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Garnishments in Michigan extended from 92 to 182 days

Effective September 25, 2012, the Michigan legislature enacted a new law extending the period of garnishment from 3 to 6 months.  You can read the new law at http://legislature.mi.gov/doc.aspx?mcl-600-4012.   I would expect this law change will result in increased filings by debtors for installment payments and/or Chapter 7 Bankruptcy.  It certainly will make life easier for creditors in uncontested cases.   It will be interesting to see whether Judges will consider the lengthier writs in ruling on installment payment petitions.   Stay tuned.

 

 

 

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Chapter 7 Bankruptcy Can Mean Relief

Being the head coach of a college football program sounds glamorous. It is a rewarding job and one that many high school football coaches lust after. However, the story of a well-respected college football coach with Michigan ties in dire financial straits should remind us all that getting deep into debt can happen to anyone.

WILX News 10 in Lansing reports that “Former Michigan State football coach John L. Smith, now in the same post at Arkansas, formally filed a chapter 7 bankruptcy petition yesterday. He claims he owes $25.7 million with assets he is trying to protect of $1.2 million. Smith told Arkansas officials before taking over for the fired Bobby Petrino last spring that he was involved in real estate deals in Louisville which went sour when the economy turned bad five years ago.”

According to Yahoo! News, John L. Smith’s largest debt listed is $20 million owed to a business in Louisville, Ky., called Terra Springs LLC. Smith has said he made land investments when he was coaching Louisville from 1998-2002 and that he and other investors lost money when the real estate market tanked.

This news is very sad and will no doubt spark many conversations about debt relief and Chapter 7 personal bankruptcy settlement because of Coach Smith being in the spotlight. It is a great example, however, of how filing for Chapter 7 with the right attorney is critical to get back on the right financial path. As a trusted attorney with decades of experience in bankruptcy filings and debt settlement, I am available to help those in need. You might not be a well known Division 1 college football coach, but that doesn’t matter. I’m here to protect your rights, get the best settlement possible and get you back to living your life happily. Please call me today.

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Paying Off Debts the Right Way

Whenever I counsel my clients on debt settlement, we always discuss which debts to pay off first. Contrary to popular belief, it’s not always wise to pay off the small debts first. In last week’s Detroit Free Press, writer Jill Krasny discussed this strategy very well.

Krasny explains that when it comes to debt solutions, a recent study suggesting consumers should pay the smallest debts first isn’t great advice. Here is her article:

In examining data from a U.S. debt settlement company, researchers from the Kellogg School of Management found that closing a debt account—regardless of its balance—predicts whether consumers will stay out debt for good.

The study challenges thinking we’ve cited before from University of Michigan professor Scott Rick.

“It really seems like makes sense when confronted with multiple debts to eliminate one right away,” Rick said, “but there are more obscure attributes with debt, like interest rates, that make it not the right thing to do in some cases.”

In his study, Winning the Battle but Losing the War: The Psychology of Debt Management, Rick argued that going for the “quick win” of paying off a smaller debt first, even if it has a lower interest rate, won’t work for every consumer.

In fact, it can brainwash people into thinking they’re further along than they are. The real thing to focus on when paying off debt, he said, is a card’s interest rate, which can snowball more debt over time:

“If the smaller debt carries a higher interest rate, it makes sense to follow (Dave) Ramsey’s advice,” he said. “When it’s reversed, when the bigger debt has a higher interest rate, you should stop doing it.”

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Jose Canseco Files Chapter 7 – Oh How the Mighty Have Fallen

Allen Iverson, Cecil Fielder, and the list goes on. Successful professional athletes who made a fortune in their careers and somehow managed to lose it all later in life.

The AP reported that “Former Oakland Athletics slugger Jose Canseco has filed for bankruptcy protection in Nevada. The 1986 American League rookie of the year and 1988 league MVP with the A’s is seeking asset liquidation in Chapter 7 documents filed Tuesday in U.S. Bankruptcy Court in Las Vegas… It lists less than $21,000 in assets and almost $1.7 million in liabilities, including more than $500,000 owed to the Internal Revenue Service.”

In my career as an attorney dealing with debt settlement and bankruptcy filing, I have seen hundreds of sad cases in which successful individuals find themselves financial hardship. Of course, their situation isn’t newsworthy enough for ESPN. They are just regular people who worked hard, but through unforeseen circumstances they lost their money.

It brings me great satisfaction to know that I can help. Throughout my career I have discovered creative solutions to debt problems. Even if you’re not a home run champion, I can help you. Please call me today to get your financial situation back on track.

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The Affordable Care Act and Bankruptcy Filing Explained

DID YOU KNOW? Medical bills are a significant reason people need to file bankruptcy. It could be related to loss of job and medical insurance coverage, being under insured, or having
no coverage at all. The Affordable Care Act will have a positive effect. Here is some pertinent information.

Jim Guest, the CEO of the Consumer’s Union, explains the Affordable Care act very well. He writes,

What’s going on with the new health-care law? What does it really do for you and your family? If you’re confused and want to know the facts, you’re certainly not alone. That’s where Consumers Union comes in. Since its founding 75 years ago, Consumers Union, the publisher of Consumer Reports, has been focused on providing consumers with easy to-understand comparative information so that they can make the best decisions in the marketplace. We know firsthand that the health-care marketplace is one where consumers have deep concerns.

We’ve been especially motivated on the issue by the personal stories we’ve heard and surveys we’ve conducted involving real people with real problems. They want access to safe and affordable health care for themselves and their families. Indeed, six out of 10 Americans we surveyed in April 2009 said they were concerned about going bankrupt because of an illness or accident. And in fact, catastrophic medical bills are still among the main causes of bankruptcy in the U.S.
The new health-care law, the Patient Protection and Affordable Care Act, includes several key consumer benefits that can help alleviate some of these problems. But you need to know about the benefits—and when they become active—to actually take advantage of them.

Because our current health-care system is so complex, making big changes takes time. So the new law is being phased in, starting with its signing on March 23, 2010, and continuing until January 1, 2014, when all the pieces are scheduled
to be in place. We’ve created this consumer guide to help you understand your options after one year of the law’s being in effect—similar to what we did at the six-month mark—and we’ve included resources on the Web where you can get additional reliable information.

For more information, check out this page. Additionally, you can always call me for advice and to help you resolve these issues with bankruptcy filing the right way.

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Tech Company Governor Rick Perry Invested in Goes Bankrupt

A third company that received taxpayer funding through Texas Gov. Rick Perry’s Emerging Technology Fund has filed for Chapter 7 bankruptcy protection, according to a recent report from CBS News.

The latest bankruptcy petition was filed by NanoTailor Inc., which had licensed technology from NASA to build carbon nanotubes to be used in industries as diverse as aeronautics and pharmaceuticals, sources say.

When Gov. Perry decided to extend hundreds of thousands of dollars in taxpayer-funded loans to the company, he reportedly believed that it was making progress, noting that it had only six employees but already had 20 different investors.

But despite the initial high hopes for the tech company, it filed for bankruptcy last month, which gave another black eye to Gov. Perry’s Emerging Technology Fund, which is managed from the governor’s own office.

The fund was created in 2005 and designed to help attract new high-tech companies to Texas. In the last seven years, the fund has given $192 million to 133 companies, so there have been some success stories, but there have also been notable failures.

In 2010, two companies that had received loans from the Emerging Technology Fund filed for bankruptcy. These companies included Thrombovision Inc., which had received a loan of $1.5 million, and StarVision Technologies, which was awarded $750,000.

And prior to their bankruptcy filings, the companies had failed to submit annual financial reports for the last three years, according to a critical state auditor’s report. Supporters of Gov. Perry, however, are quick to note that NanoTailor Inc. received one of the smallest investments issued by the governor’s fund.

And they also note that the company closed its doors after failing to meet the governor’s strict performance expectations. But the failure of NanoTailor Inc. brings the total amount of failed investments issued by the special fund to $2.5 million, which is no small amount, especially in a state where Gov. Perry is facing a tough reelection challenge.

And during his brief run as a presidential candidate, Gov. Perry was highly critical of failed government loans made by President Obama to certain tech companies. So, given the recent failures in Texas, it is likely that this issue will remain hotly debated by members of both political parties.

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Chapter 7 Bankruptcy Debtors Face Eviction From Upside Down Homestead As Investors Circle Above

I recently read an interesting article by Jonathan Alper, an Orlando colleague of mine. Michigan’s housing economy, like Florida’s, is coming back around. There will no doubt be many investors eager to get good deals by buying foreclosed homes and homes involved in bankruptcies.

Please have a look at some of Jonathan’s words of wisdom. If you have questions about how this could affect you, please do not hesitate to contact me.

As the real estate market begins its recovery some real estate investors are showing an interest in acquiring houses involved in bankruptcy. One of my clients filed a joint Chapter 7 bankruptcy and indicated he would surrender his interest in his upside down homestead. They did not claim the homestead exemption on his bankruptcy schedules, and therefore, they qualified for two $4,000 wildcard exemptions. The home mortgage was several months in arrears. The bank was threatening foreclosure at the time they filed bankruptcy.

After the trustee meeting the trustee called and said a group of investors wanted to buy the trustee’s interests in the homestead. The trustee owns the debtor’s homestead interest because the debtors did not claim the homestead exemption in order to get the wildcard. Even though the trustee cannot help the unsecured creditors by selling the upside down house, the trustee does own the debtor’s right to live in the house during the foreclosure process.

The investors can buy the trustee’s interest, themselves defend and delay the foreclosure, evict the debtors, and rent the property to a new tenant. Or, the investors can leave the debtors in their house during the foreclosure and make them pay rent. In any event, the debtors lose their right to live free in their house when they file bankruptcy and waive a homestead exemption.

This is new to the Orlando bankruptcy division, but the Chapter 7 trustee told me that investors in other divisions have been going after this type of investment for some time. The trustee also said that bankruptcy courts are resisting debtor attempts to file amended schedules claiming the homestead exemption after the trustee has received an offer to sell his rights to the debtor’s property.

I suspect that many bankruptcy attorneys will not anticipate this issue, and their bankruptcy clients may find themselves unprepared to rent or surrender their upside down primary residence soon after they file Chapter 7 bankruptcy.

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Should Michigan Raise Its Freeway Speed Limit?

Zane McMillin, writing on M-Live, asked to “Recall the last time you drove down I-96 between Grand Rapids and Lansing, or any freeway between metro areas for that matter. You, a law-abiding citizen, set your cruise control at 70 mph for the drive ahead. As the city faded in your rearview mirror, your fellow motorists started zipping right by at speeds clearly in excess of 70 mph. And it persisted, you noticed, all the way through the ubiquitous, rolling farmlands around you, until you arrived.”

According to one Michigan State Police traffic expert the 70-mph driver is actually the more unsafe driver. “It is a common scenario that Lt. Gary Megge with MSP’s Traffic Services Section said should prompt lawmakers to reexamine Michigan’s freeway speed limits, especially along rural stretches. Legislators, Megge said, should consider amending the Michigan Vehicle Code to bump the maximum past 70 mph for passenger vehicles, and put the limit for commercial trucks on par with that level.”

Read the rest of McMillin’s interesting article on Michigan’s speed limits here. If you do get pulled over for a speed limit violation or any other traffic violations, contact me so I can help you out.

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Bankruptcy Doesn’t Prevent Actions to Collect Assessments

I recently read an interesting question and answer in the Chicago Tribute about bankruptcy filing.

Question: I am on the board of a medium-size homeowners association of 150 units. Collection problems make budgeting a definite challenge. One owner has been in bankruptcy for several years and has not paid monthly assessments in more than three years. The association has placed a lien on his property, but we have been advised that the bankruptcy stops all further action on our part.

Answer: The bankruptcy filing of a unit owner does not prevent the association from taking legal action to collect assessments. The scope of the association’s remedies will depend upon the type of bankruptcy filed by the unit owner, and will require the association to obtain court permission to lift the automatic bankruptcy stay to proceed with its state court collection remedies.

If the unit owner files a Chapter 7 bankruptcy petition requiring the debtor to sell his assets, the association is entitled to collect assessments that accrue after the filing if the debtor either resides in the unit or rents out the condominium.

If the owner files a Chapter 13 petition, the owner must submit a plan to pay a portion of his debts that arose before the filing. The plan will include the secured claim of the association. The debtor must also pay assessments that accrue after the Chapter 13 filing. In a 2011 case titled In Re Spencer, a Michigan federal court held that the debtor was liable for assessments due before and after the Chapter 13 because he continued to own the unit.

If the Chapter 13 debtor fails to meet the payment obligations of his plan or does not pay assessments due after the bankruptcy filing, the board may dismiss the bankruptcy and collect both past due and current assessments.

Q. I am in an 80-unit, 20-year-old condominium. Our board has less than one year of financial records. What records exist show a very small amount of reserves. We have had no capital expenditures for the past 10 years, but did have a huge special assessment two years ago. We also have not had an explanation as to why the board decided not to spend the funds collected as a special assessment, and we have not seen any evidence that the money was added to our reserve account.

Is it legal to have almost no records? Our board refuses to answer any questions about these issues. Where do we go from here?

A. The primary goal of the owners should be to elect a new board of directors.

Section 19 of the Illinois Condominium Property Act requires the board to maintain 10 years of financial records. The absence of reserves generally means a violation of Section 9 of the act, as well as your declaration. The fact that the association had a large special assessment may be due to the lack of reserve savings.

Section 18(a)(7) of the act requires the board to submit an annual accounting of income and expenses to the owners. This accounting should explain what portions of the reserves were used for capital expenditures or repairs.

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