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Wayne County Bankruptcy Law Blog

Judge may convert Trump hotels' Chapter 11 into liquidation

Sometimes a bankruptcy case involves a small business struggling to keep the lights on. Other cases involve a major business bankruptcy with much more complex business bankruptcy issues to address. In either case, however, there are some underlying fundamental issues that Wayne County residents should understand, no matter what point they are at in their businesses.

Take a look, for example, at the situation of Trump Entertainment Resorts, Inc., the company that owns a few high-profile resorts on the East Coast. The company has been attempting to pursue business reorganization under Chapter 11. As we've discussed previously, that would give the company some flexibility to proceed with a repayment plan and continue to operate. It would, however, likely mean some changes -- a company needs to present a sound argument under Chapter 11 as to how it would return to profitability.

Feds investigate banks over bankruptcy, credit reporting issues

A major national newspaper recently ran a story about consumer bankruptcy filings. The twist was that individuals didn't end up getting the debt relief they expected after filing for bankruptcy. We want to take a closer look at this story so that our Wayne County readers understand the details and why this has happened to some people.

The story cites a number of examples where people found that, even after completing the bankruptcy process, some debts still lingered on their credit reports. The only way to clear them up, individuals have been told at that point, is to pay them -- or risk tarnishing their credit reports. As our readers likely know, building up good credit scores after obtaining a fresh start through bankruptcy is a top priority.

Personal bankruptcy can turn the tables on creditors (part 2)

As we discussed last week, Wayne County residents working in close cooperation with bankruptcy law professionals often find that they are able to take advantage of some unique options in dealing with their creditors. Lien stripping was one such tactic that can turn the tables in your favor.

This week we're going to look at what we call loan cram downs. In some ways, a loan cram down is simpler than lien stripping. It also can potentially apply in just about any case where a debt is secured by property -- a mortgage, of course, but also a car loan or similar debt.

Personal bankruptcy can turn the tables on creditors (part 1)

Wayne County residents all too often feel as if they are completely alone as they struggle with financial challenges. The bank is likely not really on your side; neither are the credit card companies or debt collection agencies. They are all looking to get as much as they can out of you, heedless of what the consequences could be for you and your family. Fortunately, a bankruptcy law professional is not only willing to stand up for your legal rights, but can even turn the tables in some ways.

For example, lien stripping is one tactic that can benefit individuals with second mortgages on their property. We've reviewed before on our blog how in a Chapter 13 bankruptcy filing, secured debt must be paid off in full while unsecured debt only gets paid in partial over course of the repayment period (up to five years) and the remainder discharged. Because a mortgage is debt secured by property, it cannot be discharged in bankruptcy.

Many pro and former pro athletes facing financial challenges

Wayne County residents dealing with financial challenges in our struggling economy could perhaps be forgiven for the occasional daydreams of fame and fortune. If only one had the six, seven or eight-figure salary of a professional athlete, it would seem, bankruptcy would simply never be in the picture.

As it turns out, however, many of these athletes -- even promising young stars with the world seemingly at their fingertips -- are finding themselves filing for bankruptcy. The recent case of a former NBA star is illustrative. Just a teenager at the time, he signed a deal in the late nineties for just over $70 million, and was told by the coach that never again in his life would money be a worry for him.

Number one reason for bankruptcy: medical debt

There is all too often a stigma associated with financial challenges. Wayne County residents are likely familiar with the social pressure to keep up appearances, to hide their struggles away from friends, family and coworkers. But study after study show that more Americans are in need of a fresh start today, and maybe not for the reason people typically think.

The main factor underlying bankruptcy claims in this country is, in fact, the cost of health care. More people (approximately four in 10) are fighting off debt collectors today over medical debt than they are over credit card debt. You could combine what Americans pay for credit card debt and bank loans and it would still only be a third of what we pay for debt related to health care.

What can I do to stop creditor harassment?

It can feel like a helpless situation. You're struggling with debt, which is hard enough as it is, trying to make payments while providing for yourself and your family. But then you get constant phone calls at all hours, official-looking letters in the mail, maybe even your friends and family in Wayne County have been contacted by your creditors looking to collect. Some of these communications may have left you feeling threatened in some way.

In any case, you are sick of it and you need it to stop. What can you do? Fortunately, there are a number of important legal protections of which you need to be aware. One is the Fair Debt Collection Practices Act, which limits what kinds of tactics your creditors can use in communicating with you. Another is the automatic stay provided under Chapter 7 bankruptcy.

Overcoming legal challenges in a personal bankruptcy case

Filing for bankruptcy is an important decision for many Wayne County residents struggling with debt. It can help provide the fresh financial start that so many need. It's not even mandatory to hire an attorney to file, although particularly when personal bankruptcy cases run into legal challenges, a legal professional can often provide the advice and guidance necessary to see the case through to debt discharge.

For example, when filing for bankruptcy, it's important to let 70 days pass without taking out a cash advance. Sometimes filers face allegations of fraud in this regard, and that can lead to litigation against the filer. The value of property may also become the subject of litigation in certain situations. Litigation can potentially derail a bankruptcy case entirely, so a legal professional's assistance can be crucial in ensuring your debt gets discharged as planned.

What should I expect during the Chapter 13 repayment period?

After our last few blog posts about Chapter 13 bankruptcy, we realize that some Wayne County readers may still have a few basic questions left unanswered. You know what Chapter 13 offers and you know about how your debts will be grouped and prioritized. But do you really know what to expect the first morning you wake up with your new repayment plan in effect? After all, this is your life we're talking about, and you deserve to have a clear picture of what the next few years will be like.

Let's try to answer your question with some general information from the United States Courts website, and note in advance that this should not be construed as specific legal advice. Let's say your proposed repayment plan has been approved by the court. Your payments need to begin "as soon as is practicable" -- there's no grace period or window within which to work up to those payments. This is something to which you and your attorney would have given careful thought as you drafted the repayment plan.

Three types of claims in a Chapter 13 repayment plan

We write frequently on our Wayne County bankruptcy law blog about the manageable payments that Chapter 13 offers. In fact, our last post briefly discussed Chapter 13 as a way to stop foreclosure on one's home and while making payments under Chapter 13 bankruptcy. Let's look a little closer at just how a payment plan is formulated for those who are wondering if filing for Chapter 13 is right for them.

A Chapter 13 payment plan divides your debts into three categories. Those associated with some kind of property that the creditor can potentially take back if the debt goes unpaid are called "secured" claims. A mortgage is a secured claim because the bank can foreclose on your house if you don't pay. Similarly, a car can be repossessed if you default on the loan. Unlike Chapter 7, Chapter 13 allows filers to keep the property securing these claims (assuming they want to) as long as the value is paid off in the repayment plan.

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