Related posts:

1. Five Myths About Bankruptcy
2. The Truth About Bankruptcy Fraud
3. Top Ten Reasons To Hire A Lawyer For Bankruptcy

DETROIT BANKRUPTCY COURT

This is it!  Home of the Detroit, Michigan bankruptcy court.  Nothing marking it other than the address:  211 West Fort.

The initial, usually, only, court date is held here on the third floor, for both Chapter 7 and

Chapter 13 creditor meetings, or, 341 hearings.  Well, for certain counties in the Eastern District of Michigan.  Chapter 7 hearings for Washtenaw and Lenawee counties are held in Ann Arbor, and Chapter 7 and Chapter 13 hearings for the Northern Division of the Eastern District of Michigan are held in Flint, Port Huron, and Bay City.

Judges are not even allowed to attend, so court date is not quite accurate.  The hearings are presided over by the Chapter 7, or, Chapter 13, trustee.

The trustee operates the tape recorded, seen above, which is the official record of what happens. No court reporter, as such.

Most of them bring a laptop computer, as in the picture.

The trustee sits behind the machinery.  If any creditors attend, a rare event other than credit unions and car finance companies, they sit to the trustee’s right.

The debtors, that is, the people who file bankruptcy, sit directly across from the trustee.

The debtor attorneys sit on the trustee’s left.

A place for everyone!

The United States Trustee, under the Department of Justice, oversees the individual trustees, who are all attorneys, except for one accountant.  The U. S. Trustee even has a Chapter 7 Trustee Handbook.

They are NOT government employees.

Currently, they get $65 dollars out of the $306 dollar filing fee.  And, a percentage, set by law, of any assets they bring into the bankruptcy estate.  Which is their job, to reduce assets to cash for the benefit of creditors.

Not enough to get me interested in applying for the job.  About twice a month, you get to sit in a small room, all day, processing 7-8 cases, every half hour.  Yes, that is 30 minutes.

For more of what happens, check my U Tube video on

Detroit Chapter 7 bankruptcy hearings.

Related posts:

1. The Truth About Bankruptcy Fraud
2. What Is A Chapter 7 No Asset Report?
3. Ten Reasons Not To File Your Own Bankruptcy

S is for Step Plan

image by: dreamstime

image by:  dreamstime

Chapter 13 bankruptcy is difficult enough to understand.  The Chapter 13 plan is the point of a Chapter 13 bankruptcy case.

Chapter 13 is a payment plan bankruptcy case, as opposed to Chapter 7 or “straight” or “liquidation” bankruptcy.

Clients always ask:  How does the court figure out how much I will pay?

The answer is:  it ain’t the court, you do!

You file your Chapter 13 plan, and you really need an experienced attorney to do this.

Any financial analysis starts with:  the budget.

How much is coming in, minus how much is going out for living expenses, determines the plan payment.

We will leave plan length and liquidation analysis for a letter “L” post.

So, simple enough, once you take your pay stubs – oh? self-employed, you say?  Or on cmmission?  Well, Congress says we have to crunch those numbers, make our best guess as to FUTURE income and expenses, and go with that.

Lots of guesswork, I know, but, them’s the rules.

Unless you are paying 100% of your debts before 3 years are up, your Chapter 13 plan must go for at least 36 months.

So, what if your car payment is done after 20 months?  Let’s make it simple:  you are buying this car, not a lease that has to be replaced.

In the Detroit bankruptcy court, the Trustee will object to confirmation of your plan unless you increase your payment, or, step up the payment, by the amount of the car payment, in month 21.

So, your monthly car payment is $300; your  monthly plan payment starts at $400, for months 21 through 36, you pay $700.

The Trustee’s view of bankruptcy law, in this situation, is right, it says here.  Regardless of my opinion, the Detroit bankruptcy Judges say she is.

What about your 401(k) loan?

The 6th Circuit Court of Appeals, In Re:  Seafort, issued its opinion that when a 401(k) loan is paid off during a Chapter 13 case, the payments must step up by the amount of that loan.

Seems obvious to me, but, the Debtors’ attorney argued that they should be able to take that money, and increase their 401(k) contribution.

The 6th Circuit blew the whistle on that move, and, short of the U. S. Supreme Court, which is usually too busy for bankruptcy cases, they are the FINAL word for those of us in Michigan, Ohio, Kentucky and Indiana.

Other S blog posts from the experts:

Schedules and Statements

Statutory Lien

Strip

Security Interest

Student Loans  Student Loans

Stuff

Spouse

Small Claims

S is For Section 341 Meeting of Creditors

Related posts:

1. The Mystery of Chapter 11
2. Chapter 13 Bankruptcy Reform Update
3. What You Need To Know About Chapter 11

Michigan bankruptcy clients forget creditors all the time.  Or, don’t even know they

owe some body money, especially medical bills, which often show up months later.

Some people panic:  I already had my bankruptcy hearing, is it too late?  How much

trouble am I in?  Will I have to pay this bill?

image credit: dreamstime

Bankruptcy law gives the debtor, that is you, the person filing the bankruptcy, the

right to amend the schedules any time so long as the case is open.

Now, you have to give the creditor notice when you file the amendment adding the

creditor, and, in Michigan Chapter 7 bankruptcy cases, the creditor gets time to

object to the discharge, as they would if they had received timely notice.

What if you already received your Chapter 7 discharge?

Michigan is in the 6th Circuit, which, like most circuits, allows a case to be

re-opened to add a creditor.  However, the 6th Circuit ruled that there is no reason

to re-open a case to add a creditor if (1) it was a no asset case unless (2) the creditor,

now that it knows about the bankruptcy, wants to object to the discharge of the

debt.

Michigan allows the use of the Federal bankruptcy exemptions, so most cases are

no asset bankruptcy cases.

So, in a Chapter 7 bankruptcy case, you can add an omitted creditor any time as

long as your case is open.  The creditor will have a chance to file a proof of claim, if

trustee has collected assets, and a chance to object to the bankruptcy discharge.

In a Chapter bankruptcy 13 case, the same rules apply, up to the deadline to file a claim.

That is, if the creditor had actual notice of the claim.  That way, there is no prejudice, as

we say in the law biz, no harm to a creditor who finds out in time to file a claim and get paid

as Chapter 13s are payment plans.

If no notice to the creditor in time to file a claim, no discharge of that debt.

A number of other bankruptcy experts across the country are playing the “alphabet game”,

writing on topics that begin with each letter of the alphabet.  The other topic that

begin with the letter “O” are listed below.

Objection    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Own    New York Bankruptcy Lawyer, Jay S. Fleischman
Omitted    Bay Area Bankruptcy Lawyer Cathy Moran
Options to Bankruptcy    Suburban Philly Bankruptcy Lawyer, Chris Carr
OOPS    Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
Objection to Discharge    Hilo Bankruptcy Attorney, Stuart T. Ing

O Is For Organize   Marin County CA attorney Catherine Eranthe

Organization:  Do You Need It In Your Bankruptcy?  Mark Markus LA bankruptcy attorney

Related posts:

1. C Is For Creditor
2. The Truth About The Means Test
3. The Truth About Bankruptcy Fraud

photo credit: dreamstime

What the hell is Chapter 11?  Just the name gives most people a headache.

OK, maybe not as much of a headache as if you work for a company that files

Chapter 11 bankruptcy, or, if a company that owes you money files under

Chapter 11.

Most Chapter 11 bankruptcies are filed by businesses that want to reorganize,

because, obviously, something bad happened.

Probably not as bad as sunk as this boat.

Generally, the bigger a business is, the more complex it is, and the more

involved the bankruptcy case will be.

But individuals can file Chapter 11 too!

This does not excite you?

Chapter 7, or straight, or liquidation bankruptcy, is what most people file, and

where many companies  which start in Chapter 11 end up.

In Michigan bankruptcy cases, rarely is anything liquidated; most people who

file do not lose any property to the Chapter 7 trustee.

Chapter 13 is a payment plan for individuals with regular income.  Corporations

cannot file Chapter 13 bankruptcy.

Companies that file Chapter 11 can get out of union contracts, and most other

contracts for that matter.  The court can re-write the terms of secured loans;

unsecured creditors, ones with no collateral, are lucky to get pennies on the

dollar.  As for those who own stock or bonds, well, check with your friends who

owned GM or Chrysler stock.

Individuals in Chapter 11 cannot get the terms of the first mortgage on their

residence changed, but, can get mortgages changed on any other real estate

they own.

This can save a person in the business of, say, renting houses or apartments.

That is the point of Chapter 11, to allow reorganization, a payment plan that

pays what is required, and keeps the business going.

So, you could own 8 Michigan houses that you rent.  They are all underwater,

that is, worth much less than what is owed on them.  Yet, you still have paying

tenants.

But you can see this is going nowhere, you owe a million dollars more than they

are worth all totaled.

Bingo!  Chapter 11 allows you to re-write every one of those

mortgages down to the value of the home, and even change the interest rate,

and how many years are left on the mortgage.

Do you have any questions about Chapter 11?

Related posts:

1. What You Need To Know About Chapter 11
2. Michigan Business Bankruptcy
3. What Is A Chapter 7 No Asset Report?

(image credit:  dreamstime)

You have your bankruptcy discharge, and now, you get an offer in the mail for:  another credit card!

It feels great!  You thought it would take years to “build up” your credit again!  You just wiped out thousands of dollars of credit card debt.  Why would the bank send you an offer for a new credit card???

Is it a good idea to get a credit card?

Why is it easier now?

Well, time was, billions, yes, billions, of applications were mailed out each year.  By banks eager to help you.  NOT.

By a money lending industry whose business model was dependent on you defaulting so they could make money.

Yes, if you paid that credit card off each month, there was no profit.  The money they charged the retailer barely met the overhead.

And they offered low interest rates, even zero, if you paid off another account or debt and borrowed money from their credit card.

Then, if you ever defaulted, you got that penalty rate of 29.99% or whatever, and late fees, and so on.

The credit card “agreement” said they could change the terms whenever the urge struck them.

Like free heroin until you get addicted, then, pow!  Price increase!

So, the Fed is now virtually giving the banks money to lend, so even at 3%, with normal default rates they make a killing.

Some $75 billion of credit card debt has been written off by the poor banks since hard times began.

The credit card default rate is about half of what it was a year ago, according to our friend at the Fed, in the same story linked to above.

Would you trust an offer from these guys?

(image credit:  dreamstime)

Well, I hope not.

Dave Ramsey’s book gives good advice about credit cards and other family finance issues.

Rich people do not have credit cards, they have money.  They did not get money by spending on credit cards.

They got it by saving.

Use a debit card, if you must have plastic, but, don’t go back into debt after bankruptcy.

It is no mystery why you get a credit card offer, even after filing bankruptcy:  the rats want you in debt again.

Related posts:

1. But, I Have To Have A Credit Card!
2. Credit Card Debt Defaults Record High
3. How Does My Credit Card Company Find Out So Much About Me?

H is for home value, in the Alphabet Game, bankruptcy experts across the country blog on different topics.

I always ask potential clients this question, how much is your home worth?, I mean, really, and the response frequently is something like:  well, it is worth $200,000, but right now, I can only get maybe $160,000 for it.”

So, what do we mean by “worth”?

There are state tax valuations, which are normally not worth the paper they are written on, and worth even less these days.

How about that last bank appraisal?

The one you did for the re-finance back in 2008 or earlier?

Uh, no good.

Most appraisals during those peak bubble  years were bogus, done to hit a number that would allow the mortgage to go through and the mortgage broker to take a commission.

What I mean is, what would a willing buyer pay, right now, as is, no painting or other fix up.  Your best guess as to the actual market price, usually based on sales of similar homes close by.  Almost everyone I talk to has a foreclosed home, or more than one, for sale nearby.

If your neighbor’s house is basically the same as yours, maybe a little better, and is for sale for $150,000, that means, it is worth less than that, or someone would have purchased it at that price.  So, your home is also worth less than that.

Doug wrote about renting v. buying a home this week, and I recommend everyone do this.

If you are in a home now worth less than what is owed, and have trouble making the payments, you need to figure out the answer to our question:  How much is your home worth?

Most of us, due to wishful thinking, I suppose, overestimate the value of our home.

Get a free estimate from a local realtor, but, get a good answer on the value.

Don’t assume prices are going to rebound soon, either.

I have seen estimates of another 20% decline in home prices over the next year.

You cannot do intelligent financial planning without knowing stuff like this.

image credit:  Master Isolated Images

OTHER LETTER “H” TOPICS:

Hearing    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell
Homeowner’s Association Dues    Marin County Bankruptcy Attorney, Catherine Eranthe
Household    New York Bankruptcy Lawyer, Jay S. Fleischman
House    Northern California Bankruptcy Lawyer, Cathy Moran
Homestead    Colorado Springs Bankruptcy Lawyer Bob Doig
House    Los Angeles Bankruptcy Attorney, Mark J. Markus
Household Size    Hilo Bankruptcy Attorney, Stuart T. Ing
Honesty    Cleveland Area Bankruptcy Lawyer, Bill Balena
Honesty (and Fraud Avoidance)    Philadelphia Suburban Bankruptcy Lawyer, Chris Carr
Harassment by Creditors    Downriver, Michigan Bankruptcy Attorney, Christopher McAvoy

Household Income Livonia MI bankruptcy attorney

Related posts:

1. What Can You Do To Save Your Home From Foreclosure?
2. Home: Rent Or Buy?
3. The Modern Rules Of Home Financing

Are you better off than you were a year ago?

Record numbers of Americans are not.  Rasmussen Reports, the top polling agency, says 32% of us owe more than last year.

Not coincidentally, confidence in banks is at an all time low.

And the government doesn’t poll so well either.

With unemployment staying high, home prices not rebounding, incomes stagnant, there is no justification for owing more than last year.  That is, we do not have more equity in our homes to borrow against, and we are not making more money with which we could pay back more debt.

(image credit: dreamstime)

Seems to me there is only one conclusion:  HELL, NO!

Each case is individual, of course.  In Michigan, home values are down further, unemployment remains high, and economic growth is uncertain.

Across America, credit card delinquencies are increasing.

The end of the year is fast approaching, traditionally a time to take stock of where we are, spiritually and financially,

I will stick to the financial side.

I think one of the most difficult things we can do as humans, is to look in the mirror and see what is really there.  Hey, scares me sometimes!

Sooner is better than later, if you have a balance sheet from last year, that is, your assets, property and its value, and your liabilities, debts, you can compare where you are now to where you are then.

Better yet, write down your expectations for the next year.  Then you can review and see if you hit or missed.

I hate to hear from clients, and it happens all the time, that they borrowed against there 401ks, cashed out IRAs, just to make up the shortfall for a decline in income.

A client told me last week that she read most people do not file until two years AFTER they are actually bankrupt. Nobody wants to, nobody likes it, we do  not do things until we are emotionally ready.

Not that there is a right or wrong, it is not my face you see in the mirror, but, do the cold, factual analysis of where you are now financially, and where you will be in a year.

Talk to me for free if you have questions.

No related posts.

 Creditors may not all look like this.  OK, probably none of them do.  But that is what some of them make us think they are, on their way to bashing our heads in if we don’t fork over the loot.

Loot that we don’t have.

The bankruptcy code defines creditor as:

(A) entity that has a claim against the debtor (the person who filed bankruptcy) that arose at the time of or before the order for relief concerning the debtor;

It goes on to list definitions (B) and (C), but reading those gives even me a headache.

To further translate definition (A) into English, “entity” is a person or company or partnership or securitized trust, whatever, that claims you owe it monty.

The “order for relief” is the filing of the bankruptcy case.

Lawyers.  The way we write sometimes.  “at the time of or before the order for relief” just means before you filed the case, or, at the exact moment you filed the case.  That is how it reads.  Frankly, until re-reading this just now, I always assumed there was before and after a case was filed, and no “at the time of”.

Even before electronic filing online, courts had time stamps, and we knew the exact minute of the day a case was filed.

So, in the world of bankruptcy, Chapter 7 or Chapter 13, we have debtors, the good guys, the people who file, and, creditors, the ones trying to get money, the bad guys, no the other.

Oversimplification, I know, but, this is a blog, not an encyclopedia.

The important thing about creditors is TO LIST THEM ALL ON YOUR BANKRUPTCY.  You do not have a choice, you are under oath in a Federal Court.  It is perjury to leave someone off the list, do you want to look at the sun come up in chunks? as one of my lawyer friends likes to say.  (Chunks would be the part between the bars on your prison cell.)

If there were one thing I could get from my clients by waiving a magic wand over their heads, it would be this one.  Tell me everything.  No thinking.  Anyone getting your money, trying to get your money, that you are paying money, that has any kind of claim against you for money, gets listed.

If you dispute the debt, you say you owe nothing, no problem, list them, and we check the box that says “disputed.”

Debtors benefit, because the court sends the notice to everyone, so the creditor knows to stop bugging you.

Oh, you say you don’t want to list cousin Sue, your plan to pay her.  MUST BE LISTED.  You can pay anyone you want.  The law does not require you to list only the ones you do not want to pay.

Don’t risk the prison cell.

Other C topics:

Conversion

Counseling

Cramdown

Competence and Compassion

Co-signer

 C is For Claims

Related posts:

1. Oh, Oh, Bankruptcy Danger: Omitted Creditor
2. Five Myths About Bankruptcy
3. The Truth About The Means Test

Are you better off than you were a year ago?

Record numbers of Americans are not.  Rasmussen Reports, the top polling agency, says 32% of us owe more than last year.

Not coincidentally, confidence in banks is at an all time low.

And the government doesn’t poll so well either.

With unemployment staying high, home prices not rebounding, incomes stagnant, there is no justification for owing more than last year.  That is, we do not have more equity in our homes to borrow against, and we are not making more money with which we could pay back more debt.

(image credit: dreamstime)

Seems to me there is only one conclusion:

Related posts:

1. Christ’s Message For Family Finances
2. Personal Property List
3. Are You Better Off Than You Were A Year Ago?