They say the two things a person can’t get out of are death and paying taxes. And although Fontrice Lenee Charles sure gave it her best shot, it turns out the rules apply to her as well. The 39-year-old Kalamazoo woman was recently indicted on 27 counts of felony tax fraud, according to the U.S. Department of Justice, and the fallout is looking huge. (more…)
You wouldn’t hand your credit card over to a stranger would you? Of course not, but wait….. As it turns out, you might have, and you just didn’t know about it. Skimming devices, which are attached by criminals to ATMs and gas pumps, “skim” your credit card information and save it so that a stranger can go shopping with your line of credit.
Detroit was the largest city in the US to ever file for bankruptcy. That makes what happened this past week a rather momentous occasion in Michigan’s financial history. After a remarkably quick and efficient litigation process, which bankruptcy experts fully believed would take months or maybe even years, the city of Detroit is finally on it’s way to a financially viable future. (more…)
In the wake of the recent mass hackings of Target, Home Depot and a host of financial institutions like JPMorgan Chase, people are paying very serious attention to their credit card information, and businesses are also watching their security measures even more closely. But is it enough? The FBI doesn’t think so. (more…)
In the first installment we talked about what bankruptcy is and what the pros and cons are of filing. In this section we are going to cover a few basics that pertain to how bankruptcy affects what you own.
A chapter 7 bankruptcy, which is the most commonly used form of bankruptcy, requires that almost all of your property and assets are now owned by the bankruptcy estate. A trustee will be appointed by the court to sell off your assets and pay your creditors. But not everything you own will be lost.
So, what exactly are your exemptions in a chapter 7 bankruptcy? According to Michigan bankruptcy law, it is property that is not listed as being exempt, or protected, from creditors. The law provides a list of exemptions, but it will help to remember that how much property you get to keep will depend on the value of what you own. Thanks to exemptions, most people filing for chapter 7 bankruptcy will get to keep most of what they own.
An important note – Michigan bankruptcy law allows a married couple to jointly file bankruptcy, but in some cases, each individual may claim a full set of exemptions.
Additionally, Michigan allows you to choose between federal exemptions and state exemptions when you are filing. Your attorney can help you decide whether federal or state exemptions are best for your situation.
Your home: you may keep real property, including a condo, up to the value of $37,775. If you are elderly or disabled the value goes up to $56,650. You may not keep more than one property. Spouses may not double.
Your personal property: you may keep your household items, your furniture, your appliances, utensils and books up to a total value of $3,775, or for a value of $600 for each category. You may also keep your food stores and fuel to last up to six months. Additionally, any family pictures, professionally prescribed health aids, and a car whose value is no more than $3,475 are still yours to keep. You may also keep your pets up to $650 in value, any livestock and animal feed valued up to $2,525, your computer and accessories up to $650, and any burial plots and cemetery plots you may own.
Your wages: you may keep 60% of your earned but unpaid wages if you are the head of the household. If you are not the head of the household, you may keep 40% of your earnings. There is a minimum of $15 per week plus $2 per week for each of your dependents if you are the head of your household, and $10 per week for others.
Your pensions: you may keep your tax exempt retirement accounts (for example, your 401k, profit sharing plans or simple IRA account) and any IRAS and Roth IRAs up to $1,245,475.
Your benefits: you may keep any money you receive as veteran’s benefits for serving in Vietnam, Korea or WWII. You may also keep any social welfare, unemployment benefits or worker’s compensation that you receive.
The tools of your trade: you may keep any tools, materials, stock, equipment or other items that you need in order to do your job, up to the total value of $2,525.
Your insurance: you may keep your life insurance policy, any trust funds or life insurance policies that are sponsored by your employer
Miscellaneous: you may keep any property owned by your business partnership.
Whatever property that remains after your exemptions are accounted for, or any assets that exceed the value assigned to that exemption, will be sold by the trustee and used to pay of your debts.
Examples of items that would not be exempt from liquidation would be:
Filing for bankruptcy is a very big decision, that will impact your life for many years to come.
If you are considering filing for bankruptcy, contact the attorneys of Kronzek and Cronkright, PLLC. We will be able to answer all of your questions and concerns, and help you make the right decisions for your financial future.
Just the word “bankruptcy” can conjure frightening images and notions of a poverty-stricken life for many. But that is most likely the result of most people not fully understanding what it is and what it entails. Hopefully this first installment of “bankruptcy basics” will answer some of your most asked questions and help to dispel some of the upsetting associations.
What is bankruptcy?
Bankruptcy is a legal process, provided by federal law, that allows an individual who is in dire financial straits to get a fresh start. Essentially, it is a court order that you apply for which allows the court to take charge of your assets in order to pay off your debts. Filing for bankruptcy will immediately stop all of your creditors from trying to collect on debts that you owe, until your debts are sorted out according to the law.
Are there different types of bankruptcy?
Yes, there are four different kinds of bankruptcy.
Chapter 7, which is also known as straight bankruptcy or liquidation, means that a debtor must give up any nonexempt property that they own, so that the property can be sold to pay off creditors.
Chapter 11, which is known as reorganization, is a form of bankruptcy that is used by businesses and the occasional individual debtor whose has very large debts.
Chapter 12 is a type of bankruptcy reserved for “family farmers” and “family fisherman” to restructure their finances and avoid liquidation or foreclosure.
Chapter 13, which is called debt adjustment, allows a debtor to keep their property and file a plan to pay their debts over time from a current income.
What are the advantages of bankruptcy?
What are the disadvantages of bankruptcy?
Filing for bankruptcy is a very big decision, as it will impact you for many years to come. For some people, it is the right answer and will allow them to regain control of their lives. For others, there are alternatives that would be far better for long-term financial health.
If you are considering filing for bankruptcy, contact an experienced and hard-working attorney. We will be able to answer all of your questions and help you make the right decisions for your financial future.
Want to know even more? Click HERE for Part Two
The last few years have been very hard for many Michigan residents. The struggling economy has left many without jobs or viable income, and for lots of families that means mounting credit card debt. And where there is debt, there will always be debt collectors.
Talking to a debt collector is, without fail, one of the single most stressful phone calls that you could possibly have. Owing money is no fun, and owing lots of money is worse. But while the law cannot exonerate you of debt, it can protect your rights while you interact with debt collectors.
The Fair Debt Collection Practices Act, which was put into place by the Federal Trade Commission, is a consumer protection amendment that forbids debt collectors from using any abusive, unfair, or deceptive practices to collect funds from you towards the payment of your debts.
According to the Fair Debt Collection Practices Act, debt collectors must abide by a set of rules that respect the rights of the debtor as an individual. They are as follows:
When talking to a debt collector, always be honest, but don’t give any more information than you have to. You may not be able to pay what you owe at this point in time, but lying won’t help your chances of future financial reconciliation.
While filing for bankruptcy will certainly reduce the amount of calls you receive, if relief from the constant phone calls is all you are looking for, there is a simpler way. The Fair Debt Collection Practices Act states that if you contact a debt collector in writing requesting that they stop calling you, by law they are required to do so.
The only exception would be that the debt collection agency is allowed to contact you to let you know that their efforts to collect from you have ended, or that they intend to sue you in an effort to get money towards your debt.
If you are considering filing for bankruptcy, contact an experienced and understanding bankruptcy lawyer today. We can help you.
In April, the Michigan unemployment rate was 7.3% and the U.S. unemployment rate was 5.9%. These rates apply to the civilian labor force and are not seasonally adjusted. Although I am not a statistician, nor do I profess to have this expertise, I noticed that Michigan’s unemployment rate exceeds the U.S. and is only slightly lower than last year. This peaked my curiosity so I went looking to see how Michigan compared to other states. Currently, according to the U.S. Department of Labor’s Bureau of Labor Statistics, there are only seven states worse off than Michigan in terms of unemployment numbers. Of course, you have to keep in mind that these statistics may not be comparing apples to apples because the numbers may be compiled from differing sources and interpreted using different analyses. Regardless of the statistical population, standard deviation, or analysis, it certainly looks like Michigan continues to be one of the states with high unemployment rates.
But what about people in Michigan who have a job but are unable to find full-time work? That is, what are the statistics saying about involuntary part-time workers? The U.S. Bureau of Labor statistics reports in its Alternative measures of labor underutilization by state, second quarter of 2013 through first quarter of 2014 averages that 15.2% of Michigan residents reported working part-time (less than 35 hours per week); they want to work full time; are available to work full time, but their hours were cut back or they were unable to find a full-time jobs. Although this survey is based on relatively small sample sizes at the state level and does not include seasonal jobs, it appears to be consistent with my own observations of the people I meet with regarding debt relief options.
The people who retain Kronzek & Cronkright, PLLC for bankruptcy are often employed, but not at the same wage level as they were just a few years ago. This means they haven’t been able to pay off their debts like they could have before, because now they make less money. In fact, with high credit card interest rates, late fees and penalty fees, the original debt amount often exceeds that amount originally borrowed. My clients often report their wages have decreased over the past couple of years, but their debt continues to increase. In these circumstances, bankruptcy is often the only viable option for some financial situations.
According to the U.S. Bankruptcy Courts own statistics, bankruptcy filings are down by about 13.5% in Michigan. To me, this decline in bankruptcy petition filings tracks with the decline in Michigan’s unemployment and involuntary part-time employment rates. Logically, this makes sense because when the economy is bad, unemployment increases and so does the filing of bankruptcy petitions in our U.S. Bankruptcy Courts. However, it does not factor in the number of people in Michigan who have been surviving their financial crisis day-by-day; keeping their heads above the metaphorical water. After “treading the debt-water”, people tell me they feel emotionally and physically devastated, and also hopeless. While economic conditions are not as bad as they were, workers are not in the same earning position they were a couple of years ago.
Bankruptcy is not the best remedy for all financial situations. But for unemployed and involuntary part-time workers, bankruptcy just may be the best remedy to solve a financial crisis and give a fresh start, reorganize your assets and debt, or provide a U.S. Bankruptcy Court protected payment plan to repay unsecured creditors.
Stop treading the debt-water. At Kronzek & Cronkright, PLLC, our experienced attorneys will meet with you to discuss your financial situation and show you the options.
Recently, the United States Supreme Court ruled on the California bankruptcy case of Law v Siegel. This case is important to both debtors and Trustees. It looks at what powers the Bankruptcy Courts have in preventing a debtor’s statutory exemption when there is a fraudulent lien and whether the Court can apply the exemption amount as a “surcharge” to offset a bankruptcy trustee’s costs.
This case begin in 2004, when Mr. Siegel, filed his Chapter 7 bankruptcy petition, applying for the State of California’s homestead exemption to protect the equity in his home. According to the petition, the deed to his home was encumbered by two voluntary liens: a note and deed in trust held by Washington Mutual Bank, and a note and deed in trust recorded by Lin’s Mortgage & Associates. Mr. Siegel represented that there was no equity in the house and, even if there was, he chose to apply the California homestead exemption amount to protect the equity. Trustee Law, who was assigned to this case, did not object to the application of the California homestead exemption. However, he did file an adversarial proceeding alleging that the “Lin’s Mortgage & Associates” lien was fraudulent and therefore the court should order the sale of the house.
In response to the adversarial proceeding, two persons named Lili Lin answered. One respondent, a California resident and former acquaintance of Mr. Law, denied lending money to Mr. Siegel and denied a secured interest in the property. The second Lili Lin respondent, who purportedly resided in China, reported a secured interest in this property. The bankruptcy court held that the Lili Lin loan was a fake loan and lien created by Mr. Siegel in order to preserve equity in the house beyond the amount provided by the homestead exemption. He was, in fact, trying to prevent the Trustee’s sale of his house. Consequently, the bankruptcy court entered an order authorizing Trustee Law to sell the property. Further, the court ordered that due to the behavior and misrepresentations made by Siegel, the amount of the homestead exemption would be surcharged and applied to the Bankruptcy’s administrative costs. In other words, the court allowed the Trustee to take the homestead exemption amount and apply it to Trustee Law’s expenses incurred during the several years of litigation defending against Mr. Siegel’s (and Lili Lin’s) attempts to avoid the sale of the property.
In this case the U.S. Supreme Court faced the questions of when there are fake secured creditors, are the debtor’s actions so egregious that the bankruptcy court can (1) reject a debtor’s statutory homestead exemption, which protects a debtor’s equity in a house; and if so, (2) can the bankruptcy court then force the sale of the home, and consequently, (3) can the court deny giving the debtor the cash amount of the statutorily protected equity; and if so, (4) can the bankruptcy court instead permit the trustee to keep the money and apply it to the Trustee’s legal fees and costs incurred.
The Court held that just because a debtor’s conduct is conniving, it does not mean that, absent a select few statutorily provided situations found in 11 USC 522, the bankruptcy court has the ability to deny the application of a debtor’s statutory exemption and apply the exemption as a surcharge to a trustee’s administrative costs. The Court said that Congress specifically listed out the exemptions to the bankruptcy estate in 11 USC 522. The Court held Congress also provided statutory remedies available for dealing with a debtor’s misconduct, such as: denying a discharge, sanctions for bad faith litigation, prosecution, and enforcement of monetary judgments. However, the Court also held that the bankruptcy court may not deny a debtor’s application of a statutory exemption as a way to deal with a debtor’s misconduct.
In summary, the U.S. Supreme Court ruled that the bankruptcy courts do not have the inherent ability to deny exemptions, which are provided to the debtor by statute, and which are chosen by the debtor unless such denial is already in the U.S. Bankruptcy Code.
Bankruptcy is often the last choice people make to fix their financial crisis, but it can be the best choice for many.
However, when bankruptcy is mentioned, many people recoil as if bitten by a snake and say “I am not that kind of person”.
BUT, think about it: what kind of person is that?
Is it someone who lost a job or was laid off, but still has to pay the bills and feed their family?
Is it someone who is divorced and cannot pay the bills that two people’s combined income used to pay?
Or maybe, is it someone who tried the American Dream and opened a business but then later the economy tanked?
Do people who have experienced these hardships and tragedy deserve to be criticized and assumed to be bad people? The answer is NO.
At Kronzek & Cronkright, our experienced attorneys will not criticize you. We will not judge your decisions. We only look at your past to help you make a better financial future. If that involves filing for Bankruptcy, we will explain what this will do for you and how it will impact you.
A Chapter 7 bankruptcy, which is a also called a “fresh start” bankruptcy and is available for people whose income and debts are below a threshold established for the number of persons in your family in your state;
In the event your family income is above the median income for a family of your size in your State, then you may be eligible to file for bankruptcy relief under Chapter 13 of the U.S. Bankruptcy Code. This is also known the “repayment plan” bankruptcy and is where you pay back a percentage of your debt based on your disposable income and the “best interest of creditors test” over the course of 3 to 5 years. All while under the protection of the U.S. Bankruptcy Court.
There is also a Chapter 11 Bankruptcy, which is also known as a “reorganization” bankruptcy. This is for people and businesses whose income and debt exceed a limit identified in the U.S. Bankruptcy Code, and are in a position to become profitable if their assets and debt were restructured. In this bankruptcy, the debtor proposes a profitability plan where debts may be repaid and assets restructured.
The final and fourth type of bankruptcy generally available to individuals is a different type of Chapter 11 bankruptcy for individuals whose source of income is derived from family fishing or farming. It is similar to Chapter 13 bankruptcy.
The experienced attorneys of Kronzek & Cronkright can help you decide whether bankruptcy is best for your financial situation. They will do so with respect and without judgment.
