Tag Archives: southfield

Do I Have to Take A Credit Counseling Course I Have To Take Before Filing Bankruptcy?

Posted on June 3, 2010 | Leave a comment

One of the “innovations” of the 2005 BAPCPA “bankruptcy reform” that Congress enacted was a requirement to take not one but two “credit counseling” courses along with the filing of a bankruptcy petition. The first of these courses is a pre-filing credit-counseling course, and the second is a post-filing “debtor education” course. Both courses may be taken in person, online, or by phone, and they allegedly provide the service of informing the prospective bankruptcy filer of some of the basics of financial and debt management that they might not have been aware of prior to reaching that stage. The two classes have been a mandatory requirement of the bankruptcy process since 2005. The certificate of completion of the first, pre-filing course must be attached to the bankruptcy petition when it is filed.

What these classes actually do is simple, however: they cost you a little more money, and they comprise one more hoop to jump through on your way to achieving a legal discharge of your debts through bankruptcy. They will waste a little of your time and, most likely, provide little to no information to you that is actually in any way useful. What I tell my clients in the Detroit, Michigan area when they ask me what they will hear in the bankruptcy course is that they will hear the sorts of things that Congressmen and Senators of a certain political inclination to believe that anyone who files bankruptcy is somehow immoral or cheating the system thinks that people of that sort ought to hear. In other words, obviousness peppered with a little condescension.

The classes usually only take 20-30 minutes of your time (although I have had a couple of clients report that the post-filing debtor education course took them up to 1.5 hours), and the high end of the costs for the classes is around $50 each. It is not a terrible burden. There are a number of companies that provide these courses, and some of them are better than others in that they quickly provide the certificate of completion to the participants’ attorneys and in that they are more or less likely to provide pseudo-legal advice to participants that is more rightfully delivered by actual attorneys. Many attorneys recommend one provider over another, as I do myself, but, always, you are free to choose your own provider, so long as the certificates of completion are delivered to your attorney in a timely manner.

None of my clients have reported actually enjoying these courses, and I don’t blame them. I do hear a healthy amount of complaining about the requirement, especially from those who have filed for bankruptcy before, prior to 2005—but a requirement it is. It is best to understand beforehand that this is one of the requirements of current bankruptcy law and to just get it over with with a reasonable amount of good humor and courtesy to the company providing the course.

If you are a resident of the Detroit, Michigan or larger southeast Michigan area and are considering filing for bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ Leave a comment

Posted in Bankruptcy Basics, Bankruptcy Laws, Bankruptcy Process, Chapter 13, Chapter 7, Credit Counseling Course, What Do I Need to File?

Tagged , , , , , , ,

Will Filing Bankruptcy Hurt My Immigration Status?

Posted on April 26, 2010 | 2 Comments

As a bankruptcy attorney in the Detroit, Michigan area, which is home to an extremely diverse immigrant community, this is a question I am asked often.  The good news is that there is no hard and fast rule existing in US immigration law or in the N-400 Application for Naturalization. Although I concentrate my practice on bankruptcy and criminal work and not at all on immigration law, Miami immigration attorney Michael Shane addresses the immigration law end of this question very nicely in his article posted here.

In short, Shane says that no question is asked on the N-400 as to applicant’s bankruptcy filing status, nor is there any law or statute requiring that this inquiry be made throughout the naturalization process. There is a question on the N-400 asking whether an applicant has failed to file an income tax return or owes any unpaid taxes, however, and it is possible that a “Yes” answer to this question will result in the need for an explanation as to why. A bankruptcy may end up the topic of the conversation in this manner. As Shane correctly points out, however, the mere fact that an applicant has filed bankruptcy does not mean that unpaid taxes or a failed return filing is implicated: there are many reasons why people file for bankruptcy, and unpaid taxes are by far not the most common cause.

Shane does mention the possibility, however, that a bankruptcy filing in a naturalization applicant’s history could conceivably be considered “poor moral character” if filed within the 5 years immediately preceding the N-400 application if the bankruptcy petition evidences behavior such as a failure to make child support payments and other individual acts that are, by statute, considered to be evidence of poor moral character.

If you are in the Detroit, Michigan area and are considering filing for bankruptcy and are concerned about its impact on your immigration and naturalization status, it would certainly be wise to consult an experienced immigration attorney as well as contacting me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ 2 Comments

Posted in Bankruptcy Planning, Bankruptcy Process, Chapter 13, Chapter 7, Child-Support, Immigration Status and Bankruptcy, Michigan

Tagged , , , , , , , ,

What Happens if I Forget to List a Creditor in My Bankruptcy Petition?

Posted on February 16, 2010 | Leave a comment

When you are filing for bankruptcy, it’s all too easy to forget to list a creditor or to discover, after the petition has been filed, a creditor that you did not even know existed. When debts are bought and sold by creditors and collection agencies faster than a credit report can often account for the exchanges, it’s a commonplace phenomenon for a filing debtor to receive, after filing the petition, a collection letter from one of the seemingly endless fly-by-night collection agencies for a debt that the debtor did not know had changed hands. (As a consumer bankruptcy attorney working in a specific geographic area, the Detroit area of southeast Michigan, I am often amazed at the sheer number of these companies that come and go like schools of fish … Outside of a few larger agencies, each petition I file brings a slew of collection agencies I have never seen before and will likely never see again!)

Other times, leaving a creditor off of a listing is just a matter of simple error. No big deal. It happens. I try to avoid such error with my clients by working with them to obtain their latest credit report prior to filing their petitions. Most of the time, this nets all of the creditors swimming around them, and it will usually ensure that at least the original debts owed by my clients are successfully listed in the petition, even if a debt happens to have been recently sold off to some random collection agency.

So long as the error or omission is caught early enough in the roughly 4 month bankruptcy process, it is a simple matter to add a missed or missing creditor to a filed petition. The court charges a $23 fee for such amendments, but it is worth the cost. Although, in a Chapter 7, a non-listed debt will still be discharged, if the creditor has a claim against the debtor for fraud, theft, some willful or malicious act against the filing debtor, or if the creditor would have received funds from the filing debtor’s bankruptcy estate if they had been listed, that debt may not be discharged.

Additionally, it goes without saying that all debts and creditors must be disclosed. When you file a bankruptcy petition, your signature on the petition in several places indicates that you have completely and accurately disclosed all of your assets and liabilities. At the 341 Meeting of Creditors, about halfway through the bankruptcy process, you likewise will swear under oath that you have completely disclosed all of your assets and liabilities. A missing creditor that you are aware of or should have been aware of means that this cannot be true.

It is, thus, very important to work closely—and patiently—with your attorney when filing bankruptcy to ensure that all of the necessary information (especially creditors!) gets included. If your attorney works as I and most other bankruptcy attorneys that I am acquainted with do, you will be required to fill out a lengthy questionnaire at the beginning of your bankruptcy process from which your attorney will create your bankruptcy petition. It is not fun to fill out these questionnaires, but it is extremely necessary. Bankruptcy, like every legal process, is only worth doing if it is done right. It is always worth taking the time and effort up front to ensure that your bankruptcy filing is completely accurate in every way.

If you are a Michigan resident and are considering filing for bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ Leave a comment

Posted in Bankruptcy, Bankruptcy Planning, Bankruptcy Process, Chapter 13, Chapter 7, Debt Listing, Michigan, What Do I Need to File?

Tagged , , , , , , , ,

Am I Responsible for My New Spouse’s Debts?

Posted on February 9, 2010 | 1 Comment

This question is a very common one, and it is, unfortunately, often the basis for uncomfortable discussions between those wishing to marry.

Much of the confusion regarding the answer is, I think, a result of media reports of the divorces of the rich and famous, many of whom reside in California, a community property state. My state, Michigan, is not a community property state … For the purposes of divorce, it is what is known as an “equitable distribution state.” That is, couples who divorce are entitled to a distribution of the property that they accumulated through their marriage according to the contribution they made to that property. It is not an even 50% split by any means, though that can, in some circumstances, be the result. All of that discussion, however, concerns the question of property—not debt.

When it comes to bankruptcy and to concerns about “marrying into debt,” the equation is more cut-and-dry: the answer to the question of whether your are responsible for your new spouse’s debt-load is NO.  You are not automatically made party to the contracts of sale and credit your new spouse has agreed to be party to by virtue of your marriage. There is no mechanism in the law that automatically adds your name to any contract to which you have not agreed to be personally liable.  While the civil act of marriage does, depending on the state that you live in, potentially entitle you to some portion of your new spouse’s property either in the case of divorce or death, a marriage does not have any legal effect with regard to each participating spouse’s personal debt accrued prior to the marriage.

It is always a good idea, of course, to discuss your financial liabilities with a prospective spouse prior to marriage so that, as a couple, you can adequately plan for the lifestyle you wish to achieve together. Further, one may consider it a matter of personal ethics or morality to “warn” a prospective spouse if your debt-load is high. However, regardless of the outcome of that necessary discussion, unless you co-sign for loans or credit-cards after the marriage is completed, you will NOT “marry” each other’s debt.

If you are a resident of Detroit or southeast Michigan and have questions about debt and bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ 1 Comment

Posted in Bankruptcy Planning, Business Debt, Debt Listing, Marriage and Bankruptcy

Tagged , , , , , , , ,

Where is the Bankruptcy Court in Detroit?

Posted on January 26, 2010 | Leave a comment

In the Detroit, Michigan area, 341 Meetings and other Chapter 7 or Chapter 13 bankruptcy-related hearings are held in the Federal Bankruptcy Court at 211 West Fort St., Detroit, MI 48226. This court location houses all proceedings for debtors residing in Lenawee, Macomb, Oakland, St. Clair, Sanilac, and Wayne counties. Debtors residing in Jackson, Washtenaw, and Monroe counties may have proceedings—especially 341 Meetings—scheduled in downtown Ann Arbor instead.

Inside the Building:

In Detroit, 341 Meetings are held on the 3rd floor of the 211 W. Fort St.  building. Passing through security is not required to access this area of the building. The main elevator bank of the building is accessed just before the security gateway through the building’s lobby. Once exiting the elevators on the third floor, simply look to your right or left to see the doubled-door entry to the always extremely crowded waiting area for 341 Meetings. Through that waiting area are the individual hearing rooms for each trustee. Your hearing will be held in one or another of these rooms, depending on who your trustee is.

Bankruptcy courtrooms are located on upper floors of the same building.

Parking:

The easiest place to park is the parking structure directly across Washington from the Bankruptcy Court. However, this ramp can run you as much as $15 per visit, last time I spent any appreciable time parked inside of it. If you are able to walk a few blocks, a better bet is the surface lots 2-3 blocks to the east up Fort St. These lots charge $6-$10 per visit, flat rate. Of course, everyone in Detroit knows of a free parking-spot somewhere in the downtown area, so you may have better luck elsewhere.

Driving Directions:

Depending on your point of origin, the best way to reach the Bankruptcy Court in Detroit is take the Lodge (M-10) south and take Exit 1B onto Congress. After that, it’s a quick left turn onto Washington and 1 block up to Fort. Otherwise, turning right onto Fort from Woodward Ave. will have you arriving in front of the Bankruptcy Court within a few, quick blocks.

If you are a resident of Michigan and have questions about whether bankruptcy is an appropriate choice for you, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ Leave a comment

Posted in 341 Hearing, Bankruptcy Basics, Bankruptcy court location, Michigan

Tagged , , , , , ,

Do I Need to List All of My Debts in my Bankruptcy Petition?

Posted on January 11, 2010 | Leave a comment

First of all, Happy New Year! 2009 was a challenge for many of us, and, while economic forecasts for the coming year are swinging wildly depending on who is doing the forecasting, I wish all of my former, present, and future clients here in Detroit, Michigan the best 2010 possible.

The question I want to address here, in my first post of the year, is an extremely basic question but one which has been popping up a lot recently. Perhaps because of the economic climate, many of the potential clients I’ve spoken to have asked me about the possibility of leaving one debt or another off of the petition, such as a personal loan from a family-member or friend, or even a debt to a trusted doctor whose services they wish to continue using during and after the bankruptcy.

Unfortunately, the answer to the question is rather quick and easy from my point-of-view: no, you cannot knowingly exclude a debt from your bankruptcy petition. All known debts with a greater-than-zero balance must be listed and, in a Chapter 7, therefore discharged.  Failure to list all of your debts may result in your petition being dismissed entirely or in criminal fraud charges.

If you accidentally leave a debt off of the petition, it is a simple matter to amend the petition to include it prior to receiving your discharge. The court charges a small amount for amendments which add a creditor to your petition, however, the cost of which your attorney may pass back to you. If the debt is not listed but your discharge is granted with no assets to distribute to creditors (i.e., yours was a “no-asset” case), the debt is discharged regardless of not having been listed.

Needless to say, the best policy is to forget nothing and omit nothing and to never have to make such an amendment in the first place. Working patiently with your bankruptcy attorney, who cannot know anything about your financial state of affairs that you don’t tell him or her, is a must. Remember, although it can be aggravating to comb through your personal papers for what is needed to compile a bankruptcy petition completely and accurately, your attorney is there to help you, and it will all be worth it in the end when each of those debts is finally discharged.

If you are a Detroit-area resident of Michigan and would like to schedule a free, initial consultation, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ Leave a comment

Posted in Bankruptcy Planning, Bankruptcy Process, Chapter 13, Chapter 7, Debt Listing, Medical Bills, Student Loans, What Do I Need to File?

Tagged , , , , , ,

If I Am Filing for Bankruptcy but My Spouse Is Not, Do I Need to Provide His or Her Income Information?

Posted on December 4, 2009 | 1 Comment

It is perfectly feasible for a married individual to file Chapter 7 or Chapter 13 bankruptcy without his or her spouse doing the same thing. There are many reasons why one married partner might prefer not to file although the other partner is, such as the desire to maintain one individual’s credit rating or a lack of jointly titled personal or real property between the married couple that would be affected by a bankruptcy filing.

Regardless of the situation, however, certain information must be provided by both partners, even if only one of them is actually filing. The requirements for this will vary from area to area, but, in the Eastern District of Michigan, where I practice, the income and employment information for a non-filing spouse is required in a couple of different ways.

First, unless the married partners are legally separated and are maintaining completely separated households, both individuals’ actual, earned gross income is required for each of the 6 months prior to the month in which the bankruptcy petition is being filed for purposes of the Means Test. This will not vary by geographic area as it is required by the Federal Bankrtupcy Code. The Means Test is a mathematical formula that computes an average household monthly income for that 6-month period and determines whether the filer is above or below the median income for their state. If they are above the median, there is a presumption of fraud that must be rebutted for the petition to avoid being dismissed. If they are below the median, the petition should succeed. What may vary is the documentation required to prove this income received: in the Eastern District of Michigan, both partners must provide 6 months’ worth of actual pay-advices (pay-stubs) or other documentary proof of income.

Next, what may further vary from area to area is the extent to which the non-spouse’s income is required for the computation of the average household income and expenditures captured on Schedules I and J of the Bankruptcy Petition. Schedule I lists the gross income, withholdings, and, finally, net income for each wage-earning partner in an average month. Schedule J lists the entire household’s average monthly expenditures in various specific areas, such as rent or mortgage payment. The court-appointed trustees who oversee each bankruptcy petition in the Eastern District of Michigan with an eye toward liquidating unexempt assets for the benefit of creditors whose debts will be discharged by the bankruptcy want to see both income streams reflected separately in Schedule I and the household expenses listed in aggregate on Schedule J.

Many of my propsective clients who are married but wishing to file alone, without their spouses, ask me why they must provide this information. Frequently, they are not necessarily on the best of terms with their spouses and are sometimes working to establish a financial jumping-off point for a full separation or divorce from their spouse. It is not always comfortable for them to approach the spouse to obtain this information. Nevertheless, it is required, and those who are in such a position should be aware of this requirement in advance.

If you are a resident of Michigan and are interested in filing for bankruptcy and have questions about this or any other topic, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ 1 Comment

Posted in Bankruptcy, Chapter 13, Chapter 7, Income, Joint-Filing, Means Test

Tagged , , , , , , , , ,

Can I Discharge My Medical Bills in Bankruptcy?

Posted on November 25, 2009 | 1 Comment

This seems an obvious question, but, as an article in today’s New York Times discusses, medical bills are a primary reason that many Americans file for bankruptcy. It is certainly the case among most, if not all, of my clients in the Detroit, Michigan area, that medical bills comprise a huge portion of the debt that I see. Amongst those that I meet who are roughly age 35 or under, nearly all are seeking bankruptcy as a solution entirely due to huge medical bills. Younger people in this country, as a statistical group, are significantly underinsured or uninsured entirely, and one bad medical emergency can cripple them financially for years to come, even, at times, dwarfing the outrageous obligations that today’s student loan burdens are imposing on new graduates.

Whether these medical bills can be discharged through bankruptcy is, therefore, a question worth answering outright—because so many of my clients do ask it. The answer is slightly different depending upon whether you’re talking about a Chapter 7 or a Chapter 13 bankruptcy, but, in both cases, the answer should give those struggling with impossible medical debt some basis for optimism.

In a Chapter 7 bankruptcy, the answer is an unqualified “YES!” In a Chapter 7, medical bills are treated the same as credit-card and other forms of unsecured debt: they are completely discharged. The only complication arises from debtors themselves, many of whom do have a positive and long-term relationship with their doctors and a strong desire to maintain that relationship. While many Americans have not had consistently high-quality or considerate medical care, others do want to keep using a doctor or other medical professional that they have come to know and trust over many years. They don’t want to “stiff” these doctors.

This is a very common feeling … It is admirable and understandable. But anyone shouldering an amount of medical debt that is so high that it is causing them to consider bankruptcy in the first place is between a rock and a hard place: the doctor did not, in turn, feel sentimental enough about the relationship to charge less in the first place, after all. They may be willing to work with longtime patients in offering payment plans and other options, but, in my experience, most will otherwise have no reservation about referring debtors to aggressive collection agencies to collect the amount owed. Medical collection agencies are among the most obnoxious that I have encountered in my practice, and, in my opinion, no one should feel badly about using the legal option of bankruptcy to protect themselves and their families.

In a Chapter 13 bankruptcy, the answer is slightly more complicated. Chapter 13 is a reorganization process through which debtors and their attorneys pay off debt through a 3-5 year payment plan. Debts are paid according to a certain priority established by the Federal Bankruptcy Code. As in a Chapter 7 bankruptcy, medical bills are classifed as unsecured debt, and unsecured debt is paid lastly in a Chapter 13 plan, after “secured” debt like home mortgages and “priority” debt like federal and state taxes and child-support. There are many requirements for the approval of these payment plans, but, generally, at the end of the 3-5 year period, providing that enough of the unsecured debt has been paid by the plan, the remaining unsecured debt is discharged as in a Chapter 7 liquidation. Therefore, the discharge of medical debt in a Chapter 13 is not as broadly sweeping as in a Chapter 7. Depending on how much credit-card and other unsecured debt a person has, some percentage of the medical debt will have to paid off through the Chapter 13 plan.

Medical debt is out of control in this country. Anyone receiving a bill from their local hospital for something as simple as an MRI test is well aware of this. More complicated procedures can derail a person’s financial planning for years to come. However, bankruptcy, whichever form is most appropriate for each individual, does provide a solution. It is not a solution that always feels right, as doctors are people with whom we all would like to develop a positive relationship. But, after the service has been rendered and the bills mailed, no one should feel badly about choosing to not live as a slave to a type of debt that no one else in our governmental system is working very hard to lower for you, regardless of what the headlines are saying about the insurance “reform” bill working its way through the Senate as I write.

If you have questions about medical bills and bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ 1 Comment

Posted in Chapter 13, Chapter 7, Medical Bills, Michigan

Tagged , , , , , , ,

What Happens if My Creditors Keep Calling after I File my Bankruptcy Petition?

Posted on October 8, 2009 | Leave a comment

In Detroit, Michigan, where I practice bankruptcy law on behalf of consumers, and every other jurisdiction in the United States, it is true that, once you file a petition for either Chapter 7 or Chapter 13 bankruptcy, all collection attempts against you must cease. The reason for this is that, as I’ve discussed in many of my posts on this blog, upon the filing of the bankruptcy petition, an “automatic stay” goes into effect against all of your creditors’ collection attempts. This automatic stay, which originates in Section 362(a) of the US Bankruptcy Code, prevents creditors from calling, sending bills or letters, garnishing your wages or bank accounts or state income tax refunds, or foreclosing upon or repossessing your property. It is a sweeping stay that is intended to freeze all of your incoming and outgoing assets and liabilities so that the bankruptcy court can properly adjudicate the bankruptcy process.

Most creditors, upon receiving notice of the bankruptcy, do indeed stop collection attempts cold. When the bankruptcy petition is filed, notice is sent both electronically and by mail to every creditor listed in the petition. Creditors who are inadvertantly not listed in the petition may be notified by you or your attorney even after the petition is filed, and, generally, even at that point, they will understand that they need to freeze all collection efforts.

Every once in a while, though, a creditor (usually one of the countless, dubious collection agencies across the country) will ignore the notice and continue harassing debtors who have filed for bankruptcy, even after having been informed of that fact and provided with the debtor’s case number and filing-date. What then?

At that point, there are a number of remedies available to you and your attorney. Primarily, under Section 362(k) of the US Bankruptcy Code, these violations of the automatic stay may be actionable. Likewise, such efforts may also be actionable as contempt of court. What that means is that your attorney may file a motion against that creditor in the Bankruptcy Court which may result in an award of $100 per contact attempt for you, as well as your attorney’s fees paid by the creditor.

In short, the automatic stay against collection attempts is one of the many protections and advantages the law offers those who file for bankruptcy. If you are considering filing for bankruptcy, please contact me at jhilla@aronofflinnell.com or (248) 977-4182 to schedule a free, initial consultation.

→ Leave a comment

Posted in Bankruptcy Basics, Chapter 13, Chapter 7, Eviction and Bankruptcy, Garnishment, Michigan

Tagged , , , , , ,