Due to the corona virus people are having difficulty getting to an attorneys office to file Chapter 7 and Chapter 13 bankruptcy while creditors are still calling, garnishing, repossessing vehicles and engaging in other collections efforts.

I am now helping people by phone, email and Internet communication. I have the ability to send your petition by email for you to sign and return and get your case filed without coming into my office. I am at my office as well so whether you are comfortable coming to my office or communicating by email and phone I can file Chapter 7 and Chapter 13 bankruptcy cases now, often same day, with just a phone call.

Hearings with the Trustee are now held by phone also. So there are no court appearances required.

You just call into an 800 number from your home and the hearing is held over the phone. I will be with you every step of the way as usual but now it is very easy to file Chapter 7 and Chapter 13 Bankruptcy and stop creditors without having to come to an office or appear at court hearings.

 

If you receive inherited money or property after filing bankruptcy it can impact your case. Timing is the issue.  Inherited money or property becomes property of your bankruptcy estate if you receive it within 180 days of filing. It does not matter whether you have received it within the 180 days. Only that you become entitled to the inheritance within 180 days.

The consequences in Chapter 7 and Chapter 13 bankruptcy depend on whether the amount you are entitled to receive is exempt.

 

In a Chapter 7, the trustee has the ability to take the proceeds to the extend that they are not exempt, and distribute to creditors. If you have or expect that you may receive an inheritance you may want to file Chapter 13 bankruptcy so you do not lose the proceeds to a Chapter 7 trustee to distribute to  your creditors.

 

In a Chapter 13 bankruptcy the amount that is non-exempt may impact the amount you pay back your creditors but you can often deduct and retain amounts that exceed your exemption amount, and most importantly, the funds are not just taken by a trustee. While a Chapter 7 case once filed becomes “involuntary”, a Chapter 13 case is always voluntary. You  remain in control of your assets and you can decide if you want to continue the case  or not if you receive an inheritance after filing.

Procedure: :  If you real property within 180 days of filing you must amend Schedule A and exempt the proceeds to the extend you are able to do so in Schedule C.

If you inherit money or personal property you must amend Schedule B and exempt the property in Schedule C.

 

• If you inherit real property, such as land or a house, you must amend Schedule A. If you are claiming the property as exempt, you must also amend Schedule C.
• If you inherit money or personal property, you must amend Schedule B. If you are claiming the property as exempt, you must also amend Schedule C.

*if your spouse receives and inheritance after you filed for bankruptcy and they did not file then the proceeds are not part of your bankruptcy estate or reachable by a trustee.

When I run a credit report for my clients my service calculates a pre-filing credit score and 12 month post-filing score. It is not unusual to see an increase of 100 to 150 points or more in just 12 months! Read more »

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Debt Settlement vs. Filing Bankruptcy

 

Debt settlement will work but it usually something you can do for yourself as opposed to paying someone else. The companies that do this for you tell you first thing is to stop paying your creditors and/or credit cards and make installment payments to them… once your CC accounts are in default, the collection entities that take over the accounts will settle for 40 to 50% on the dollar.  The debt settlement company then uses the money you are paying them to settle the accounts one at a time as funds you pay into them build up.

 

The problem with this method is that no creditor is required to cooperate. While you are paying the credit settlement company,  the creditors can still sue, collect, garnish etc…. You get one paid off  off and another creditor starts garnishing you and the whole thing falls apart. If your total debt is not that much and you have the ability to do it, this can  save your having a BK on your credit report for 10 years.

 

If you want to go this route you can really do it yourself. Go to each creditor/account and offer the 40% lump sum to start. Pay one then go to the next.  If someone sues you and gets a judgment you can stop them from garnishing you by going to your local district court (that is where they have to file a case against you) and get a “Motion to Make Installment Payments”. Clerks  at the district court are usually very helpful with filing these and it does two things: 1 It forces them to accept a reasonable monthly payment while stopping them from garnishing you; and, it makes them more amenable to taking the 40% lump sum payment.

 

Most people are not aware that the Debt Settlement Agency is holding their money to pay one creditor at a time and get a rude awakening when another of  the creditors get a judgement and starts garnishing. They  then very often end up having to file bankruptcy anyway,  and the money they have been paying in to the debt settlement company is gone.

 

The real issue in deciding what route to take is the amount of debt you have and the resources you have to pay it back.  If you can pay roughly 40 to 50% of your debt over the course of say,  15 to 24 Months?     You may want to start with some smaller accounts and offer the lump sum payment.  Then go to the next one,  and knock them off one by one.  Try and make a condition of the lump sum payment that they take all negative info off your credit report (probably not likely but may as well try). Tell them you consulted a BK attorney and they can take the lump sum or you will just have to  file BK.  Hold off other creditors  (if necessary) by going to your local district court if they come after you and fill out the “monthly  installment payment”  motion.  Judges will usually accept any reasonable monthly offer to stop a creditor from garnishment or other direct collection from you.

 

Or … you can file  bankruptcy, discharge all your debt and get a fresh start without all the hassle.  While it is on your record for 10 years, you have immediate relief and the impact really wears off after a year or so. Immediately your income to debt ratio is much  better, and depending on who much debt your eliminating this may far outweigh  the BK on your credit report.

 

I usually put the over / under at 10,000 for people that contact me. Some people with under 10,000 have no choice and have to file anyway. But the more over 10,000 you are  eliminating by filing bankruptcy the easier the decision to file bankruptcy is to make.

 

Many individuals filing Chapter 7 and Chapter 13 bankruptcy in Detroit Michigan have tax obligations. State and IRS Debt can be discharged in Chapter 7 & Chapter 13  bankruptcy filings if the debt/obligation  meets 5 conditions:

1. More than three years Old.  This is measured 3 years from the date the tax obligation was due.    Taxes are usually due April 15.  So a  2011 tax obligation would be  due to the IRS  on April 15, 2012. That debt/obligation can be discharged after April 15, 2015 (3 years) if the debt meets the other 5 conditions for discharge.
2. The taxes must have been filed for at least 2 years.  A tax return must have been file more than 2 years prior to an attempt to discharge the obligation/debt.
3. There must be no assessments in the past 240 days prior to any attempt to discharge the debt/obligation.  You may have filed your taxes more than 2 years from the bankruptcy filing and the tax year may comply with rule 1, being due more than years prior to the BK filing, but if there have been any assessments by the IRS within 240 days the debt/obligaiton may not be dischargeable due to the assessmenht.
4. The tax return must not have been deemed a fraudulent return by the IRS.
5. There must have been no determination that there was a willful attempt to evade taxes.  Even if all the prior conditions are met, if there was a willful attempt to evade taxes involved in the filings the taxes will not be dischargeable.

 

The five conditions set out above generally can determine whether a tax obligation can be discharged in bankruptcy. For individuals with non-dischargeable tax obligations, a Chapter 13 bankruptcy can stop collection, levies, seizures and garnishments and allow the debtor to pay the non-dischargeable debt over 36 to 60 months (3-5 years) while protecting income and assets.