Tag Archives: Chapter 7

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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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 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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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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Is My Social Security Overpayment Dischargeable in Bankruptcy?

Posted on January 18, 2012 | Leave a comment

Overpayments of Social Security benefits are unsecured debts just like credit cards and medical bills, and they are therefore dischargeable in Chapter 7 and Chapter 13 bankruptcy in most cases, short of any finding of fraudulence in the acceptance of the payment by the recipient. In other words, so long as you did not accept the payments knowing that you were not entitled to it—or knowing that you were about to file for bankruptcy—the overpayment amount can be discharged in a Chapter 7 or Chapter 13 bankruptcy.

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Posted in Chapter 13, Debt Listing, Social Security Overpayment, Tax debt, Tax Returns and Bankruptcy

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Is There Really a Stigma to Filing Bankruptcy?

Posted on December 29, 2011 | Leave a comment

One of the concerns most frequently expressed to me in consultations with potential Chapter 7 and Chapter 13 bankruptcy clients in my southeast Michigan practice is whether their reputations will be ruined by the filing of a bankruptcy. It is almost universally believed, I gather from my clients, that a bankruptcy, once filed and once known of by the general public, will result in both a sullied business and personal reputation and also in a complete inability to get credit of any sort of years to come.

These are serious concerns for people who do see bankruptcy as a way out of what very realistically may be a hopeless financial situation but also a potential impediment for moving forward afterward.

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

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Can I File for Bankruptcy if I Reside Outside of the United States?

Posted on December 22, 2011 | Leave a comment

A bankruptcy can be filed in any of the Federal judicial districts in the United States which is deemed to be the proper “venue” for the case under Federal law, and, under Federal law, that venue, or location for filing, is any Federal jurisdiction “… in which the domicile, residence, principal place of business in the United States, or principal assets in the United States, of the person or entity that is the subject of the case have been located for the one hundred eighty days immediately preceding such commencement, or for a longer portion of such one-hundred-and-eighty-day period than  in any other district.”

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

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