Many people who have a difficult time paying their bills have discovered that bankruptcy is an invaluable option. When financial indebtedness involves student loans, however, many people are deterred because they have heard that student loans are not capable of being discharged in bankruptcy. While it is true that there are steep requirements for discharging student loan debt through bankruptcy, some people have managed to do it. For this reason, bankruptcy is worth considering even if you have significant student loan debt, provided that you have the assistance of an experienced bankruptcy attorney.

The Hardship Requirement

In 2005, Congress enacted the Bankruptcy Abuse Protection and Consumer Protection Act, which made federal and student loans more challenging to discharge in bankruptcy. In most situations, a person is unable to discharge debt if the borrower is unable to establish that the loans led to undue hardship. To establish that an undue hardship exist, debtors must establish that:

• They are unable to maintain a minimal standard of living for themselves as well as their dependents due to their current income and expenses
• Their financial situation is not likely to change during the term of the loan
• They have made good faith efforts to repay their loans

This hardship requirement only applies to federal student loans, student loans funded by a non-profit, and qualified educational loans. The debtor must have attended a Title IV certified school, borrowed only as much as the school’s cost of attendance, and have been a qualified student, which often means having at least a half-time course load.

Income Driven Repayment Plans

While some student loans, including Perkins loans, are federal loans, other loans are non-federal and made through private lenders. There is an option of income-driven repayment for federal student loans, which involves borrowers making loan payments based on their monthly income and family size. Often, after faithfully paying income-driven repayment plans for a period of several decades, a person is able to discharge the remaining loan balance. Because non-private student loans do not offer income-driven repayment plans, individuals are not able to lower monthly payments for an extended period, which means that it is often easier to show that these loans are creating an undue hardship.

Prepare a Budget

If you decide to pursue bankruptcy options for student loans, it is critical to prepare a budget that details your expenses as well as paying work. It is important that not just large loans, but also small ones will likely be analyzed by a bankruptcy court. Courts might also analyze if you looked for additional work and whether you will be able to afford student loan payments in the future. Fortunately, an experienced bankruptcy attorney can help prepare you for these situations.

Obtain the Services of a Knowledgeable Bankruptcy Lawyer

If you are interested in navigating the bankruptcy process, you should not hesitate to speak with a knowledgeable bankruptcy attorney. Resnick Law has helped many people navigate bankruptcy. We understand the complexities of bankruptcy law and will remain committed to obtaining the results you deserve. Contact our law office today and during a free consultation, we will discuss your various available options to obtain compensation.

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One of the most common myths about bankruptcy is that you are required to give away all of your belongings. In reality, there are certain exemptions and items that you are allowed to keep during bankruptcy. For example, Michigan has a distinct group of items that a person is allowed to keep while navigating the bankruptcy process. To determine what items you are allowed to keep when filing for bankruptcy as well as answer the many questions that arise about the bankruptcy process, many people find it helpful to obtain the assistance of a seasoned bankruptcy lawyer. It is also helpful to understand some of the basics about Michigan’s homestead exemption.

The Amount Allowed Under Michigan’s Homestead Exemption

In accordance with the Michigan exemption law, homeowners as well as dependents are allowed to exempt up to $38,225 of interest in property. In cases in which the homeowner is 65 years of age or older (or the homeowner is disabled), the amount is increased to $57,350. While some states recognize that couples who file for bankruptcy and own property together are able to use the full exemption amount, married couples in Michigan who own property together are unable to double the homestead exemption. Despite these limitations, since 2005, the Michigan Department of Treasury has adjusted the exemption amount every few years. Currently, these amounts are scheduled to be adjusted against in 2020. This homestead exemption will apply to various types of real property that you might own in Michigan including houses, condominiums, co-op units, mobile homes, water vehicles, or any other type of home you own and use as your principal residence. If the property has associated land, the homestead exemptions also includes 40 acres. If the property is located in a city, the exemption includes one lot.

The Option of Federal Bankruptcy Exemptions

In the state of Michigan, when you declare bankruptcy, you have the option to select either state or federal bankruptcy exemptions. Currently, the federal bankruptcy exemption is $23,750.  Much like Michigan’s bankruptcy exemption, this federal exemption can be used for houses, condominiums, co-op units, mobile homes, water vehicles, or any other type of home. Unlike Michigan’s exemption, under the federal exemption, married couples are able to double this exemption. Much like Michigan’s exemption numbers, though, these numbers change frequently, which is why it is often important to contact a knowledgeable bankruptcy attorney before proceeding through the bankruptcy process.

Contact an Experienced Bankruptcy Attorney

The bankruptcy process is particularly complex and if you are not familiar with bankruptcy laws in Michigan, it is often in your best interest to obtain the assistance of a skilled bankruptcy attorney. At Resnick Law, we have years of experience in helping individuals navigate the bankruptcy process. Contact our law office today to schedule an initial free consultation.

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Because filing for bankruptcy is often seen as an acknowledgement of financial failure, many people resist initiating the bankruptcy process. In reality, waiting to file bankruptcy often makes it more difficult for a person to recover from the bankruptcy process. The following will review some of the reasons why you should not delay in speaking with an experienced bankruptcy lawyer.

How Waiting to File can Cause Problems

There are some practical reasons why individuals who are interested in bankruptcy should not delay the process. The longer that a person waits to file bankruptcy, the more likely an individual is to encounter one of several obstacles, which include:

• The longer that a person waits, the more likely that a person is to experience a reduction of his or her assets. With a decreased number of assets, it will be more difficult to rebuild one’s credit rating after declaring bankruptcy.
• The debt-to-income ratio is often increased for individuals who wait to file bankruptcy. As a result, by waiting to declare bankruptcy, you will likely end up facing more and larger debts that require discharge.
• Individuals who wait to file bankruptcy are more likely to end up facing debt collection lawsuits. This can creat additional complications associated with rebuilding your credit history.

Because of these numerous complications, individuals who wait to file bankruptcy often experience a more challenging time obtaining a fresh start at rebuilding their credit.

Signs You Should File for Bankruptcy

One of the most challenging parts about beginning the bankruptcy process is that it can be difficult to determine if you an appropriate candidate for bankruptcy. Some of the signs that you should consider filing for bankruptcy include:

• You have debts that are greater than 40% of your income. A debt to income ratio of this degree suggests that you will likely experience financial distress and that your debts are too high to pay off without help.
• Credit is being used to pay to pay off other debts. This financial pattern suggests that a person is falling further into debt. It can be particularly difficult to recover from such financial difficulty.
• You have debts that can be erased by declaring bankruptcy. This includes debts related to unsecured credit cards, medical bills, and personal loans. Some other types of debts, including student loans, can only be discharged through bankruptcy in a limited number of situations.
• You have been forced to give up essentials to pay off debts. This might include forgoing medical care or food.

Speak with an Experienced Bankruptcy Lawyer

Once you decide that bankruptcy is an appropriate step, you should then determine whether to file Chapter 7 or Chapter 13 bankruptcy. You should not hesitate to contact an experienced bankruptcy lawyer at Resnick Law if you are considering pursuing the bankruptcy process. We have helped many people regain their financial footing, and we know what it takes to make sure that you have the opportunity to rebuild your credit.

(image courtesy of Melinda Gimpel)

While most couples do file bankruptcy together, there are some circumstances in which married couples might decide to file bankruptcy separately. In rare cases, such as newlyweds, for example, one spouse might file bankruptcy alone, which helps to preserve the non-filing spouse’s credit standing. However, certain aspects of the marriage will still be examined, so you should consult with an experienced

The “Means Test”

Even if only one spouse is filing bankruptcy, the entire income of the household must be calculated for the “means test” that determines whether or not you are eligible for Chapter 13 or if you should file for Chapter 7. While bankruptcy laws require that the household’s total income be calculated, the codes also allow for household members who are not filing to include their expenses for deductions, as well. The means test for bankruptcy is quite complicated.

Do You Have to be Legally Married?

The short answer is, yes. You cannot be in a common law marriage, and even if you have been living together and referring to each other as wife and husband for 20 years, you can only file a joint bankruptcy if you are legally married. Common law marriages are not recognized in Michigan, but even if they were, federal bankruptcy codes require a legal marriage for joint bankruptcy petitions.

Will Filing an Individual Bankruptcy Affect Your Spouse?

There are times when only one of the spouses carries the load of debt. Married individuals have the choice of filing bankruptcy jointly or individually, so if only one spouse has the majority of debt, it would make sense for only that spouse to file bankruptcy. If only one spouse files bankruptcy, only his or her personal information, such as a name and social security number, will show up on the petition, so the credit report of the non-filing spouse will not contain any mention of the bankruptcy. This is typically rare, however, in married couples.

Are There Benefits for Married Couples Filing Bankruptcy?

It costs a little over $300 for an individual to file either Chapter 7 or Chapter 13 bankruptcy. Married couples only need to pay this filing fee once, which essentially means that both people get to file bankruptcy for all of their debts for one fee, rather than two. This is typically true for legal fees, as well – married couples’ debts are consolidated into one case.

Are You Considering Filing Bankruptcy?

If you live in Michigan, are married, and you are considering filing Chapter 13 or Chapter 7 bankruptcy, you should contact a Michigan bankruptcy attorney who focuses on helping married couples and individuals deal with their consumer debts. Contact an experienced attorney at Resnick Law P.C.for a free phone consultation at (248) 642-5400. If you are in the Detroit area, you can call (313) 423-8320, and if you are in the Bloomfield Hills, call (248) 642-5400. We will evaluate your specific case meticulously and help you make informed decisions based on your unique financial circumstances.    

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A person who is drowning in debt may make the mistake of ignoring his or her creditors. A common misconception is that ignoring a debt will make it go away or help it become more manageable. In reality, pretending a debt does not exist only makes creditors more aggressive, and when it becomes clear that you will not pay them voluntarily, they will begin exploring other methods to extract money from you. One way a creditor may obtain money owed is by getting a

What is a Garnishment?

Garnishment refers to garnishing, or collecting money on behalf of a plaintiff, from the funds of another person. Typically the plaintiff is someone who is owed money by a defendant, and garnishments can be used by major companies, law firms, or even average individuals. The garnishment allows your creditors to obtain the money you owe them through means outside of the collection actions with which most are familiar.

The Garnishment Process and How it Affects You

Once you have fallen significantly behind in payments for a debt, your creditor may take you to court to try and collect their funds.  This method is often used when the debt is unsecured since they have no property such as a vehicle or home to repossess. If the court agrees that the defendant (debtor) needs to pay the debt, then the creditor receives a judgement.  

After the judgement is received a creditor may request a post-judgment garnishment order. The process and secondary order affect you by allowing your creditor to send the garnishment order directly to any person who holds your money or property. As soon as your creditor has a garnishment order, they can contact your employer or bank to have money withheld from your paycheck or withdrawn from your bank accounts.

How to Stop a Garnishment

Finding out that you have a garnishment can be financially devastating, but it is not the end of the world. It is possible to object to the garnishment in writing and make outside arrangements to pay the debt, allowing the garnishment order to be canceled. However, this method is time-sensitive and may not always work. If a creditor has failed to get you to honor other arrangements or the court itself does not agree with the plan, then the garnishment order may remain active. Alternatively, filing for bankruptcy stops all collection activities including garnishments under the automatic stay giving you an opportunity to find a way to recover financially.  

Contact an Attorney

If you have been taken to court or fear that you may have your bank account or income source garnished, then it is important to reach out to an attorney as soon as possible. Timely advice may help you avoid being forced to file for bankruptcy and could save you significant financial hardship. The garnishment attorneys at Resnick Law have experience helping people in situations just like yours. We work with you to make sure that the best choices are made and are available to answer any questions that you may have. Call us today at 248-642-5400 to schedule a free consultation so that we can begin providing you with the legal assistance that you need.

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Chapter 13 bankruptcy allows a debtor to benefit from protection against aggressive forms of debt collection such as foreclosure, repossession, and wage garnishment, while requiring him or her to repay a portion of his or her debt. The repayment amount is based on the financial assets available to the debtor along with the amount of secured and unsecured debts owed. When filing for bankruptcy relief, a monthly repayment amount is proposed and the bankruptcy trustee will decide whether that amount is appropriate or not. However, it is possible that over the course of the three to five-year repayment period, the amount will change. Knowing why a

A Secured Debt is Paid Off

The chapter 13 repayment amount is largely influenced by the debts you have and the income you receive. Major changes to either factor could cause your payment to increase. If you own a home or a vehicle, paying it off means that you have more disposable income each month.  At that point, the bankruptcy court may decide to increase your monthly payment obligation to complete your plan faster or pay off other creditors in your plan.

Additional Income is Received

Changing jobs is one of the most common reasons for a bankruptcy plan payment increase.  Moving on to a higher-paying career or position usually means that the debtor’s income increases. Along with raises or promotions to higher paying jobs, the court may also view consistent overtime as a source of additional income. Any income increase that appears to be reccurring or consistent could lead to an increase in bankruptcy payments.

Support Payments End

Monthly support payments such as alimony and child support are taken into consideration when your debt-to-income ratio is determined. Depending on the age of your children or the time-frame outlined in your divorce decree, your period of making payments could end before your bankruptcy is discharged. When your monthly support obligations end, your trustee will determine a new repayment amount based on the increase of disposable income you now have.

Missed Payments

Falling behind on your monthly chapter 13 payment could extend the life of your repayment term. Usually when this occurs, your trustee will file a motion to dismiss your case or have it converted to chapter 7. Instead of losing your bankruptcy protection or being forced to convert to a chapter that does not allow you to retain certain property, your attorney may be able to have your case reinstated by bringing the plan current. Either a lump sum to catch up on past due payments is required or your monthly payment is recalculated to include the past due amount.

Contact a Bankruptcy Attorney

If you are considering filing chapter 13 bankruptcy or having issues with an existing case, do not hesitate to reach out to a qualified bankruptcy attorney. The legal team at Resnick Law is here to answer your questions and provide you with the help you deserve. The decision to file bankruptcy is not one to make lightly, and we are dedicated to providing you with the high quality legal representation you need. Contact either of our two conveniently located offices today to schedule an initial consultation.

(image courtesy of Oliwier Gesla)

If a debt goes unpaid for a long period of time, it can be sent to collections. This usually means that the debt owed is written off by the original creditor and sold to a collection agency. At the time the original creditor sells the debt, the debtor’s credit is negatively affected because the unpaid debt has already been reported to the credit bureaus. The collection agency buys the debt at a fraction of the original debt owed, and then tries to collect the debt using various methods.

Once a person’s unpaid debt is reported to the credit bureaus as unpaid, the person is unlikely to be approved for new lines of credit or loans. In some situations, having debts in collections can also affect a person’s ability to get a job or rent an apartment. An unpaid debt can also keep increasing through the addition of interest charges.

In addition to the negative impact on a person’s credit, when a debt is sent to collections, the person may begin to be harassed by debt collectors trying to collect on the debt they purchased. The Fair Debt Collection Practices Act protects consumers from unfair and abusive collections practices. In addition, the law provides a way for the consumer to sue the debt collector if the debt collector has harassed the consumer in attempting to collect on the debt.

If a debt is sent to collections, the consumer can pay the underlying debt and any applicable interest charges in order to start rehabilitating his or her credit score. However, there may be instances in which the debt itself is not properly attributed to the consumer. If there is a mistake and the consumer does not owe the debt, the consumer may challenge the debt in court.

A person whose debt is in collections can also arrange to make payments to a debt collector in installments. This can be a good way for the person to clear an old debt without it being too much of a financial burden. However, arranging to make payments does not guarantee that a debt will not be sold again to another collection agency. If the debt is sold, the debtor may find him or herself in new negotiations for the repayment terms, unless the original repayment terms were arranged with the help of an experienced attorney who ensured some rights for the debtor.

Sometimes, a consumer who owes a lot in unpaid bills may decide that the best way to handle the situation is to file for bankruptcy. If the debts qualify for discharge in bankruptcy, then filing for bankruptcy can help the filer reset the button and begin to rebuild his or her credit. However, bankruptcy also negatively affects a person’s credit, and before a person files for bankruptcy, he or she should consider whether filing will leave him or her at more of a disadvantage than allowing the debt to go into collections.

Contact an Experienced Attorney

If you are experiencing financial troubles and  bankruptcy seems like the way out, you need to speak with an experienced attorney. Our attorneys can discuss the legal issues that will arise with bankruptcy and how they will affect you, in addition to debt settlement and other ways you can manage your debt. Call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan to schedule a consultation.

A person may decide to file for bankruptcy for various reasons, such as overwhelming debt, as a way to restructure a business, or because of unemployment. Federal bankruptcy laws provide different options for debt discharge depending on the goal of the person filing. In return, the law requires the person to provide accurate information on all aspects of the filing, especially assets and income, or be subject to criminal charges for bankruptcy fraud.

Bankruptcy fraud occurs in several different ways. A person may commit bankruptcy fraud by: intentionally lying on the forms required as part of the bankruptcy filing; hiding assets to avoid losing them in the bankruptcy; attempting to bribe the trustee appointed to handle the bankruptcy; or by filing multiple bankruptcy petitions in various jurisdictions using false information. Of these, the hiding of assets is the most common form of bankruptcy fraud.

Since bankruptcy law is federal, a person who commits bankruptcy fraud is charged under federal law. A person who commits more than one form of bankruptcy fraud can also be charged multiple times and faces a prison sentence on each charge of up to five years in prison. Additionally, the person may be required to pay fines and fees associated with the prosecution.

There are also potential civil repercussions for committing bankruptcy fraud. The court may refuse to grant a discharge of the debt that caused the person to file for bankruptcy in the first place. When this happens, the creditors can sue to recover the money owed or move for foreclosure and repossession of assets. In addition, the appointed bankruptcy trustee can ask for civil fines to be levied. These kinds of actions can have longer term impact; for example, if a creditor gets a judgement against a person, the creditor can seek to have the person’s wages garnished in order to collect on the judgment. This would make it difficult to get a fresh start, especially after serving a prison term for a fraud conviction.

Some people who may fail to list assets because they are afraid to lose them in the bankruptcy should not take the risk of being charged with a federal offense. A person who is filing for personal bankruptcy should always remember that there are some types of property that he or she will be allowed to keep even after that bankruptcy. There are also ways to affirm debt obligations for a mortgage or a car and keep making payments after other debts have been discharged. Before filing any petitions or forms to initiate a bankruptcy proceeding, it is important to speak with a bankruptcy attorney.

Contact Us for More Information

If you are experiencing financial troubles and considering filing for bankruptcy, you need to speak with an experienced bankruptcy attorney. Our experienced attorneys can discuss the legal issues that will arise in a bankruptcy, and how they will affect you. We can also help you consider other options that may help you avoid bankruptcy. For more information, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan.

(image courtesy of Allef Vinicius)

When a business is in financial trouble and owes a lot of money to its creditors, bankruptcy may be one option to restructure the business and get ahead of the debt. However, before the business can file for bankruptcy, creditors may initiate a lawsuit to put the business into receivership in order to get their debts paid. Receivership is different from bankruptcy in its implementation and operation.

Creditors who have filed lawsuits against the business to collect business debts can use a variety of methods to collect on the judgement. One such way is to petition a court to appoint a receiver who is empowered to take various steps, including selling off business assets, in order to pay off the business debts. The creditors can propose the person to serve as a receiver, and the business has an opportunity to argue against the appointment.

There are certain people who cannot serve as receivers, mostly people who have worked in certain capacities at the business, and those who have interests that are adverse to the business such as the creditors and their representatives. There are exceptions to the prohibition on certain people serving as receivers if a court makes a determination that the person’s appointment is in the best interest of the business and that the issue that would otherwise disqualify the person as a receiver would not be materially adverse to the business.

A company can be placed into receivership for reasons other than to pay a judgement creditor. Sometimes, a business may seek receivership in order to turn the business around from the brink of financial disaster. In this case, the receivership can help the business make management changes and sell off property for the benefit of the business. A receiver in some cases can help a business avoid bankruptcy.

However, if a business owner would rather file for bankruptcy than have a receiver appointed to control the business and manage its assets, he or she may have the option to do so depending on when this is done. In some cases, in appointing a receiver, the court may empower the receiver with the authority to file for bankruptcy on behalf of the business. If this is what the business owner wants anyway, then he or she may not fight the receiver’s action in filing for bankruptcy. If the business owner wants to avoid receivership altogether, he or she has to file for bankruptcy on behalf of the business before a receivership action is begun.

Business owners should remember that filing for bankruptcy will not give them unfettered control over their businesses. Once a business files for bankruptcy, the court appoints a bankruptcy trustee who does many of the things an owner would have done, including selling off assets in order to pay creditors.

Contact a Business Attorney

If your business is in trouble and you are at risk of being sued by creditors on debts owed, you need to contact an experienced business attorney to help you determine your best way forward. For more information on bankruptcy and receivership, contact an experienced business attorney at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan, to schedule a consultation. Our attorneys can assist you as you make your decision to seek a receivership or fight the appointment of a receiver.

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Although it is sometimes difficult to do so, it is possible for a person who has been through foreclosure to buy a house after the foreclosure is behind him or her. A person who wants to buy a home after foreclosure should consider the reasons that led to the foreclosure before, whether it was from misconduct by the mortgage lender or a financial problem. Reviewing these reasons may help avoid foreclosure in the future.

Once a person goes through foreclosure, it is noted on his or her credit report. If there were missed payments before foreclosure, these will be noted on the credit report, as well. These notations may affect a person’s credit score and ability to get approved for another mortgage loan. A person buying a home after foreclosure is likely to be offered higher interest rates for loans than a person who has not, but this also depends on a person’s credit score.

Typically, homeowners also have to wait a certain number of years before applying for a loan to buy a home. If applying for a federal housing administration (FHA) loan, a three-year wait from the time the foreclosure is completed is required. Some lenders can overlook this waiting period, but this is likely to come with steep interest rates on the loan and other unfavorable terms. Military servicemen and others whose foreclosed loans were government-backed loans may have to satisfy other requirements before they are approved for other government-backed loans.

It is critical for a person seeking a mortgage loan to look into various lenders and research the terms they offer, especially to former homeowners who lost their homes to foreclosure. Shopping around for the best terms can help save money in the long run. In addition to considering the financial terms offered by a prospective lender, the person seeking the loan should investigate the loan modification options available to borrowers.

The lender may need to be convinced that a person who has previously gone through foreclosure will not default on payments as before. This can be done in various ways, including remaining current on all other bills. Saving a down payment to purchase the home will also help convince the lender that you are likely to keep up with the payments.

A person who lost a home through foreclosure should ensure that he or she does not lie about the foreclosure or try to hide it on loan application documents. A lender who does its due diligence in checking the financial status of the prospective borrower will almost always catch misrepresentation by a borrower, and it will mean that the lender does not approve the loan.

Contact an Experienced Attorney

If you are going through a financial hardship and are facing foreclosure, you need to contact an experienced attorney as soon as possible. For more information and to find out if you have a valid defense to foreclosure on your home, call us at Resnick Law, P.C., in Bloomfield Hills and Detroit, Michigan. Our experienced attorneys can guide you through possible defenses and different alternatives to avoid foreclosure. Additionally, we can advise you if filing for and bankruptcy is in your best interest.

(image courtesy of Valentine Locatelli)