Bankruptcy, Bankruptcy Questions

Top 10 Facts About Bankruptcy Law

Bankruptcy law in the United States is designed to ensure that no individual faces an undue burden as a result of his debts. If your debts are truly too much to handle, you can declare bankruptcy and some or all of the debt will be forgiven so you can start over with a (mostly) clean slate. Before you declare bankruptcy, though, you should know the top 10 facts about bankruptcy law.

  1. Bankruptcy laws are federal laws and the cases are brought in federal court. This means the bankruptcy laws are the same every place in the entire United States and you must bring the case in federal bankruptcy courts. While these courts may be located in multiple different states, they are still federal courts, not state courts.
  2. You have to petition for bankruptcy with a judge. Filing bankruptcy is not as simple as just turning in some legal papers… you actually have to go to court to do so.
  3. Chapter 11 Bankruptcy is for businesses only. Individual people cannot declare chapter 11. When a business declares Chapter 11 bankruptcy, the business is simply restructured – the company does not close and it can continue to operate, although a trustee may manage the assets.
  4. Some individuals may be required to file Chapter 13 bankruptcy. Under new bankruptcy laws in the United States, if your income is over a certain level – the median income for your state – and your disposable income – the amount you have left over after you pay all your debts – is high enough, then you will not be eligible to file the simpler Chapter 7 bankruptcy.
  5. Not all debts are forgiven when you file Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, you are put on a court mandated payment plan. This means you don’t get a clean slate. You have to pay back a portion of your debts to creditors, depending on how much money you have available to you and how much you owe.
  6. Chapter 7 bankruptcy wipes out almost all debts. If your income is low enough to file for a Chapter 7, this will mean that almost all of your debts are eliminated. Debt collectors will not legally be allowed to contact you about those debts or to attempt to collect the money for those debts.
  7. Student loans and tax debt usually can’t be eliminated in any bankruptcy. Unless you can prove “undue hardship” which essentially means that you will be completely unable to maintain a nominal standard of living if forced to pay back your student loans or taxes – you will have to pay. The undue hardship test is very hard to pass. Normally, only those who have become totally and permanently disabled or who have otherwise experienced a dramatic shift that makes them unable to pay, are eligible.
  8. Creditors can occasionally force you into involuntary bankruptcy. If your debts are extremely high, creditors can petition the court to ask the judge to declare you bankrupt. If the judge does so, he may put you on a court mandated payment plan.
  9. You may be able to keep your home, even when you declare bankruptcy. There are homestead exemptions in most states that allow you to keep your house, no matter what kind of bankruptcy you declare. Your house generally can’t be worth more than a certain amount in order for it to be eligible for the exemption, and you will have to be or become current on your mortgage payments to stop the bank from foreclosing.
  10. Bankruptcy stays on your credit report for 10 years after filing. This may make it difficult to qualify for credit or to rent an apartment or buy a home.

Call Firebaugh & Andrews today for your free consultation to see what is your best option 734-722-2999

Advantages of bankruptcy, After Bankruptcy Tips, Bankruptcy, Bankruptcy Questions, Bankrutpcy Myths

If you file bankruptcy will you lose everything? 10 bankruptcy myth busters

Bankruptcy Myths #1: If I file for bankruptcy, I will lose everything.

This is a common misconception that keeps people who really should file for bankruptcy from doing it.  Federal and Michigan laws provide exemptions that can protect (up to a certain value) assets, such as your house, your car, money in qualified retirement plans, household goods and clothing.  For most people, they’ll lose nothing in the bankruptcy process!

Bankruptcy Myths #2: If I file for bankruptcy, I will never again be able to buy a house or a car.

Many of our clients are able to obtain new cars after completing the bankruptcy process.  However, each lender varies in their business practices so you may need to shop around.  Lenders take other factors into account as well, such as current employment, current income, and credit history.

To purchase a new home it usually takes a bit longer.  It typically takes about two years to get a house after you file for bankruptcy.

Bankruptcy Myths #3: If you’re married, both spouses have to file for bankruptcy. 

If one spouse has a significant amount of debt in their name only, it may make sense for only one spouse to file.  However, if there are joint debts then it may be prudent for both spouses to file.   If there are joint debts and only one spouse files then the creditor may still attempt to collect the debt from the non-filing spouse.

Bankruptcy Myths #4: I won’t ever be able to get credit after my bankruptcy.

Many of our clients are shocked by how quickly they’ll start getting credit card offers in the mail again.  By opening a new credit card and habitually making on-time payments your credit score will quickly improve beyond pre-filing levels.  Please see our credit repair kit to view other ways to increase your credit score. We help our clients increase their credit scores through bankruptcy. It’s also important to monitor your credit score.

Bankruptcy Myths #5: People who file bankruptcy are financially irresponsible.

There are a multitude of reasons that people need to file for bankruptcy, many of which are out of their control.  Often it is because people run into very serious personal problems such as a job loss, serious medical issues, or a divorce.  Unemployment, the cost of running two households following divorce, or the cost of medical care have all driven well-intentioned Americans into bankruptcy.  It’s financially irresponsible to avoid your creditors, ignore your bills and drive yourself further into debt.  Millions of well-intention-ed Americans have filed for bankruptcy and come out stronger and more successful!

Bankruptcy Myths #6: You can’t get rid of back taxes in Bankruptcy.

Certain federal, state and local taxes can be discharged under the bankruptcy laws.  There are several qualifications that must be met, but once these are met, the taxes may be discharged.

Bankruptcy Myths #7: It’s really hard to file for bankruptcy

Although there were new laws enacted in 2005, the new laws were drafted to prevent fraud and bankruptcy abuse.

Bankruptcy Myths #8: Everyone will know you have filed for bankruptcy.

It is unlikely anyone will know that you have filed for bankruptcy unless you tell them.  While bankruptcy is a matter of public record, someone would have to specifically track down the information using your personal information in order to find out if you filed for bankruptcy.

Bankruptcy Myths #9:  You can’t afford to hire an attorney.

At Firebaugh & Andrews , initial consultations are FREE!  Money is never a reason we turn clients away.  We pride ourselves on our flexible payment plan options which can be customized to your unique circumstances.  In our experience, the worst thing a client can do is obtain legal advice from the internet, co-workers, family or friends.

Bankruptcy Myths #10: There is a minimum amount of debt required to file for bankruptcy. 

There is no minimum amount of debt required to file for bankruptcy.  Every situation is unique.

Call Firebaugh & Andrews today for your free consultation 734-722-299

Advantages of bankruptcy, Bankruptcy, Bankruptcy Questions

A Look At Personal Bankruptcy & What To Expect

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One of the most difficult decisions that you can face is whether or not to file for bankruptcy. For individuals, there are basically two types of personal bankruptcy, which includes Chapter 7 and Chapter 13. Designed to give the filer a fresh start in life by wiping out certain debts, a Chapter 7 bankruptcy will rid the filer of credit card and other unsecured debt. A chapter 13 bankruptcy, on the other hand, is a court-approved payment plan in which the filer is required to repay a predetermined percentage of their debt. The determination of which chapter to file will be based on the filer’s disposable income, if any, after paying their necessary monthly bills.

When many people file for bankruptcy, their first thoughts are of their assets and whether or not they may lose their home. In a Chapter 13 repayment plan, the majority of filers are allowed to keep their property in exchange for repaying a portion of their debts. A Chapter 7, however, is designed to be a liquidation process that often results in the sale of non-exempt property. Which property is non-exempt in a bankruptcy proceeding? Each state has it’s own laws pertaining to the amount of property that an individual or married couple can keep without having to worry about it being liquidated.

The official bankruptcy process begins upon filing a petition with the local bankruptcy court. This can either be done individually, also known as pro se, or with the help of an attorney. For most, hiring Firebaugh and Andrews  is the best way to make sure that every form is completed accurately and in order to make sure their assets are protected as much as possible. Upon the filing of a bankruptcy petition, the court will assign a trustee to the case and will set a date for a Meeting of the Creditors. Although creditors of the filer are invited to attend, they are not required to do so. The filer, however, is required to attend and will be questioned by the trustee, under oath, while having the meeting recorded. This meeting is typically the only appearance required of the filer unless special circumstances are present.

Following the Meeting of the Creditors, often referred to as the 341 meeting, the creditors will have 30 days to object to the filers property exemptions and another 30 days to object to the discharge if the filing is a Chapter 7 bankruptcy. In a Chapter 13 proceeding, creditors may object to the payment plan but the discharge will not be granted until the payment plan is complete. A Chapter 13 bankruptcy can last for up to 5 years before the payments are completed and a discharge is issued. Following the discharge, the bankruptcy case will be closed and the process will be complete.

We offer free consultation, call us today 734-722-2999

After Bankruptcy Tips, Bankruptcy and your Mortgage, Bankruptcy Questions, Rebuilding credit after Bankruptcy

A Few Helpful Tips On How To Buy A House After Bankruptcy in Michigan.

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There is hope still for those that have had a recent bankruptcy on their credit and who still wish to buy a home, but it may require financing to own the house. One should realize that all is not lost when it comes to learning how to buy a house after bankruptcy. The effect of having bad credit is that it only serves to put more emphasis on the other two factors governing how to buy a house after bankruptcy, which are income verification as well as a down payment.

You Must Wait Two Years Following Bankruptcy if one has become bankrupt, lenders normally require the borrower to wait for a minimum of two years from when he or she went bankrupt before making their application for a mortgage loan. Once this two years waiting period has been served out, lenders will normally offer loans and finance should not be difficult to obtain.

Of course, it does require affirmation from the credit bureau to attest that the debtor’s payments have been paid on time after the discharge of his or her bankruptcy. However, if the debtor wishes to obtain a mortgage loan prior to the two years waiting period having been completed, he or she will need a flawless payment history from the time of his or her bankruptcy discharge.

Thus, how to buy a house after bankruptcy will require having a good and certified credit standing that has been consistent ever since the bankruptcy was discharged, and it may even be helpful if the debtor is able to pay a down payment, which even as small an amount such as three to five percent as a down payment will help to further the cause adequately.

Other methods open, when one is considering how to buy a house after bankruptcy, are to borrow or ask for a gift from relatives. Having financed a house, it is always possible to go and take out a second or third mortgage up to the total value of the house, and then pay back the loan from relatives. However, one should always be honest with lenders about the source of the down payment; otherwise dishonesty could lead to it being treated as defrauding the lender.

Another option one can consider regarding how to buy a house after bankruptcy is down payment assistance programs such as Neighborhood Gold or the Nehemiah program, which basically aid sellers in helping the debtor with down payments. It is legal to receive a down payment from these sources but it is illegal to receive down payments from the seller of the property.

Finally, with regard to how to buy a house after bankruptcy, one may also consider cashing out a 410K or another investment, and repay with a second or third mortgage after the loan gets closed. These days, mortgage loans following bankruptcy are not so hard to come by, and there are many bad credit mortgage lenders who will provide loan assistance in this regard.

Call Firebaugh and Andrews for a free evaluation today at 734-722-2999

Bankruptcy Questions, Tax, Tax Refunds & Bankruptcy

Taxes And Bankruptcy. Can You Eliminate Tax Debts in Bankruptcy?

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In many cases, a debtor is still liable for tax debt after bankruptcy. However, bankruptcy law allows the discharge of tax debt only in some circumstances. A debtor is more likely to have tax debt discharged in Chapter 7 than in a Chapter 13 bankruptcy. In Chapter 13, tax debt, along with other debt, enters a repayment plan. Chapter 7 bankruptcy, on the other hand, allows a debtor to discharge certain kinds of debt, such as credit card debt and medical bills, and in some instances, federal tax debt.

Bankruptcy and Taxes: Qualifying for Discharge

The determination of whether a debtor can discharge tax debt will depend of the type of tax, how old the tax debt is, if the debtor filed a return, and the type of bankruptcy. Federal income taxes in Chapter 7 are dischargeable if the debtor meets all of the following conditions:

  • The discharge is for income taxes: Payroll taxes and penalties for fraud are not eligible for discharge.
  • The debtor filed a legitimate tax return: The debtor filed a tax return for the relevant tax years at least two years before filing for bankruptcy.
  • The tax liability is at least three years old: The tax debt is from a tax return that was originally due at least three years before filing for bankruptcy.
  • The debtor is eligible under the 240-day rule: The IRS assessed the tax debt at least 240 days before the debtor filed for bankruptcy. If the IRS suspended collection activity during negotiation, the applicable date may be extended.
  • The debtor did not commit willful tax evasion: Possible evasive actions include changing your Social Security number, your name, or the spelling of your name; repeated failure to pay taxes; filing a blank or incomplete tax return; and withdrawing cash from a bank account and hiding it.
  • The debtor did not commit tax fraud: The return contains no information that was intended to defraud the IRS.

Penalties on taxes that are dischargeable are also eligible for discharge. After the discharge of tax liability, a debtor is no longer responsible for paying the taxes and the IRS may not garnish a debtor’s wages or bank accounts.

Bankruptcy and Taxes: Federal Tax Liens

Even if the discharge of tax debt occurs under Chapter 7, if the IRS placed a federal tax lien on the debtor’s property prior to the bankruptcy case, it will remain after discharge. As a result, it is necessary to clear the title by paying off the lien before selling the property.

Bankruptcy and Taxes: Tax Debt Not Eligible for Discharge

The following types of tax debt are not dischargeable in Chapter 7 bankruptcy:

  • Tax penalties from tax debt that is ineligible to be discharged
  • Tax debts from unfiled tax returns
  • Trust fund taxes or withholding taxes withheld from an employee’s paycheck by the employer

A debtor unable to discharge tax debt under Chapter 7 may consider other arrangements, such as entering into an installment agreement with the IRS or making the IRS an offer in compromise which will result in the settlement of the tax debt for less than the amount owed.

Call Firebaugh & Andrews to get a free consultation. 734-722-2999

Bankruptcy, Bankruptcy Questions

Is bankruptcy the end of the world?

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Filing for a bankruptcy is never an easy task. It is not an easy decision to make either. The decision to file for a bankruptcy comes from the fact that something has gone wrong and this is the time where you are not only worried and stressed-out but also emotionally vulnerable. Actually filing for a bankruptcy on the other hand is an extensive process that requires specialized knowledge and skills.

The first challenge for most people is whether to choose chapter 13 or chapter 7 bankruptcy and this is a very difficult choice to make all by yourself. F&A Firebaugh Andrews P.L.L.C Bankruptcy Law Firm is the one you can bank on at such a time. Its attorneys and staff understand that you don’t just need a cookie-cutter solution but something that is customized to get you the maximum benefit based upon your unique circumstances. This is why they provide case-by-case basis evaluations by highly qualified attorneys that will help you get just that. The firm will provide you with legal support and expertise from the first call you make until the time your case is completed.
To get you started, the distinction between the benefits of filing a chapter 13 and a chapter 7 are not quite that clear for everybody. Here’s what both of these mean:
Chapter 13: This lets you reorganize your debts into one affordable payment plan by using the powerful provisions of the bankruptcy code to force creditors to accept much less than they have been getting. You can choose from payment terms between 3 to 5 years and work with your attorney to decide the amount of money you can afford to pay in that time period so that you don’t have to worry about those huge payments coming up each month to various creditors and don’t have to be worried each time your phone rings. This plan can be used for your mortgage payments, student loans, credit card payments, pay-day loans, past dues taxes, or even if you want to restructure your car loan.
How do I Qualify?
To qualify for chapter 13, you need to have a regular flow of income and your debts cannot exceed a very high maximum amount.
How does it work?
When you file for a chapter 13, your lawyers will help you to prepare your budget, fill out all the forms, and appear with you at the court hearings. This is done after you have sat down with your lawyer and discussed your financial goals with your lawyer to make sure the Plan is meeting your individual needs and safeguarding your interests to the maximum extent allowed under the law.
What happens after my payments are made?
After all of your payments are made and you have complied with all of the terms of the Plan, the payment plan is terminated and you receive a discharge from debts.
Chapter 7: Chapter 7 is filed when people can’t afford to pay creditors. The idea is to sell the non-exempted assets and to use that money to pay off the debtors. Many people are able to exempt all of their assets and therefore keep everything that they own and get rid of their debt. Chapter 7 is commonly known as straight bankruptcy and allows a person be relieved from debt while still keeping enough property to make a fresh start.
How does it work?
With chapter 7, a trustee is assigned to your case. The trustee’s duty is to collect and sell all the non-exempted assets and use the money to pay off your creditors. The Trustee also has a duty to make sure that you have been truthful in disclosing your complete financial circumstances and in good faith you can’t afford to pay your creditors.
What can I not use Chapter 7 for?
You cannot use chapter 7 to get rid of student loans, most of the taxes, and child support.
The best part is, you can visit the website bankruptcyfilingfees.com to get all the information that you need.

Bankruptcy, Bankruptcy Questions, Chapter 13 Facts, Chapter 7 Facts

Chapter 7 Or Chapter 13 Bankruptcy

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A New Beginning With Bankruptcy – Chapter 7 Bankruptcy

No one ever expects it to happen but everything gets out of control and you are in debt far over your income. No one wants to think about filing bankruptcy but sometimes you just don’t have a choice. Chapter 7 bankruptcy allows you to emerge from a difficult experience and start all over. Chapter 7 bankruptcy is when a debtor’s non-exempt assets are sold and the money is distributed to his creditors. If a debtor has few assets, he or she can exempt the property and obtain a fresh start and keep his or her assets.

Chapter 7 is the most common type of bankruptcy. This type of filing is most common, claiming about 65% of all bankruptcy filings. As long as the creditors have no objections, the debtor can be free of most debt within a few months.

A debtor will not lose their house or car with loans if they agree to continue to pay for these items and there is little equity. Many people are unfamiliar with this information and won’t even check into Chapter 7 bankruptcy. The only drawback to Chapter 7 is that you are unable to file bankruptcy within eight years after a previous bankruptcy discharge.

How do you file a Chapter 7 bankruptcy claim? The easiest answer to this is to contact Firebaugh & Andrews PLLC at 734-722-2999. You will speak directly with either attorney Sam Firebaugh or Roberta Andrews. They will ask you questions to make sure sure qualify. It is very important to answer all questions truthfully.

No one ever thinks they could possibly have to file bankruptcy. It is comforting to know that if things get bad enough you do have an option. It is also reassuring to know that you don’t have to lose your house or car when trying to make a new beginning.

A Way To Ease The Pain – Chapter 13 Bankruptcy

The debts have been mounting up and you are getting farther and farther behind in paying them. You want to pay them but you are not sure exactly how to get that done. Chapter 13 of the bankruptcy code allows you to do exactly that. You can pay your bills back at a lower interest rate or no interest rate at all. A Chapter 13 bankruptcy allows you to keep all of your assets. This type of bankruptcy is for those who have a regular income and can afford to pay something but not as much as they are paying out now. Chapter 13 bankruptcy gives you three to five years to finish your payment plan and discharge most of your debts even if they only receive a fraction of what you owed. During these five years, Firebaugh & Andrews, PLLC will oversee the process for both you.

A Chapter 13 bankruptcy allows the debtor to keep their property. The Court allows you to will set up a Plan of repayment based upon what you can afford to pay. There will be a written plan drawn up to protect you from collection while you are in the payment Plan. Once this plan has been written and approved the repayment process must begin in about a month of filing. The payments are normally paid to a Trustee who oversees distributing the money fairly to creditors. The creditors are bound by law to adhere to this plan and are unable to collect any other claims from the debtor. You will work with your attorney to set up a reasonable repayment plan for you.

Chapter 13 bankruptcy has a full discharge option when the debtor has completed all the required payments. This type of bankruptcy plan also allows for a repayment plan even if the creditors disagree with it. They do have the option to file an objection, but if it has been approved by the court these circumstances don’t allow them a lot of options. If you want to repay your debts but at a slower rate this is probably the way you want to go. You get out of debt and get to keep all your property.