automobile to a family member.  At the time of the transfer there were no intentions of committing a future bankruptcy fraud, however nonetheless we have a situation that needs to be dealt with.

If a Debtor (the person filing for bankruptcy) gives an automobile, or any other piece of proper of value, away to a family member prior to filing, the court may deem this to be a fraudulent transfer.

However, fortunately for our clients there is a way out. There is well established case law (Nino v. Moyer) that takes a “No Harm, No Foul” approach. What this means that if we are able to undue the transaction prior to filing the bankruptcy, there is no fraudulent transfer. For information on how this is done, contact our office at (616) 920-0555 or use the following link: Contact Us

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Meeting of Creditors (341-Hearing)

About 4-5 days after your bankruptcy petition as been filed, you (and the creditors you list in your bankruptcy papers) will receive a notification that a “meeting of creditors” has been set. The assigned bankruptcy trustee leads the hearing and, after swearing you in, will ask you questions about your assets, debts, monthly budget and other transactions that may have occurred in the past 1-5 years. Typical questions are:

  • Did you sign the petition, schedules, and related documents before this case was filed?
  • Did you have an opportunity to read and review those documents before you signed them?
  • Did you list all of your assets, and are all the values correct to the best of your knowledge?
  • Did you list everyone you owe money to?
  • Have you paid any creditor $600 or more in the 90-days prior to filing?
  • Have you paid back any family or friends back for any loans in the past year?
  • Have you sold or transferred any property to any family members or friends in the past 2 years?

It is very important that you bring your DRIVERS LICENSE AND SOCIAL SECURITY CARD with you, and that you arrive about 10-15 minutes early to complete any questionnaire the trustee may have for you. In the large majority of Chapter 7 and Chapter 13 bankruptcies, this is the only hearing you will attend. 

For more information about our services, feel free to call our Grand Rapids’ office at (616) 920-0555.

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Get Rid of Your Second Mortgage

A Chapter 13 Bankruptcy (also known as Repayment Plan) can remove a second mortgage from your home.  If the first mortgage is more than the value of your home, a Chapter 13 Repayment Plan will let you pay your second mortgage or home equity loans the same as your credit card debt.  After 3 or 5 years, your mortgage will be gone.  If your house is underwater and has a second mortgage a Chapter 13 Repayment Plan is worth looking into.

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Does my Bankruptcy become Public?

No.

Although when you file for Bankruptcy it is a “public record,” it is not published in the local paper. Unlike a foreclosure, which would be published in the Grand Rapids or other local newspaper, this does not happen in a Bankruptcy. For that reason, if you file a Chapter 7 or Chapter 13  Repayment Plan, your neighbors will not see it in the paper.

If you have any questions regarding Bankruptcy and the privacy around it, please do not hesitate to contact my law office at (616) 920-0555.

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Get Your Car Back With A Bankruptcy

In a ruling that agrees with most other courts, the U.S. Court of Appeals for the Second Circuit held that a creditor who repossesses a car or truck must return it if the owner files chapter 13 before it is sold. If you car was seized, you may have your car returned through a chapter 7 or chapter 13.

Because state law determines the rights of an auto owner after repossession, owners in some parts of the country may not have the right to demand turnover. But in Michigan where I practice, the courts agree with Weber. So an owner can reclaim a repossessed car and pay for it – or sometimes pay its value, if less – through a chapter 13 plan.

Chapter 13 can be an expensive and cumbersome process. An attempt get back a repossessed car, without more, will rarely justify filing bankruptcy. But if an auto owner has other reasons to consider bankruptcy – if he is behind on a mortgage or has a substantial amount of unsecured debt – the advantage of saving the car may make chapter 13 appealing.

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Chapter 13 Plan Payment

Pursuant to the bankruptcy code, the debtor must commence making payments pursuant to their plan within 30 days after their petition is filed. Payments to the trustee must
be retained by the trustee until the plan is confirmed or denied. If the plan is confirmed, the payments are distributed in accordance with the plan. If confirmation is denied, the trustee, after deducting allowed administrative expenses, must return the remaining funds to the debtor.

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Retaining Nonexempt Property in Chapter 7 Cases

In consumer chapter 7 bankruptcies, although the trustee pretty clearly has a right to take possession of totally nonexempt property prior to the 341 meeting of creditors, this rarely occurs. These non-exempt issues can be resolved in one of three fashions.: (1) Turn the property over to the trustee; (2) Buy the non-exempt property back from the trustee; (3) file a Chapter 13, perform a liquidation analysis and account for that L.A. in your plan.

In the second option, the client would only need to buy back the non-exempt portion. For example, the debtor’s automobile may be worth $1,000 more than the amount which can be exempted. In these circumstances, terms can be arranged for a payment to the trustee in lieu of turning over the car. As long as the case will not be delayed, the trustee should be willing to accept payment in installments.

Give us a call at (616) 920-0555 for information on our $999.00 Flat-Fee Bankruptcy Service where you can get started with only $500.00 down.

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Can I keep my 401(k) if I file for bankruptcy? Yes.

When you file for bankruptcy you are given exemptions that you may use to protect your property. Some exemptions are limited, such as those used to protect your automobile and household goods, and some are unlimited, such as the exemptions you receive to protect any qualified retirement.

401(k)’s, 403(b)’s, pensions and the vast majority of IRA’s are considered to be qualified retirement plans.

For this reason, it does not make sense to take a loan from your retirement plan if you believe a bankruptcy filing is inevitable. Instead, give my office a call so that we may assist you with planning your financial recovery.

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Can I Discharge Michigan Driver’s Responsibility Fees with Bankruptcy? Yes.

In this attorney’s opinion, driver’s responsibility fees only compounds our economic problems and do not “encourage” drivers to drive more responsibly.

Fortunately, Michigan driver’s responsibility fees are generally dischargeable in Chapter 7 bankruptcy, as well as Chapter 13 bankruptcy.

Criminal penalties are not dischargeable in bankruptcy. However, Michigan driver’s responsibility fees are not “criminal penalties.” They are administrative fines levied by the Secretary of State’s office, not as a sentencing judgment or criminal statutory penalty by a criminal court conviction. Therefore, they should not fall under the “criminal penalty” non-dischargeability exception to the list of debts dischargeable under the US Bankruptcy Code as traffic tickets, parking tickets, and other fines may.

Thus, the filing of a Chapter 7 bankruptcy should discharge a driver’s responsibility fee arrearage, after which the Secretary of State’s office should return a driver’s license. However, with that said, the State of Michigan has taken various stances on such issues at various times, including the position that such fees are non-dischargeable “criminal penalties.”

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How To Rebuild Your Credit

Looking to build or rebuild your credit? You should consider a Secured-CD Loan.

Here is how it works: Bank gives you a loan for $1,000.00. That $1,000.00 immediately goes into a CD. That loan is then secured by the CD. You pay $85.00 a month of 12 months ($1,020 total). At the end of the 12 months, you will receive the CD (now worth approx $1,005).

Such a program will cost you approximately
$15 over the course of 12 months, but you will receive 2 HUGE benefits:
1) All payments will be reported to the three credit bureaus, improving your credit profile.
2) You will be forced to save money!

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Means Test – Chapter 7 Qualification

To qualify for a Chapter 7 Bankruptcy, you must past the “means test.”

To determine whether one passes the means test, and therefore qualifies for a Chapter 7, their household income must first be calculated. To calculate, you must take the previous 6 full months household  income, and multiply it by 2. (Do I have to include my spouse’s income if they are not filing?) For example, if you were to file November 16th, you would add up your household’s income for May through October, then multiply it by 2. If you were to file December 2nd, you would add up your household’s income for June through November, then multiply it by 2.

Next, you take the amount calculated and see if it is less then the allotted amount for your household size.

Household of 1 – $52,168
Household of 2 – $63,281
Household of 3 – $76,825
Household of 4 – $91,986

*Add $9,000 for each individual in excess of 4.

If the figure you calculated is less than the amount listed above for your family size, you pass the means test.

Grand Rapids Bankruptcy Law Firm

We’re debt relief agents. We help people find relief under the Bankruptcy Code.

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Paying Preferred Creditors

Clients may wish to delay a bankruptcy until after they have paid creditors whose claims they do not want to see discharged, for example friends or grantors of credit cards they hope to keep.  Such payments, if over $600 and within the applicable preference period could be set aside by the bankruptcy trustee.  Thus, if a client wants to pursue this course of action, and ensure that the creditor retains the payment, the petition must be delayed until after the preference period has run.

In most cases, it is preferable not to delay a bankruptcy for this purpose, but rather to pay the creditor after the petition is filed, using either exempt assets or post-petition income.  There is no impediment to this course of action in a chapter 7 case and usually it will not be questioned in a chapter 13 case.

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Secured v. Unsecured Debt

Debt is typically separated into one of two categories — secured or unsecured. The main difference is that a secured loan contains collateral as a form of security for the creditor. If you do not pay off your debt, the creditor can take the collateral. If you want to keep the collateral, you have to maintain some form of payment. Secured debt is typically not discharged through bankruptcy proceedings unless you elect to surrender the collateral.

Automobile and home loans are almost always secured loans.

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Automatic Stay: What does it do?

The automatic stay is an injunction against against the continuance of any legal action against a debtor or the debtor’s property. 11 U.S.C. 362. The automatic stay protects a debtor from harassing collection calls, evictions, repossessions, foreclosure sales, and garnishment of wages.  The protection from the automatic stay starts as soon as the debtor gets a bankruptcy case number. How long it lasts depends on your circumstances. Visit How Long Does it Last for details on the duration.

Let’s say a creditor lawsuit has been filed against a person who lives in Grand Rapids, MI and that person comes to see me to file a Chapter 7 bankruptcy.  As soon as we get a bankruptcy case number and notify the creditor of the bankruptcy filing, the creditor must stop all collection actions.

For another example, let’s say I have a client from Kentwood, MI who is worried that their car creditor is about to repossess their car.  Once we have a bankruptcy case number and we have notified the car creditor, the car creditor must stop all efforts to repossess the car. Any creditor that ignores the filing of a bankruptcy case and repossesses a car post-petition can be severely punished by a bankruptcy court.

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Garnishments: Will they stop and can I get my money back?

When a person files for bankruptcy, they are immediately extended a number of protections designed to protect them from further actions by creditors. The very minute a bankruptcy has been filed, creditors can no longer to seek collection of the debts. This means any garnishments currently occurring must be terminated.

The Bankruptcy Code also provides a means for recovering wage garnishment that occurred prior to filing for bankruptcy. However, in order to qualify you must of had $600 or more garnish from your paycheck within the 90 days leading up to the filing of your case. If you’re considering bankruptcy due to impending wage garnishment, or if you’ve just started having your wages garnished, you may want to consider waiting to file until you hit the $600 threshold. After all, if you’ve had $599.00, it is probably a good idea to wait and allow your creditor to garnish one more paycheck so you break over the $600 line. This way, with the help of your attorney, you can recoup funds from the creditor who has been reaching into your pocket.

Contact my office today to schedule a free consultation and get more information on our $999 flat fee bankruptcy option.

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Exemptions

Many people considering bankruptcy live with the fear of losing all of their property. However, that is not the case. And more often than not, they will not lose anything at all. This is all due to “exemptions.”  Think of an exemption as a credit you can use to buy back your property. If you have a loan or lien on a piece of property, then you only need to use your credits to buy back you ‘equity’ in the property (Equity = Value – Loan Amount).

In Michigan, those filing for bankruptcy have the option of choosing Federal or Michigan exemptions. A quick run-down is as follows.

Federal:

Homestead – $23,675
Household Goods – $12,625
Motor Vehicles – $3,775
Tools of Trade – $2,375
Jewelry – $1,600
Wildcard – $13,100

Michigan:
Homestead – $38,225 (standard), $57,350 (over 65yrs or disabled), unlimited (if you and your spouse both own the home)
Household Goods – $3,825
Motor Vehicles – $3,525
Tools of Trade – $2,550

Additionally, you may have unlimited exemptions to protect property such as life insurance proceeds and retirement accounts.

Give us a call at (616) 920-0555 or send me an email at Travis@RussellGR.com if you have any questions regarding exemptions and would like to speak to a licensed attorney in Grand Rapids, MI.

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Experienced Grand Rapids Bankruptcy Lawyer

We understand that our clients come to us in a time of need. Many suffer from financial hardship, emotional distress and difficulties in their lives that affect their families.

Mr. Russell has years of extensive experience in bankruptcy, family law and estate planning where he has always taken the sensitive and informed approach to help clients work towards a lasting, stable solution for their families.

Give us a call at (616) 920-0555, or use the email form below, for information on our $999.00 Flat-Fee Bankruptcy option.

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