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Charles J. Schneider, P.C.
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Livonia, MI 48150
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Wayne County Bankruptcy Law Blog

Bill may help stop foreclosure for some Wayne County residents

A home is one of the most important investments Wayne County residents can make in their lifetimes. But with the financial crisis of recent years, many saw these important investments lost to foreclosures. Indeed, many are still fighting today to stop foreclosure on their homes as the economy remains challenging in many ways.

Recently, some potentially good news arrived for a number of these homeowners. Those who are in danger of losing their homes due to unpaid property taxes may get some relief from a bill which just passed the Michigan House of Representatives. It should be noted that the bill is not yet law; although it is generally expected to pass in the Senate, anything could happen between now and then.

What exactly goes into a Chapter 11 reorganization plan?

This blog has discussed commercial bankruptcy in a number of recent posts on. In particular, in a post from two weeks ago, we highlighted how the automatic stay associated with Chapter 11 bankruptcy helped one business owner renegotiate some debts that he might not have been able to otherwise. Chapter 11 is often referred to as a reorganization bankruptcy, but our Wayne County readers may have some questions about what exactly this means for them. Following is some general information regarding that question, which should not be interpreted as specific legal advice.

It's important, first of all, to distinguish between Chapter 11 and Chapter 7, or liquidation bankruptcy. In Chapter 7, a business's assets are "liquidated," or sold off, in order to repay creditors. While the bankruptcy filing will wipe out its lingering debts, the business will no longer exist after the Chapter 7 filing.

Understanding debt relief options and filing for bankruptcy

For some residents in Michigan, dealing with financial challenges is a difficult reality to face. While in some situations these financial problems may only be temporary. Our firm understands the importance of addressing these situations carefully and effectively. Individuals should educate themselves about their situations so they could take proper measures to alleviate these problems. Exploring debt relief options may allow them to take the necessary steps in order to move forward and obtain a healthy financial life.

While filing for bankruptcy is a common form of debt relief, individuals and families should understand all the options available to them. Bankruptcy can impact life in the short-term and the long-term, so it is crucial that people have a clear understanding of the intricacies involved.

Developer benefits from "breathing spell" in Chapter 11

For Wayne County business owners, the idea of filing for bankruptcy may seem antithetical to the very entrepreneurial spirit that drives them. One wants to hold on, keep fighting even in the face of overwhelming debt. However, for many, business bankruptcy is just the opposite of giving up the fight: it's a last-minute tactic that can turn the game around, sometimes even faster than expected.

Take the case of a once-successful developer in a neighboring state who got into trouble (like so many others) during the recent economic meltdown. Trying to hold on to his businesses hit by one foreclosure after another, he poured $25 million from his personal funds into them. But eventually he was holding just over $33 million in assets compared to $170 million in debts, and knew it was time to try another strategy.

What is the means test for Chapter 7 bankruptcy?

We often write on our Wayne County bankruptcy law blog about the similarities and differences between Chapter 7 and Chapter 13 bankruptcy. Just in our last post we referred briefly to the means test required in order to file for Chapter 7 bankruptcy, which is not a prerequisite for Chapter 13. Because this is an important distinction, let's take a closer look at the means test in this post -- with the understanding that this is simply a general review and does not constitute specific legal advice.

The first part of the test compares your average income over the last six months against the median family income in that state. It's worth noting that "income" in this calculation includes sources you might not typically consider as income. Besides salary and wages, business income, and income from a rental property, it includes child support and alimony, for example, as well as unemployment and workers' compensation benefits.

Chapter 13 offers benefits despite distant discharge date

When most Wayne County residents think about filing for bankruptcy, the images that come to mind are from the Chapter 7 liquidation process. They think of potentially losing some assets like a house or car that are used to secure debts, and they see their debts quickly swept away. Many are less familiar with what happens in Chapter 13 bankruptcy, even though it is an important option to consider.

An important distinction between Chapter 7 and Chapter 13 is the discharge date. This is a technical way of referring to the date on which one's debt is formally forgiven -- or at least, those debts that qualify. In Chapter 7, the discharge date typically comes around four months after the initial filing. In Chapter 13, however, the discharge date will be at least three years down the road, possibly four or five years.

Chapter 7 may help older residents struggling with debt

Last week on our Wayne County bankruptcy law blog, as we were discussing the consumer medical debt crisis in this country, we mentioned how some turn to credit counseling or debt negotiation agencies for debt relief. There may, as we mentioned, be underlying concerns about the true interests or even the legitimacy of some such companies. This week, we want to highlight another situation in which Chapter 7 bankruptcy may be a better option for Wayne County residents who are seeking a fresh financial start.

A reader recently commented in a national publication that her mother is almost 80 years old and struggling with debt. On top of that, memory problems make budgeting and paying bills a confusing and frustrating endeavor. While this elderly woman's Social Security and retirement benefits remain at a set level, her monthly credit card payments have been steadily rising thanks to exorbitant interest rates. These two factors -- increasing payments and a fixed income -- make for a seemingly impossible situation.

Disturbing new statistics on medical debt

Many Wayne County residents spend their lives with strict financial priorities and goals in place. They pay their bills on time, avoid carrying credit card debt and add to their savings each month. The possibility of ever filing for bankruptcy is probably the furthest thing from these individuals' minds. But staying well-informed financially means having at least a basic understanding of one's legal rights and options should the unexpected occur.

One unexpected expense many Americans struggle with is medical debt. Given the sudden nature of many serious illnesses and the astronomical medical and hospitals bills that can accrue, it's virtually impossible to save up in anticipation of such an event. But debt collection firms don't distinguish between this and any other type of debt; over 30 million people in this country dealt with debt collectors in 2010 on the basis of medical debt alone. And a recent study of bankruptcy filings from seven years ago found that almost two-thirds of them were related to health care or medical debt.

As cupcake craze dies down, bakery files for Chapter 11

The cupcake craze of recent years swept Michigan just like every other part of the country. For one little East Coast bakery that first opened its doors in 2003, the national sweet tooth opened up opportunities to expand the business, even going public less than 10 years later. Crumbs was famous for its calorie-packed cupcakes, which sold for around three or four dollars apiece.

However, with changing tastes and perhaps the end of a fad, the company saw year after year of dwindling cash flow, and Crumbs finally made the decision to file for Chapter 11 bankruptcy. Crumbs Bake Shop initiated the business bankruptcy filing after defaulting on a loan of over $9 million. It closed all of its almost 50 stores and retained only nine of its over 450 employees.

Michigan senior too late to stop foreclosure, town fights back

Wayne County residents may have heard the recent story about an unorthodox foreclosure in a neighboring county. The details are chilling, and may raise questions about what actions our readers can take to stop foreclosure in their own situations.

The story involves a woman in her mid-eighties who lives alone in a condo that she has owned for almost 30 years. She originally paid $60,000 for the condo, which is now valued at $100,000. Her association fee of $160 is automatically paid from her account every month, but last year she was assessed a repair fee of just over $340 above and beyond the monthly fee. That sum was not withdrawn electronically and the owner never saw a bill.

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