Category Archives: Bankruptcy

New Means Test Numbers for Michigan for May 1, 2012

Posted on April 24, 2012 | Leave a comment

As of May 1, 2012, the Federal US Trustee Program is again updating their means test household median income numbers for Michigan. The news is good for prospective Chapter 7 Bankruptcy filers as the median incomes for households of various sizes have increased slightly—meaning that you can earn a little more money than previously and still be eligible for Chapter 7.

  • Household of 1: $45,056.00
  • Household of 2: $51,660.00
  • Household of 3: $60,313.00
  • Household of 4: $72,454.00

(Add $7,500.00 to median for every household member over 4.)

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

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Posted in Chapter 7, Means Test, Michigan

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What Are the Tax Consequences of a Short Sale?

Posted on April 20, 2012 | Leave a comment

First off, I am not a CPA—or even a tax attorney. However, a large number of potential clients who visit me to inquire about the advantages of bankruptcy relative to those of a short sale (or outright foreclosure walk-away) when distressed real estate is their primary concern have not realized that there may be tax-related disadvantages to the short sale of a property or walking away via foreclosure.

Indeed, there can be.

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Posted in Chapter 13, Chapter 7, Foreclosure, Home Mortgages and Bankruptcy, Michigan, Property Taxes, Short Sales, Tax Returns and Bankruptcy, Uncategorized

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Do I Need to Keep Paying Homeowners’ Insurance after I Surrender my Home in Bankruptcy?

Posted on March 28, 2012 | 1 Comment

One of the primary reasons that people are filing for bankruptcy these days is to let go of and truly walk away from real estate that is significantly underwater or in foreclosure. Bankruptcy is in nearly all cases a vastly more cost-effective and time-efficient means of walking away from a home than is a short sale in which homeowners must negotiate with and often pay off lenders to get their agreement on the sale (not to mention the tax liability that short sales can leave them with!), and it is certainly more effective than simply letting a house go to foreclosure, which, particularly here in Michigan, can result in potentially huge “deficiency debts” to the mortgage-holding bank.

However, the surrender of a home in bankruptcy, which requires no negotiation with creditors or banks, incurs no tax liability, and leaves you free from worry over collections for deficiencies owed, unlike short sales, does not instantly immunize a homeowner from all costs associated with the property. Until the home is, per the deed or title filed with the register of deeds for the county in which the home sits, no longer titled to the homeowner, there will remain some costs: insurance and maintenance, primarily.

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Posted in Home Mortgages and Bankruptcy, Insurance, Michigan, Mortgage Modifications, Property, Property Taxes, Real Estate, Short Sales, Tax debt

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Support Senator Durbin’s Fairness for Struggling Students Act of 2011

Posted on March 22, 2012 | Leave a comment

Sen. Richard Durbin (D-Il) has introduced new legislation, S. 1110, The Fairness for Struggling Students Act of 2011. This legisltation would re-introduce the possibility of a discharge in bankruptcy for private student loans, which have become one of the largest debt burdents not just on American students but also on American taxpayers at large.

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Posted in Bankruptcy, Chapter 13, Chapter 7, Michigan, Student Loans

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Does the Death of a Debtor Stop a Chapter 7 or Chapter 13 Bankruptcy Case?

Posted on March 22, 2012 | Leave a comment

It may sound logical that, if you pass away after filing a bankruptcy case, your banrkutpcy proceeding will terminate along with you. This is not so, however. A bankruptcy case will continue after the death of a filing debtor in either a Chapter 7 or a Chapter 13 context, though there are steps your attorney might take to either shepherd the case through to a successful, post-mortem discharge or to terminate or dismiss the case, if necessary.

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Posted in Bankruptcy Laws, Bankruptcy Process, Chapter 13, Chapter 7, Exemptions, Michigan, Property

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Business Debt and the Chapter 7 Bankruptcy Means Test

Posted on March 15, 2012 | Leave a comment

There are some significant advantages in Chapter 7 Bankruptcy to having “mostly” business or non-consumer debt. I have previously written about the dischargeability of business debts and the valuation of small businesses on this blog, but I have not previously discussed the primary advantage of having a so-called “non-consumer” Chapter 7 bankruptcy case: the waiving of the requirement of passing the Chapter 7 Means Test for Chapter 7 eligibility.

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Posted in Business Debt, Businesses in Bankrutpcy, Chapter 7, Debt Listing, Means Test, Michigan

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Are Property Taxes Priority Debts in Bankruptcy?

Posted on March 9, 2012 | Leave a comment

In Chapter 7 or Chapter 13 bankruptcy, debts are classified according to certain categorizations established by the Federal Bankruptcy Code: administrative, secured, priority unsecured, and unsecured. These classifications are especially important in Chapter 13 bankruptcies, in which the class of a debt determines in what order and to what extent the debt is paid by the Chapter 13 Trustee through the Chapter 13 payment Plan.

Priority unsecured debts are paid second-to-last in a Chapter 13 Plan, and, in either a Chapter 7 or a Chapter 13 bankruptcy, a “priority” classifications generally means that the debt is non-dischargeable.

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Posted in Bankruptcy Laws, Bankruptcy Process, Chapter 13, Chapter 7, Debt Listing, Home Mortgages and Bankruptcy, Michigan, Tax debt

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Are Assets in a Trust Protected in Chapter 7 Bankruptcy in Michigan?

Posted on March 1, 2012 | Leave a comment

Placing assets into a trust is not always an effective means of protecting those assets from creditors, or, thereby, from the asset liquidation power of Chapter 7 Bankruptcy Trustees.

As I’ve written here before, a Chapter 7 Bankruptcy is a “liquidation” bankruptcy both in that your debt is liquidated, or discharged, and in that there is a possibility that your assets will be liquidated during the bankruptcy process. A Trustee assigned to your Chapter 7 Bankruptcy case by the Bankruptcy Court has the duty of seizing and liquidating personal assets that are valued above the limits of the protective exemptions provided by the Bankruptcy Code statute. While, in most Chapter 7 Bankrutpcies, these exemptions are sufficient to cover everything a typical household generally has, some higher earning or higher asset households may include assets that cannot be protected with the available protective exemptions. Thus, in a Chapter 7 Bankruptcy, those assets are subject to seizure and sale for the benefit of the filing person’s creditors by the Bankruptcy Trustee.

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Posted in Bankruptcy Planning, Chapter 13, Chapter 7, Exemptions, Michigan, Personal Property in Bankruptcy, Property, Uncategorized

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Can I Still Pay My Child’s Private School Tuition in a Chapter 13 Bankruptcy?

Posted on February 22, 2012 | 1 Comment

A Chapter 13 bankruptcy, as I’ve described here in prior posts, is essentially a monthly payment plan in which some and sometimes all of your debts are paid according to what, in theory, you can afford to pay after your basic household expenses are met each month. In other words, you pay in a Chapter 13 what you have left over each month of your available income after paying your household bills.

The question, from the point of view of the Chapter 13 Trustees who are assigned to your case by the Bankruptcy Court after your case is filed and whose job it is to review proposed Chapter 13 Plans and either approve or object to them, is: what is a necessary household expense?

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Posted in Bankruptcy Laws, Bankruptcy Process, Chapter 13, Expenses, Michigan, Tuition

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What Is My Redemption Period in Michigan if I Have More Than 3 Acres of Land?

Posted on February 6, 2012 | 3 Comments

As of December, 2011, the amount of acreage owned is no longer a factor in determining the length of the post-foreclosure sheriff’s sale redemption period in Michigan. Prior to December, 2011, foreclosure of land more than 3 acres required a “redemption period” of 12 months as opposed to the 6 months required for non-abandoned property of less than 3 acres.

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Posted in Bankruptcy, Bankruptcy Laws, Bankruptcy Process, Chapter 13, Chapter 7, Eviction and Bankruptcy, Foreclosure, Home Mortgages and Bankruptcy, Michigan, Real Estate

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