Category Archives: Personal Property in Bankruptcy

Can I Lower my Salary or Wages to Pass the Chapter 7 Bankruptcy Means Test if I am Self-Employed?

Some small business owners inquire as to the possibility of artificially lowering their income or taking less wages out of their business prior to filing a bankruptcy petition in order to pass the Chapter 7 means test.

This possibility is fraught with peril for uninformed individuals. Click here to read more about whether one can lower wages to pass the means test in bankruptcy on the new Michigan Bankruptcy Blog of Michigan bankruptcy attorneys The Hilla Law Firm, PLLC.

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

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

Placing assets into a trust may not be an effective way to protect your personal property if you are planning to file a bankruptcy in Michigan.

Click here to read more about the protection of assets in trusts during Chapter 7 or Chapter 13 bankruptcies in Michigan on the new Michigan Bankruptcy Blog of Michigan Bankruptcy Attorneys The Hilla Law Firm, PLLC.

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

How Much Can my Chapter 7 Banrkuptcy Trustee Can Take from Me?

Most Chapter 7 cases that I handle as a Michigan bankruptcy attorney are “no-asset” bankruptcy cases, meaning that, after I  have exempted the filing individual’s personal assets from the bankruptcy estate created by the filing of the bankruptcy petition, there is nothing left available for the Trustee to liquidate (seize and sell off for cash) and distribute to creditors. In fact, the great majority of Chapter 7 bankruptcy cases filed anywhere are “no-asset” cases of this sort.

However, some cases are “asset” cases that do involve a transfer of assets from the filing individual’s ownership to the creditors whose debts he or she is discharging by way of the Chapter 7 Trustee assigned to the case, whose job is to do just that.

Sometimes, however, a filing individual does have more property or more cash assets in their possession than the exemptions in the Bankruptcy Code allow me to protect. (The exemptions are bits of the Bankruptcy Code statute that allow me to remove up to certain dollar-amounts of certain types of property from that legal “bankruptcy estate” containing otherwise everything the individual owns or is owed at the timing of the filing of the case.) These cases are called “asset” cases.

Usually, the available bankruptcy exemptions are sufficient to protect, if not ALL of somebody’s property, nearly all of it and what the Trustee manages to liquidate and distribute to creditors is less than what the individual owes to their creditors. This is sometimes only a few thousand dollars or less, which may be a small price for the individual to pay to discharge and walk away from tens of thousands or hundreds of thousands of dollars’ worth of debt.

Occasionally, however, the asset liquidated by the Trustee may be quite valuable. On extremely rare occasions, its value may outstrip the total dollar amount owed to the individual’s creditors.

Of course, this is rare because the calculation by the filing individual of the worthwhileness of the bankruptcy’s filing in the first place may be premised upon the fact that they will lose less to the Bankrutpcy Trustee than they owe; if they could simply sell off a valuable asset in order to pay creditors off and avoid bankruptcy in the first place, this is generally preferable. When this occurs, it may be because a filing individual has underestimated the value of an asset, did not realize that they owned it in the first place (e.g., a piece of real estate titled to them by an elderly relative without their knowledge, etc.), or for other reasons.

What happens then?

The Trustee takes a small percentage of the amount distributed to creditors, naturally. After that, however, Section 726 of the Bankruptcy Code governs how creditors are paid and in what order. Creditors are paid by the Trustee according to the timing of the claims that they file with the Bankruptcy Court when the Trustee alerts them that there is an asset to be distributed and according to their classification as “secured” creditors (holding debts with collateral attached to them) or “unsecured” creditors (holding debts with no collateral attached to them). Interest owed is paid as well, under certain circumstances.

However, after all creditors have been paid in accordance with Section 726, the Debtor him- or herself (i.e., the individual who filed the bankruptcy) is then paid.

In other words, you can only pay 100% of what you owe–and no more. If an asset liquidated by the Trustee brings more money to the Trustee for distribution to creditors than those creditors are actually owed, the filing individual will get money back from the Trustee. Eventually. (This distribution process can take months or years to complete.)

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.

What Is the Value of my Small Business in Bankruptcy?

A business owned by someone considering filing for Chapter 7 or Chapter 13 bankruptcy may be seized or liquidated the same as any other asset owned by a filing individual if its value exceeds the amount of protection available for that type of property under the US Bankruptcy Code.

Thus, it is extremely important, if you are a small business owner, to retain an experienced bankruptcy attorney to assist you, let your livelihood be lost in the process.

To read more about the value of a small business in bankruptcy, click here to read our full article on this topic on the new Michigan Bankruptcy Blog of The Hilla Law Firm, PLLC.

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

Is My Personal Injury Settlement Protected in Bankruptcy?

A personal injury settlement in Michigan may be protected in bankruptcy in a number of different ways depending upon the classification of the settlement funds.

Personal injury settlements may be awarded by Michigan district or circuit courts for different purposes: lost wage replacement, medical expense damages, caretaker or nursing services, and punitive damages, to name a few settlement categorizations. Depending upon which of these categorizations applies to a specific sum of settlement funds, the settlement may or may not be protectible in bankruptcy.

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Can I Still Do Business with my Credit Union if I File for Bankruptcy?

Credit union debt can have complicated results in a Chapter 7 or Chapter 13 bankruptcy. Credit unions, although famous for a high level of customer service, become entirely different and more aggressive creatures once a bankruptcy is filed.

To learn more about credit unions and bankruptcy, click here to read our full article on this topic on the new Michigan Bankruptcy Blog of The Hilla Law Firm, PLLC.

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

When Is My Chapter 7 Bankruptcy Actually Over?

A chapter 7 bankruptcy case does not necessary close immediately after the Bankruptcy Court issues your discharge of debt. A Chapter 7 Trustee’s efforts to liquidate some of your assets and any lawsuit or other adversary proceedings by creditors or other parties can result in your case staying open for months or even years after your discharge is issued.

To read more about this topic, click here to read our full article regarding Chapter 7 bankruptcy case closure timing on the new Michigan Bankruptcy Blog of The Hilla Law Firm, PLLC.

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