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Wayne County Bankruptcy Law Blog

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 That sum was not withdrawn electronically and the owner never saw a bill.

Chapter 7 can bring independence from overwhelming debt

With Independence Day 2014 now in the rear-view mirror, many Wayne County residents will find themselves reflecting on the possibility of their own independence -- from credit card debt, that is. The good news for these folks is that there are a number of options on the table. These range from some common-sense best practices in their day-to-day budgeting for smaller debts to more comprehensive solutions for overwhelming debt.

The first thing one must do in order to begin to chip away at credit card debt is to stop adding to it -- i.e., stop using credit cards altogether. Then, look at where in the budget cuts can be made to free up the money necessary to start paying down the debt. Deep cuts may be required, especially if one intends to make more than just the minimum monthly payments (usually a must in order to really start putting a dent in the debt).

Stopping creditor harassment with Chapter 13's automatic stay

Wayne County residents struggling with debt are probably all too familiar with debt collectors and the types of practices they use to try to collect. They may not, however, be familiar with the types of limits the law places on what collectors can and cannot do. And Wayne County residents have some legal options of their own that can protect them from debt collectors.

On the one hand, debt collectors do have the right to try contacting borrowers at home, between 8 a.m. and 9 p.m., whether by phone, fax, mail or an in-person visit. They can also contact borrowers' places of employment, but they cannot continue calling if the employer wants the calls to stop. And they can reach out to a borrower's friends and family members for help locating the borrower -- but, importantly, they cannot say they are trying to collect on a debt (or how much a borrower owes).

Michigan commercial bankruptcy case converted to Chapter 7

We've discussed a number of business bankruptcy cases in recent weeks on our Wayne County bankruptcy law blog. The latest involved a national restaurant chain emerging successfully from Chapter 11. However, one recent example of a commercial bankruptcy right here in Michigan highlights the importance of a sound reorganization plan when filing for Chapter 11, and the consequences of failing to develop one in the time allotted.

The business in question is a shopping center in a town a few hours northwest of Wayne. The developer had a successful record of strip malls and chose the site of an old apple orchard for this particular one. It failed to secure full funding, however, with the only tenant eventually suing the developer for failing to complete the rest of the mall on time.

Debt relief for student loans can be hard to come by

Student loans have become a double-edged sword in recent years. While they make obtaining a college education possible for many who could not otherwise afford it, they can come back to haunt young people after graduation.

Federal student loans do come with many perks, including low interest rates and flexible options for repayment. One option, called Pay As You Earn, caps the amount borrowers are required to repay each month based on their income. This program has thus far been limited to relatively recent borrowers, although Wayne County residents may have heard news of President Obama's recent announced that eligibility for Pay As You Earn will now extend to older loans as well, bringing some relief to an estimated 5 million additional borrowers.

Commercial bankruptcy helps pizza chain slice up its debt

Just about a month ago, our Wayne County bankruptcy law blog talked about the case of a cosmetics company that made a major announcement. By choosing to pursue Chapter 11 bankruptcy, the company was going to try to reorganize and eventually resume operating without being held back by debt. Sound too good to be true? A major national chain restaurant has done just that.

It's likely that many Wayne County residents will be familiar with Sbarro pizza. The chain has over 800 restaurants in this country and abroad. Back in March, it sought to shed a vast amount of debt through a commercial bankruptcy filing.

Medical expenses driving up credit card debt

Health insurance has been a hot topic here in Michigan and across the country for years. The basic idea is simple: people pay monthly premiums for a plan which, in turn, is supposed to cover their health care costs -- maybe not all, but at least enough to keep medical expenses from threatening their financial stability and security.

Unfortunately, even with insurance, many are finding that the sky-high costs of prescription medications leave them struggling to make ends meet elsewhere in their lives. More insurance plans today are shifting the costs of prescriptions onto the consumers. Some may find it difficult to understand the technical terminology and insurance jargon that fills their plan brochures and end up making ill-informed decisions about their coverage and their medications.

How you can start rebuilding your credit after bankruptcy

Many people tend to think of bankruptcy as the end of the road – the “nuclear option” when debt has become overwhelming. But in reality, bankruptcy is often a new beginning and a chance for a fresh start. If you are considering filing for bankruptcy protection, it might be a good idea to start thinking ahead to what your financial life will look like with most debts erased and with the credit score repercussions that typically accompany bankruptcy.

Whether you file for Chapter 7 or Chapter 13, it will likely be harder to borrow money for several years. But this isn’t necessarily a bad thing. The first few years after bankruptcy are an important time to make changes that can set you up for long-term financial success. This includes the opportunity to rebuild good credit by fastidiously making monthly payments on bills and other financial obligations.

Debt relief for credit card balances leftover from college years

This time of year is full of eager students graduating from the many other colleges and universities in the Wayne County area. While local residents are rightly proud of these young Michiganders and their accomplishments, the fact is that some of them are entering the "real world" already burdened by credit card debt that may not be so easy to overcome.

College students with credit cards often tend to carry a balance on their cards, paying just the minimum monthly amounts rather than paying the balance off every month. Many see this as a way to cut their expenses in the short term, not taking into account the accumulating interest. They are also unlikely to take into consideration the long-term effects on their credit scores that carrying large balances can have.

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