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Bankruptcy, Student Loan Payoff, What you need to know when filing Bankruptcy

What circumstances will allow you to include your school loan in your bankruptcy

Every year, millions of students are convinced to take on student loans with promises of huge salaries upon graduation, but often the reality is a bit different and these same students are left with an enormous debt and little or no means of repayment. Indeed, these debts can last for decades.

Millions cannot afford to repay their student loan, some may think that filing chapter 13 can be done with your school loan but it is not 9 out of 10 times. Now what circumstances may allow you to include your school debt into your bankruptcy?

The very rare exception is when one can show at the time of the bankruptcy that the debt created by the student loans is going to create an unreasonable burden to the debtor and that the debtor will never be able to make payments, often because of a disability or other circumstance beyond the debtor’s control. Absent that, the debts to federal student loan companies are exempted from bankruptcy and will not be discharged. If you believe you are in such a situation contact Firebaugh & Andrews are these circumstances are very rare and there is only one way to find out, call us now for your free consultation 734-722-2999.

Tax Refunds & Bankruptcy

Keeping your Michigan tax refunds in a Chapter 7 bankruptcy is easy.

You can keep your Federal and State of Michigan tax refunds but only if your bankruptcy lawyer knows how to do it. One of the most common questions our clients ask around tax season is whether or not they will be allowed to keep their tax refund when they file a Chapter 7 bankruptcy.  Thousands of people in the greater Detroit area rely on their tax refunds to catch up on past-due mortgage payments, property taxes, and other bills.

Like money in a bank account, a tax refund is an asset which must be disclosed to the bankruptcy court.  In Chapter 7 cases, the Bankruptcy Court appoints a Chapter 7 Trustee to seize the debtor’s non-exempt assets.  However, the vast majority of our clients get to keep their tax refunds as part of their exempt property.  The Bankruptcy Code allows debtors to keep a certain amount of money they are entitled to, and this includes tax refunds.  The amount of tax refund you can keep could exceed $10,000.00.  Debtors who are married and file jointly could potentially double that amount.

Michigan is home to some of the most aggressive Chapter 7 Trustees in the nation, and they have figured out several clever ways of getting their hands on debtors’ tax refunds.  Although the law entitles most people to keep some or all of their tax refund, that protection is not automatic.  In order to keep your tax refunds in Chapter 7, your lawyer needs to file the proper documents with the court.  A good bankruptcy lawyer can help you get rid of your debt AND keep your tax refund.

Fast bankruptcy and tax facts:

  • The average Federal Tax Refund in Michigan in 2016 was almost $2,600.00.
  • The highest personal tax refund I protected in a bankruptcy case was almost $9,600.  It was the case of a single mother with three children.  She got to keep all of it.
  • If your lawyer doesn’t know how to protect it, the Chapter 7 Trustee may be able to take next year’s tax refund, too!
  • The IRS can actually tax you for debts settled for less than the full amount!  But…
  • …Debt discharged in a Chapter 7 bankruptcy CANNOT be treated as discharge of debt income, meaning you won’t have to pay taxes on it!

Call Firebaugh & Andrews For A Free Consultation 734-722-2999

Zone of Insolvency

Zone of Insolvency – How to Conduct Business When Bankruptcy is a Looming Possibility

Corporate Boards of Directors always have complicated decisions to make. However, those decisions become incredibly more complex when the company has entered a “zone of insolvency” and is considering bankruptcy. Generally, Boards of Directors owe a fiduciary duty to the company’s shareholders.
That means that they must make decisions for the company based on a duty of care, a duty of loyalty and a duty of good faith to the shareholders. In other words, the board of directors must act like reasonably prudent people would and make decisions based on the best interests of the company.
The fiduciary duty of Boards of Directors changes when a bankruptcy is a looming possibility. While the Board of Directors still owes a fiduciary duty to the company, the zone of insolvency may also require Boards of Directors to exercise fiduciary duties with regard to creditors.
How Boards of Directors Know They’ve Entered a Zone of Insolvency
It can be difficult to pinpoint a moment in time when a company becomes insolvent. It takes time for the financial books to reflect the current condition of the business. Therefore, the courts have created a concept called the zone of insolvency. The zone of insolvency begins when the company is in financial distress and could possibly be insolvent. Generally, courts apply either a balance sheet test or a cash flow test to determine if the company should be considered in the zone of insolvency. Courts applying a balance sheet test will consider whether the company’s assets are greater than its liabilities and courts applying the cash flow test will consider whether the company has a sufficient cash flow to pay its bills and financial obligations.
Boards of Directors Fiduciary Duties to Creditors
Once a company has entered the zone of insolvency, the Board of Directors continues to owe a fiduciary duty to the company’s shareholders but, now, it also owes a fiduciary duty to its creditors. Sometimes this can create a conflict of interest for the Board of Directors since a decision may be in the best interest of the creditors but not of the shareholders. In some states, Boards of Directors primary fiduciary duty shifts to the creditors once a company is in the zone of insolvency. In other states, the fiduciary duty does not shift to creditors until a company is officially insolvent. In the remaining states, Boards of Directors are not required to make creditors interests a priority over shareholder interests but that are required to protect the rights of creditors. In these complicated situations it is important for Boards of Directors to seek legal advice to avoid future legal problems.
A company is not required to seek the advice of creditors nor inform them of the company’s financial troubles even if the Board of Directors owes the creditors a fiduciary duty. Likewise, it is important for Boards of Directors to focus on their fiduciary duties to all shareholders and to all creditors when answering individual questions about the company’s financial health.
Businesses that are within the zone of insolvency often face difficult choices. It is prudent for Boards of Directors to make every single decision with a focus on their duties of care, loyalty and good faith to both shareholders and creditors to avoid future litigation.
Call Firebaugh & Andrews for your free consultation 734-722-2999
Advantages of bankruptcy, Bankruptcy

Why hire a bankruptcy lawyer?

What can be more pathetic than being bankrupt? It has to be making the decision to file for bankruptcy. And what can make it more pathetic is to find a good bankruptcy lawyer for this purpose. In this 21st century of cut throat competition it might not take long for an individual to file a case a bankruptcy when the individual concerned is reduced into nothing. But hardly does a common man know the procedure or the requirements of filing for bankruptcy. This is the necessity of a bankruptcy lawyer comes into the picture.

But what is more important is the choosing of a bankruptcy lawyer who can file and win the title of bankrupt for his client. There are a few steps that are being highlighted below and what may help an individual in choosing a bankrupt lawyer to serve his or hers purpose. The toughest part of this whole is, choosing whether or not to file a case for bankruptcy. And if the choosing part leads to the answer yes, then that is from were the individual will feel the necessity of a bankruptcy lawyer.

Bankruptcy is actually a special area of the law, which makes it all the more important for an individual to hire a lawyer who has all the respective knowledge that is usually required in this field. Thus, the most essential and important step should be to contact the local bar association of the locality. This is usually done to take there advice before deciding upon which lawyer will the individual will entrust his case to prove him bankrupt. The individual can also choose his own lawyer and then ask the associations thoughts and concerns over this lawyer. The individual can also take recommendations from the association regarding the lawyer of his choice. As the bar keeps in touch with these lawyers, it has its views and thoughts against them, and depending upon the nature of the case the association also suggests a list of lawyers, who the association thinks are capable of handling this case.

The individuals concerned should however not restrict themselves to only what the bar says or what the individual thinks, the individual should try to gather information about the lawyer or any other lawyers by asking and inquiring to their friends, colleagues and their relatives. Or even better is if the individual can inquire to other lawyers and attorneys regarding the lawyer of his choice or any other lawyer that may suit his or hers case requirement. The individual can also search online on the web before coming to a decision and before deciding upon his choice among the lawyers. Start with Firebaugh and Andrews with over 40 years experience conveniently located in Westland, Call them today 734-722-2999