Category Archives: Uncategorized

Can a Chapter 7 Bankruptcy Trustee Sell My House after My Case Discharge?

Posted on August 30, 2011 | Leave a comment

The practice of a Chapter 7 bankruptcy Trustee seizing and selling real estate after it is surrendered in bankruptcy and then sold at foreclosure sheriff’s sale is a phenomenon may be primarily local to the Detroit, Michigan bankruptcy courts. However, it has become more and more common for a Chapter 7 bankruptcy Trustee, in this area, after a case has been discharged, to re-sell real estate that has been surrendered in the bankruptcy in order to gain proceeds from the sale that may be distributed to a bankruptcy debtor’s creditors—and, of course, net a percentage “fee” for the Trustee.

How is this possible?

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Posted in Chapter 7, Foreclosure, Home Mortgages and Bankruptcy, Michigan, Property, Real Estate, Tax debt, Uncategorized

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Is Income Tax Debt Dischargeable in Bankruptcy?

Posted on August 9, 2011 | 2 Comments

Income tax debt is, under some circumstances, dischargeable in Chapter 7 bankruptcy. Even outside of those circumstances, it is at least “treatable” in a Chapter 13 bankruptcy in a manner that can be a much better deal for the taxpayer than any of the payment schemes offered by the IRS.

Income tax debt, whether Federal or state income tax debt, is, for starters, classified as a “priority” claim by the Bankruptcy Code. In a Chapter 7 bankruptcy context, that means that, unless the debt meets certain criteria, it is non-dischargeable and the bankruptcy will not affect the filing debtor’s obligation to pay it. In a Chapter 13 bankruptcy context, “priority” classification means that the debt must be paid in its entirety within the Chapter 13 bankruptcy payment plan (60 months maximum).

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Posted in Chapter 13, Chapter 7, Debt Listing, Tax debt, Tax Returns and Bankruptcy, Uncategorized

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Is Social Security “Income” in Bankruptcy?

Posted on June 3, 2011 | Leave a comment

Social Security benefits, both age benefits and disability benefits, are and also are NOT considered “income” within the bankruptcy process in a couple of different ways.

Income is considered in the bankruptcy process both as a measure of a debtor’s eligibility for Chapter 7 (as opposed to Chapter 13) bankruptcy and as a measure of the debtor’s ability to repay creditors some portion of the debt owed to them on monthly average basis.

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Posted in Bankruptcy Laws, Chapter 13, Chapter 7, Income, Means Test, Michigan, Uncategorized

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Can I Discharge in Bankruptcy a Settlement of a Lawsuit that Alleged Fraud?

Posted on April 14, 2011 | Leave a comment

The Bankruptcy Code states that a debt is not dischargeable in Chapter 7 or Chapter 13 bankruptcy if it is owed for money obtained through fraud. The US Supreme court has upheld even the non-dischargeability of a settlement of a lawsuit in which a complaint of fraud is alleged as owed “for money obtained through fraud.” In short, although you must list all debts owed in your bankruptcy petition when you file it, some of those debts may not actually be discharged by the bankrutpcy, and “fraudence-based” debts are one of those types.

However, the question remains: what is a debt obtained through fraud?

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Posted in Bankruptcy Laws, Bankruptcy Process, Business Debt, Debt Listing, Judicial Decisions, Michigan, Uncategorized

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What Is the Benefit of a Chapter 13 Bankruptcy?

Posted on December 30, 2010 | 2 Comments

There are a few key mechanisms available in a Chapter 13 bankruptcy that are not available in a Chapter 7 bankruptcy. These mechanisms are largely, in addition to the lack of an income eligibility standard, what make a Chapter 13 very attractive to some debtors. These mechanisms are:

  •  The Lien Strip: A lien-strip is a process by which a 2nd or 3rd mortgage on a primary residence is “stripped off,” which is to say, converted from a classification within the Chapter 13 Plan as “secured” debt to “unsecured” debt, at the bottom of the priority of payment. A lien-strip is possible where the property in question, in fair market value terms, is worth less than the 1st mortgage on the property. If that is the case, 2nd or 3rd or other inferior mortgages are considered to be unsecured by the value of that collateral and may be stripped.

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Posted in Chapter 13, Uncategorized

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My Bankruptcy Hearing: What Should I Wear?

Posted on September 28, 2009 | 4 Comments

When you file bankruptcy in Detroit, you have decisions to make. Do you file a Chapter 7 bankruptcy or file a Chapter 13? Will you keep property (like your house or car), or will you surrender it? Are there special issues in your bankruptcy case that need to be addressed?

You probably won’t think of what you’ll wear to your bankruptcy hearing until a day or two before the hearing. And while there are rules about other bankruptcy issues, there really aren’t any concerning what you should wear to your hearing. As with most other decisions you make, use good judgment. Here are some things to keep in mind when you make this decision:

  • While you are going to court, the judge will not be present. Instead, a bankruptcy trustee appointed by the United State Trustee’s Office (a division of the Department of Justice) will preside over your hearing. This isn’t as formal as testifying before a judge or jury.
  • You are in bankruptcy. You have financial problems. Overdressing, while not prohibited, looks a bit odd. Coming in a suit and tie, for example, is a bit over the top. Let you lawyer be the one in the suit.
  • You are in bankruptcy. You were required to list all of your assets on your bankruptcy paperwork. That includes jewelry. I’ve seen trustees cross-reference a debtor’s personal property schedules with what’s on a woman’s hand. If there’s a large diamond engagement ring on her hand but not on her bankruptcy schedules, most trustees will notice. Note: I am not telling you to hide anything. I am telling you that you should notify your attorney immediately if you forgot to list property on your schedules. And wearing jewelry you didn’t list on your schedules is a really bad idea.
  • You want to show respect to the court, but, at the same time, blend in. There’s a happy medium between dressing like you’re going to work in the yard all day long and dressing like you are going to a funeral. Pick something somewhere in the middle. You don’t want to look like a slob, but you don’t want to look affluent, either.
  • Don’t dress immodestly. You’re not at the beach or at a night club. Again, the goal is to blend, not to stick out (pardon the pun).

 The goal at your hearing is to show respect while, at the same time, not look out-of-place. While what to wear to your bankruptcy hearing isn’t one of the more important issues in your case, it still deserves some attention. Don’t put unnecessary obstacles in the way of your bankruptcy case being a success.

Written for the Michigan Bankruptcy Blog by Charleston Bankruptcy Lawyer, Russell A. DeMott.

To schedule a free, initial consultation with Detroit, Michigan-area bankruptcy attorney John Hilla, contact jhilla@aronofflinnell.com or (248) 977-4182.

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Posted in 341 Hearing, Chapter 13, Chapter 7, Uncategorized

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How Is My Mobile-Home Handled in a Chapter 7 Bankruptcy?

Posted on September 9, 2009 | Leave a comment

Mobile or manufactured housing is handled roughly the same way non-mobile housing is handled in a Chapter 7: it is property that is possibly securing debt the same way a standard mortgage or even car loan does and is likewise property that may be foreclosed upon if payments for the debt that it secures fall behind. The difference is, naturally, in the possibility that this particular type of home may, as its name implies, be mobile.

In a bankruptcy filing, the question for any real estate is whether it does or does not qualify for the homestead exemption available under the Federal Bankruptcy Exemptions and under most state bankruptcy exemptions to varying degrees. For a mobile home as with any home, the question is whether or not the home is the filing debtor’s primary residence. That is, does the debtor actually live in the property at the time the petition is filed? If so, any equity in the mobile home is likely covered by the homestead exemption just as with non-mobile real propety that is the debtor’s primary residence. 

A further underlying issue with regard to mobile homes is whether the debtor also owns the underlying land upon which it sits. If so, a certain percentage of this land in combination with the mobile home itself is covered by the homestead exemption. If the underlying land is rented rather than owned, then it is the mobile home alone that is valued and exempted in the bankruptcy petition, while the land must be disclosed on the bankruptcy petition as the subject of an executory rental agreement, much like an apartment. It is important, therefore, to give your attorney all of the information he or she requires to determine your level of ownership in the property so that the various components—mobile home and the underlying land upon which it sits—are both valued properly and in the right amounts and listed properly in the bankruptcy petition.

Further, the manner in which the mobile home is listed in the bankruptcy petition may depend upon such details as whether or not the wheels have been removed from the mobile home. (State law governs this determination, generally).

If you have questions about your mobile or non-mobile home and how it might be handled in the bankruptcy process, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation. Together, we’ll work out the best strategy to protect and preserve your home.

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

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Michigan Bankruptcy Lawyer: Best of the Bankruptcy Basics

Posted on July 3, 2009 | Leave a comment

I began this blog only last December, and, although six months is not a lot of time to assess the effectiveness of anything, one thing that has become clear to me is the number of people interested in very basic information about bankruptcy. The ground-level hows and whys and whens remain a mystery to many people, despite the huge amount of information about bankruptcy available on the internet and elsewhere. The posts I’ve written here that address some of these basic questions are among the most-viewed, far exceeding the readership of my posts addressing very specific issues within the framework of bankruptcy.

Therefore, for the benefit of any new readers who may stumble upon this blog, I’d like to take the opportunity, to point toward some of my previous posts that have touched upon the very basic basics of bankruptcy. Wondering where to get started? Try reading these first, below, first.

Still have questions? please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation. I’d be happy to sit down and help you decide whether bankruptcy is a viable solution for you.

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Posted in Bankruptcy, Bankruptcy Basics, Bankruptcy Planning, Bankruptcy Process, Chapter 13, Chapter 7, Michigan, Uncategorized

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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 have a reverse-mortgage and are considering filing for bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation. Together, we can work to find the best solution to your immediate difficulties.

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

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