Monthly Archives: May 2009

Will My Utilities be Shut Off if I File for Bankruptcy?

Posted on May 29, 2009 | Leave a comment

Continuation of electrical, gas, water, and other basic household utility services through and after a bankruptcy may be a great concern to some consumers wishing to file bankruptcy, particularly those who are not, as a side-effect or direct result of the bankruptcy, changing their residence. While overdue utility bills are not an uncommon feature of many bankruptcy filings, they are frequently not the primary focus of the bankruptcy. Rather, many people are pressured into considering bankruptcy due to other forms of debt, such as medical bills and credit cards. In those cases, the person considering bankruptcy may not even be behind in their utility payments at all.

Nevertheless, there is a possibility that the filing of a bankruptcy petition will disrupt a consumer’s utility services if they are behind in their payments at the time that the bankruptcy petition is file. Under the Bankruptcy Code, a utility may not refuse or discontinue service because a customer has filed bankruptcy—unless the customer filing bankruptcy provides “adequate assurance” that they will be able to pay for their utility service in the future within 20 days of filing the bankruptcy petition. While, most of the time, if the customer is fully current in their payments to the utility, the mere filing of the bankruptcy petition will not cause the providing utility to disrupt their service or demand this “adequate assurance,” the question of what “adequate assurance” actually is and how much of that assurance must be provided to be “adequate” remains for consumers who are not current in their payments.

Depending on the local practice of utilities in your area, “adequate assurance” can mean a cash deposit, a letter of credit, a certificate of deposit, a surety bond, a prepayment for future utility consumption, or some other type of security. Generally, what is required is some sort of deposit, though the amount of the deposit, where that is considered acceptable, is often still a point of dispute.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

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Posted in Bankruptcy, Bankruptcy Planning, Chapter 13, Chapter 7, Michigan, Utilities in Bankruptcy

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What Happens to my Reverse Mortgage if I File Bankruptcy?

Posted on May 25, 2009 | 2 Comments

Real estate subject to a “reverse-mortgage” is valued the same way that real estate subject to other sorts of mortgages are for purposes of bankruptcy. Both an “ordinary” mortgage and a reverse-mortgage are liens against the value of the property that will affect the determination of whether the owner of the property actually has any equity in it or not. In this manner, there is no difference between the two types of liens, and a determination that a debtor has no equity in his or her real estate governs the options available for retaining the property through bankruptcy.

The difference between the two lies not in valuation of the property but in the chief benefit that consumers look to reverse-mortgages to receive: a line of credit.  Typically, in the most common reverse-mortgage situation, a homeowner meeting certain criteria assigns a future interest in the full value of the real estate—their home, generally—in exchange for a line of credit which pays out a set amount per month for an allotted period of time, which, in many cases, particularly with regard to elderly consumers, may be the remainder of the consumer’s life. It is a means for a consumer living on limited income, often, to increase their monthly standard of living without losing the benefit of the roof over their heads—at least, when it works as advertised (I won’t comment further here about when this is or isn’t the case).

When that same consumer, however, runs into other trouble and needs to file for personal bankruptcy, the sticking-point for debtors with real estate subject to a lien that is a result of a “reverse-mortgage” is whether or not the finance company providing the reverse-mortgage will continue to provide the line of credit to the consumer under the terms of the original reverse-mortgage agreement. Whether or not this is the case is determined by a wide variety of factors, such as the amount of credit remaining in the line of credit, the business strategy of the finance company when confronted by such situations, as well as others.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

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Posted in Chapter 13, Chapter 7, Home Mortgages and Bankruptcy, Uncategorized

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Can I File for Bankruptcy if I Have Previously Filed for Chapter 7 or Chapter 13?

Posted on May 13, 2009 | Leave a comment

By and large, if you have filed for bankruptcy before, you need to be a little careful in considering whether or not to file again. As with every other part of life, timing is everything in bankruptcy. This is one of the least complicated considerations in bankruptcy planning, but, nevertheless, many do find it confusing.

I have written about Chapter 13 eligibility, including the timing with regard to prior bankruptcy filings here. To recap, though, if you have never filed bankruptcy before, there is no problem, but, if you have filed for and received a Chapter 7 bankruptcy discharge within 4 years before you would file the new Chapter 13 petition, you are not eligible. Likewise, if you have filed for and received a Chapter 13 discharge within 2 years of the date you would file the new Chapter 13 petition, you are not eligible.

With regard to Chapter 7 filings, you are not eligible to file a petition if, during the 180 days (i.e., 6 months) prior to the planned filing, you have had either a Chapter 7 or Chapter 13 bankruptcy petition dismissed due to your wilfull failure to appear before the court or comply with the court’s orders or if you voluntarily dismissed the previous case after a creditor sought relief from the court to recover property burdened by liens held by that creditor. A Chapter 13 petition voluntarily dismissed because, for example, your circumstances worsened and you could not make the required plan payments should not, on the other hand, make you ineligible to file a subsequent Chapter 7 petition, even within 180 days. If you have received a Chapter 7 discharge within the past 8 years, you are also not eligible to file again until that 8 year-mark has passed.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

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Posted in Bankruptcy Basics, Bankruptcy Planning, Chapter 13, Chapter 7

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