Detroit Bankruptcy Lawyer

1. You should not seek credit counseling first (you should seek legal counsel) if your home or other real estate is in foreclosure.
2. You should not seek credit counseling if you have been sued in court.
3. There may be other reasons. If you have a question, it is always better to speak with an attorney first. Credit counselors simply cannot give legal advice you can rely upon, like an attorney can.

When should I consider filing a Chapter 13?

You should consider filing a chapter 13 if:

1. Your house is being foreclosed upon.
2. You have received a notice from your mortgage company that they intend foreclosure at any time in the future.
3. You need some time to catch your breath, so that you can regain control of your life from your creditors.
4. You are in severe financial difficulty and have tried, but cannot work other arrangements with your creditors.
5. You have property (real or personal) that you need to protect and are in danger of losing to a creditor.
6. You have committed a wrongful act respecting the debts (misrepresentation, fraud, etc.) and you feel that a creditor would object to your discharge in a chapter 7.
7. You have income to pay less than 100% of the debts you owe and would like to make (in most cases) interest-free payments to unsecured creditors.
8. You have an honest desire to not "run away from" your creditors, but are not in a financial position to pay all the debt, or all the debt and all the interest on that debt.

You should be aware that payments to mortgage creditors generally cannot be reduced or modified.

How can I pay for an attorney if I am "bankrupt?

There are a number of different manners of payment. One should consider that he will not be paying a significant portion of his indebtedness so that in itself, may free up funds for counsel fees. Sometimes, some of the fee may be paid through the chapter 13 plan without interest. You will then have up to five years to pay! This will increase your plan payments only marginally. Many people still would want to pay prior to filing because the total fee would be less.

How can I stop creditors harassing you or your family?

Filing a Chapter 13 acts as a stay (which means an Order of the court preventing this) of ALL creditor activity, including all collection action. This includes, suits, phone calls, letters, "friendly reminders" of indebtedness or visits from bill collectors. This includes legal papers, of course. Please note that it is the Bankruptcy Court that notifies your creditor. Therefore, just because you have filed bankruptcy, it does not mean that all your creditors will know immediately. It may take a few weeks for them to learn of the filing through the court. If a particular creditor is getting on your nerves, let me know and I will contact them. The harassment should then cease. If it does not, you may have the right to bring legal action against them.

What if I owe the electric company, will they shut off my power?

The Bankruptcy Code prohibits your local power, water, telephone, or any utility company from discriminating against you because you have filed a bankruptcy. It cannot shut off your power, water or phone service or refuse you any utility service just because you filed. You should be aware that your local utility company may request a deposit from you for continued service.

What about my credit record?

Fact: Bankruptcy will hurt your ability to obtain credit for some time to come. That you have filed a chapter 13 will appear on your credit record for ten years. In some circumstances, i.e. credit transactions in excess of $50,000, the credit record can reach back even further. Generally, the best (and probably the only) way to get good credit is to pay your bills, or at least the minimum amount due, when they become due. A chapter 13 will be listed on your credit record as just that; a chapter 13 bankruptcy. Your creditors may also be able to see if you completed your plan successfully, which is certainly to your advantage. Some people may be fortunate enough to find a creditor willing to overlook their bankruptcy. This may or may not be you; the question is left entirely up to the individual creditor. By the way, the bankruptcy trustee will require you to cut your credit cards in half and return them to the creditors. YOU MAY NOT CONTRACT FOR CREDIT WHILE THIS CASE IS PENDING!

I wrote a bad check to a creditor. Can that be discharged in a chapter 13?

Issuing a bad check is a crime in most states. The bankruptcy will not protect you from criminal prosecution and will not discharge criminal liability for restitution, costs or fines. In addition, you can be arrested, notwithstanding the bankruptcy. It is strongly recommended that you satisfy all bad checks before you file.

What exactly is expected of me in a Chapter 13 case?

The following are among the most important obligations you have in a chapter 13 case:

1. Be truthful to all authorities involved, including your attorney. Lying in a bankruptcy proceeding is a federal crime and is punishable as such. It is often the case that a debtor can accomplish better results by truthfully disclosing unfavorable facts than by lying about them.
2. Pay the plan faithfully. I will tell you the amount of your plan payments. If you miss two consecutive payments, your case is subject to dismissal. You may wish to request a wage attachment. If you do, the payments will come directly from your pay and you will not have to worry about payments, as long as your employer is making them. Of course, if your employer stops making payments for any reason, it is your responsibility to continue them. By the way, your first plan payment will be due the first full month after you file your bankruptcy. Retain your money order receipts as proof of payment.
3. Attend court when directed to do so. Your court appearances will be minimal. Most debtors only appear one time, at what is called a "section 341" Meeting of the Creditors. At that meeting, the creditors are allowed to attend and ask questions, although it is rare that they actually do.
4. Generally, these are the items that you will need to bring to a meeting of creditors:

• Proof of your income (pay check stubs, etc.).
• Proof of income from rent (leases or other agreements to pay you).
• Proof of insurance for all vehicles and for your home (fire insurance or proof that the same is being paid through your mortgage payment) .
• Copy of your most recent tax returns and any other items requested by the trustee.
  
  5. PAY YOUR MORTGAGE! You may have been told of this obligation, but it cannot be stressed enough. Current monthly mortgage payments must be maintained. Payments must commence the month after filing your case. Pay the regular monthly amount to your mortgage company unless you are instructed to do otherwise. Should payments be refused by your mortgage company, report this fact to me at once. You are never excused from making current monthly mortgage payments. Your failure to comply with this requirement will eventually cost you your home. Be sure to retain your canceled checks as proof of payment. It is usually a good idea to enclose a copy of your bankruptcy petition with your first check to your mortgage company as proof of the filing of this case. They will need to know that you are in a chapter 13 case in order to begin accepting payments again. If you do not pay your mortgage payments (post-petition) and the mortgage company gets relief from the stay (is allowed to proceed with or commence a foreclosure), you are not allowed to just dismiss your case and start over. If you dismiss your case after a motion for stay relief is filed, then you must wait 180 days to refile. If the trustee dismisses your case, then the 180 day period is not applicable. Therefore, it is sometimes better to consider dismissing your case yourself if you get behind in your mortgage. There is no way to know exactly when a motion for stay relief will be filed by the mortgage company. It is best to stay current.
  
  6. Obey all orders of the Bankruptcy Court.
  
  7. Pay your car payment! If you fail to keep this current, your car is subject to repossession after relief from the stay is obtained. You must also keep your car fully insured.
  

What are the chances of my bankruptcy "not being accepted?"

For some reason, many clients are under the impression that "their bankruptcy has to be accepted." The truth is that once the case is filed, it is "accepted" by the court and the debtor receives relief from all debt collection activities, including, but in no way limited to:

• The immediate stay of any litigation, excepting criminal and child support (also certain family matters);
• Harassing phone calls;
• Requests for payment;
• Repossessions;
• Electrical, water, telephone or other utilities being shut off;
• Most types of setoff activity.

While it is true that your plan must be confirmed (i.e. made binding upon the rights of your creditors) by the court, your creditors do not have to accept the plan if:

• It is your best effort;
• It provides for a payment to unsecured creditors in an amount at least as much as they would receive if you had filed a Chapter 7 bankruptcy;
• It provides that secured creditors will retain their liens; and
• It otherwise complies with the minimum requirements for a chapter 13 plan under the law;

Of course, the statements above are simplified for the lay person's understanding. This is not to say that there may be other issues for the attorney to consider.

What if I want to sell my home (or real estate), and I have already filed a Chapter 13?

Sometimes, the debtor(s) in a chapter 13 case realize that the best way out of their problems is to liquidate (sell) their home or other real property owned by them at the time of filing. Many times the debtor(s) do not realize that all real estate owned at the time of the filing is subject to the jurisdiction of the court. Some courts in certain jurisdictions feel that, or allow plans that, revest complete ownership of the property when the plan is confirmed. Most of the time, however, the debtor(s) need to get permission of the court to sell their property.

After a sale, most times the trustee will take control of the proceeds after the liens are paid. The realtor and attorney(s) will need to get court approval of their fees in order to get paid from the sale. Realtors need to be appointed first in many if not all jurisdictions. The realtor, therefore, cannot just appear at the settlement or closing of title and ask that the title clerk or closing attorney withhold his fee. Furthermore, all sales prices are subject to approval of the court. If the court feels that the sales price is inadequate, then the court will disapprove the sale. If the court disapproves the sale and the sale takes place anyway, then the purchaser may not have valid title (thus creating a major headache for the purchaser and his title company).

In summary, when you sell real estate in a chapter 13, your creditors may get paid before you do. This depends greatly on the exemptions you and your counsel claim when you file.

I lost my job or cannot make my plan payments for another reason. What can I do?

If you are paying for arrears on your mortgage as a result of a foreclosure or threatened foreclosure, or for any reason, then your plan may already be at a minimum and may not be able to be reduced. If your plan calls for a certain percentage to unsecured creditors (e.g. credit cards, etc.), which percentage was based upon a wage figure that you can no longer support, then the plan can be reduced accordingly, as long as you provide for full payment for your mortgage arrears and any other arrears (e.g. vehicle payment arrears) that you need to pay.

If your plan has no secured creditors, then you can modify the plan to reduce it to any reasonable level that the court will approve. Often, you attorney will need to file a motion to have the new plan approved.

I just got some extra money. Can I pay off my chapter 13 plan early?

The answer is yes, if you are willing to pay your creditors 100%. Most courts will require a debtor to be in a chapter 13 at least for 36 months. The reasoning is that if the debtor has the money to prepay the plan, he maybe really did not need a break anyway. The debtor will be expected to continue to make his or her plan payments for at least the balance of the plan or a minimum of 36 months. The plan is not a loan that can be "prepaid."

What happens when I complete my Chapter 13 obligations?

After you have completed payments under the plan, and if no objections to discharge are filed, you will be receiving your discharge in bankruptcy. You are not be required to appear in court to get your discharge order. The discharge, as you know, "cancels" certain debts that you had at the time the bankruptcy was filed. It does not affect the lien of secured claims, however, it will cancel the personal liability only, on those debts. This means that if you owe money on the secured debt after you receive the chapter 13 discharge, your collateral is still subject to repossession, unless you remain current with that creditor.

If no objections to discharge are filed, you can expect to receive an order, signed by the Judge, in the mail after your completion of the plan. When you receive the discharge order, you should put it in a safe place with your other valuable and important papers because you may have to show it to creditors later.

What is the effect of a bankruptcy discharge?

You must understand several things about your bankruptcy discharge:

• ONLY DEBTS LISTED ON YOUR BANKRUPTCY SCHEDULES can be discharged. If you have a debt that you owed at the time that the bankruptcy was filed, but do not have it listed, it will not be discharged. If you have such a debt, speak with me immediately and I will file amendments to the schedules and amend the plan, if required.
  
• ONLY DEBTS OWED FROM THE PERIOD BEFORE THE BANKRUPTCY WAS FILED WILL BE DISCHARGED. This bankruptcy discharge will not discharge debts that you became obligated to pay during the bankruptcy. Your discharge will only cover your personal obligation to pay debts. It will not cover co-signers on your debts and it will have no effect on most security interests, like home mortgages and encumbrances on motor vehicles.
• If you want to REAFFIRM A DEBT, AVOID A LIEN, OR REDEEM PROPERTY, you must do so BEFORE THE CONFIRMATION ORDER IS SIGNED. Therefore, you should tell me now if you want to do this. An explanation is in order:
• Certain liens (judgments, levies, non-purchase-money interests in household goods) can be eliminated entirely by asking the court to do so. There is an additional fee for this service. If you are interested in this service, let me know and I will quote a fee.
• Other liens, like mortgages, motor vehicle encumbrances, and purchase money security in other goods cannot be eliminated.
• If you think that any of these agreements or motions should be filed in your case, or if you want additional information, contact me.
• Remember: You can pay anybody you want after your discharge however, few debtors do. Depending on the length of your plan, you may not receive a discharge for 3 to 5 years.
  
• The bankruptcy code prohibits the discharge of certain types of debts. Upon your request, I can describe to you in detail the types of debts that cannot be discharged. These debts include, but are not limited to: educational loans that first became due less than seven years ago, child support, certain taxes, including income taxes less than three years old. Furthermore, your taxes may not be dischargeable even if they are more than three years old in certain circumstances. These are, but are not limited to the following: (i) If you did not file a return, or (ii) if you did not file a return on time. In many instances, income taxes over three years old may be DISCHARGEABLE, however, to be sure, you must review your specific case with me.
  
• It is important that you know the significance of your discharge order. If a debt is discharged, that creditor cannot force you to pay that particular debt. This means that the creditors cannot legally file an action against you (for that debt), continue an action that it had filed before the bankruptcy, send you collection letters or harass you in any other way. If this type of harassment occurs, you should contact me immediately, and I may be able to sue the creditor.
  
• This information sheet is intended only as a summary of certain points of interest regarding your bankruptcy discharge. The terms used in this information sheet are intended to be simple so that they can be understood, the law is much more detailed. This information therefore is not "the law" and is only a summary designed to help you understand this phase of your bankruptcy.

Each bankruptcy is unique. Your case may have special facts making further discussion necessary. Do not be afraid to raise any issue if you feel uneasy about it. I will be pleased to answer any question you may have.

What if I forgot to list a creditor?

It is usually not a problem if it is caught before the confirmation hearing. This can be done even after the plan's confirmation. There is a Bankruptcy Court fee of $20. Your attorney may also charge a small additional fees for the service.