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Wayne County Bankruptcy Law Blog

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.

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.

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