Michigan Unemployment Overpayment and Bankruptcy

Can Bankruptcy Discharge my Unemployment Overpayments in Michigan?

Many of our clients have collected unemployment insurance payments in the years leading up to their bankruptcy. For various reasons, our clients will occasionally receive more than they were supposed to. The State of Michigan demands that the overpayment benefits be paid back regardless of the reason behind the overpayment.

Understandably, this creates a difficult scenario for people who are already unemployed and then asked to pay back months worth of benefits. Depending on the specific circumstances to your case, these unemployment overpayments may be dischargeable in bankruptcy.

The State of Michigan’s Department of Licensing and Regulatory Affairs (LARA) has more information about how these unemployment overpayments are dealt with outside of bankruptcy.

If you’re still receiving unemployment benefits

If you’re still unemployed and receiving benefits then the state will recoup the overpayment by taking a portion of your ongoing benefits. This recoupment action will continue until the overpayment amount is paid. This recoupment is not subject to the Court’s automatic stay and will continue even after filing for bankruptcy.

MCL 421.54 and MCL 421.62 cover the penalties and recovery of unemployment overpayments. If you’re no longer receiving unemployment you’ll usually be able to discharge that debt in bankruptcy unless the overpayment is determined to have been fraudulent.

When is an overpayment fraudulent?

The Bankruptcy Court treats unemployment overpayments the same as any other unsecured debt. Because debts that are incurred by fraud aren’t wiped out in bankruptcy neither are unemployment benefits if there was an intent to deceive by the debtor in order to get those benefits. Section 523(a)(2) of the bankruptcy code discusses fraud.

In recent years, the Michigan Attorney General’s office has taken a more aggressive stance in how they handle these overpayments in bankruptcy. If you’ve received a letter stating that your overpayment is considered fraud or the result of misrepresentation then the State will probably file an adversary proceeding objecting to the discharge of their debt.

Bankruptcy options for unemployment debt

A letter from the State isn’t a determination that the debt will be found to be fraudulent in bankruptcy, but it’s a good clue as to whether or not they’ll fight you on the issue. Oftentimes the fines and penalties associated with the overpayment greatly outweigh the original amount that was overpaid. The principle amount originally owed is dischargeable but the fines are not(in a Chapter 7 – see 523(a)(7)).

In a Chapter 13, the penalties would be wiped out if properly listed in the petition and there is no adversary filed in the case. In either a Chapter 7 or a Chapter 13, however, the Michigan Attorney General appears willing to negotiate a settlement. While it’s impossible for us to tell you what would happen in a specific case, we’ve had success getting rid of all the fines (usually 4 times the amount owed) if the debtor stipulates to paying back the principle that was overpaid. If the debtor defaults then the State will accelerate the entire amount due.

Call our office if you were overpaid for unemployment and now the State is trying to collect. It’s impossible for us to tell you in a post like this exactly how your scenario will play out without knowing the facts specific to your case. The bottom line is that unemployment overpayments are just like any other debt in bankruptcy; you’ll be able to discharge the debt unless it’s found to be fraudulent. But even if it turns out to be a fraudulent debt our office has experience working with the State in order to reach a reasonable settlement.

 

Income Tax Debt and Michigan Bankruptcy

Income Tax Debt in Bankruptcy

The start of a new year also represents a new tax year and many families feel will feel the increased burden of yet another year of unpaid income tax debt.  Many of our clients are unable to pay down their past due taxes or meet the minimum amount of the IRS’s payment plan. Fortunately, there are a number of options through bankruptcy that can reduce or eliminate your income tax burden altogether.

Totally eliminate your income tax debt

Through a Chapter 7 bankruptcy, you can eliminate your income tax debt if you meet the following requirements:

  • You did not commit fraud or tax evasion
  • Three Year Rule: Your tax debt is over three years old. The due date for filing the return for the tax year in question is more than three years old. This period is determined by the most recent date the tax return is due for the tax year. If you filed an extension for the return it will delay the start time for those three years. In short, as of January 1, 2015, your income tax debt from 2010 and earlier can be wiped out.
  • Two Year Rule: You filed a tax return two years before you file bankruptcy: At least two years preceding the filing date of your bankruptcy you must have filed a return or equivalent report. For example, if you file your bankruptcy on January 1, 2015, your 2010 taxes must have been filed before January 3, 2013.
  • 240 Day Rule: The taxes were assessed at least 240 days prior to the filing.

Pay off your income tax debt on a court ordered payment plan

Even if you don’t meet the above requirements to eliminate your tax debt, a Chapter 13 payment plan will still provide many benefits to individuals. First and foremost, Chapter 13 will provide relief from collection efforts from taxing authorities and may prevent the addition of penalties and interest.  In a Chapter 13 plan, the tax debt can be paid over a five year period.  Further, any penalties and post-petition interest on the taxes will be deemed unsecured and not required to be paid through the plan.

An Attorney will guide you through the process

Although the above guidelines can provide a framework for an individual to eliminate or reduce their tax debt, it is important to work with a licensed Michigan bankruptcy attorney to guide you through the process. At Detroit Lawyers, PLLC we will obtain an IRS transcript of your tax debt. The transcript will be used to determine when your returns were due, when your returns were file; and if you were audited, which increases the tolling period.

Take back the power

If you owe large amounts of income tax debt, you know the burden of receiving phone calls and letters with multiple years of unpaid taxes. Often, interest and penalties add up increasing the amount owed. By consulting with an attorney and using a form of bankruptcy, you can take back the power and subject the IRS to the rules and regulations of the court system.

Credit Scores and Employment

This is part 2 in a series on how credit scores can impact more than your ability to get a loan. You can find part one, which covers insurance, here.

Employment | Your Credit Score Affects a Lot More Than Credit

Clients often seek our help with their consumer debt issues.  We help clients with debt related to credit cards, medical bills, foreclosures, garnishments, or repossessions.  Often times we find that their best solution is to file for bankruptcy.  After this determination, the next question is usually, “how will this affect my credit score?” or “will I still be able to get a loan?.”  The short answer is, it depends and yes.

Many of these clients are aware that their credit score impacts the ability to get a loan or credit card.  However, most people do not know that credit scores also impact other areas of their life.  Over the next few blogs I will examine how your credit score affects insurance, renting, employment, and even utilities.

Today we will look at the impact of your credit score on current employment and potential employment.  We will also examine how bankruptcy may affect your employment.  In general, your credit score is rarely used to disqualify job seekers for most positions.  However, some companies run credit reports for candidates who would have access to the company’s finances.

Can an employer check my credit report?

No.  An employer cannot check your credit report unless you consent to it.  The Fair Credit Reporting Act sets limitations on who can access your credit information without your consent.

If you do consent to allowing the employer to run a credit report and the employer decides not to hire you based upon the report, it must provide you a copy of the report for you to review yourself before denying you the job.  This gives people a chance to address their credit report and make sure there are no errors.

How will bankruptcy affect my job search?

The impact bankruptcy has on your job search may depend on whether you are applying for a job at a private company or with the government.  If you are applying for a federal, state, or local government job then your bankruptcy will not be taken into consideration when determining whether or not to hire you.

Private employers are different.  There is no law prohibiting private employers from taking into account your bankruptcy when going through the application process before offering you employment.  However, like we said above, the company will still need your consent to run a credit report.

Many experts believe that due to the recent economic downturn, most employers are more understanding of blotches on credit reports.  Employers are aware that job loss and layoffs could lead to poor credit scores.  Take the initiative to explain what led to your poor credit score or bankruptcy.  More likely than not, the interviewer knows someone in a similar situation.

Can I get fired for filing bankruptcy?

No.  The fact that you filed for bankruptcy does not give your employer the right to fire you.  It does not matter if your employer is in the private sector or the public section.  Nor is the employer allowed to reduce your pay, take away any responsibilities or demote you.

The majority of the time your boss will not know that you filed bankruptcy.  However, in the case of a Chapter 13 it may be notified as the court requires automatic payments deducted from your paycheck.

Filing bankruptcy may actually help you in some instances.  On numerous occasions clients have come in at the request of their public or private employer.  Governmental agencies and private companies that contract with the government have recommended some of their employees file for bankruptcy in order to retain their security clearance or receive a higher security clearance.  The reason being is that a person with a lot of debt is more likely to be blackmailed.  By wiping out the debt in bankruptcy, the risk of blackmail is lowered significantly.

However, if your employment is terminated shortly after your employer is notified of the bankruptcy, you might have a case against the employer for discrimination.

How can I increase my credit score?

There are a number of factors which will influence your credit score.  Some of those factors include: payment history, debts owed, length of credit history, new accounts, and balance of accounts.

One of the most important factors in your credit score is the amount of debt you owe.  This includes the number of debt accounts you currently have, the types of accounts (credit card, installment, collection, etc.), and their balances. It is best to have a few credit cards and open credit accounts with low balances.  In general, using only 30% of the available credit improves your credit score.

Another factor in your credit score is your payment history.  A long record of on-time payments demonstrates an individual who has been reliable for a significant period of time.  It’s vital to your credit score to always pay your bills on time.

Another factor is the length of credit history.  The longer your credit history with a certain account, the better.  These long payment histories can be for houses, vehicles or even credit cards.

Bottom Line on Employment

Even though employers are less likely to look at your credit score as opposed to the past, you should work to improve it just in case they do.  And, be aware of what employers can and cannot do regarding employment and bankruptcy.

Come back next Wednesday to read about how landlords look at credit scores when renting to tenants.

Can I file for bankruptcy without an attorney?

Yes. Bankruptcy without an attorney is possible. We don't recommend it, however, so this article is for information purposes only. Come in and discuss your situation with one of our lawyers even if you plan on filing bankruptcy yourself.

Why file bankruptcy without an attorney?

First things first… yes, you’re able to file Chapter 7 or Chapter 13 bankruptcy in Michigan without needing a lawyer. But why are people googling how to do it without an attorney helping them? Money! People assume they won’t be able to afford a lawyer, so they put off talking to one.

Our consultations are always free. Even if you plan on filing your own bankruptcy it’d be a good idea to come in to talk to one of our Michigan bankruptcy experts. You never know what critical piece of information you could learn that saves your house, car, or credit!

How to file bankruptcy without an attorney

First you’ll need to determine if either Chapter 7 or Chapter 13 bankruptcy is right for you. This is worth the free consultation all by itself. You want to make sure that you’re able to file and that you can protect your assets.

You’ll also want to make sure you know if you’ll pass the “Means Test” before you file a petition with the bankruptcy court. The proper form for the Means Test calculation (along with all other required forms) can be found on the court’s website. Sometimes waiting a month to file a bankruptcy petition can be the difference to passing the Means Test.

Where to file your case

Bankruptcy petitions are filed in Federal Court. We mostly work in the Eastern District of Michigan. If you’re in the Eastern District of Michigan you’ll either be in Detroit, Flint, or Bay City. They also hold some 341 meetings in Ann Arbor.

You’ll usually file a case based on where you lived in the 6 months prior to your bankruptcy. You can find your district by using the US Court Location by selecting “bankruptcy court” from the options.

If you moved in the 180 days before you file bankruptcy then you’ll file in the location where you lived for the majority of those 180 days. Your filing location could also depend on the location of your assets. Since different jurisdictions have different exemptions, it’s critical to know the proper place to file your bankruptcy.

Required credit counseling course

Before you can file for Chapter 7 or Chapter 13 bankruptcy without an attorney you need to complete the required credit counseling course. This law is new since 2005 and is important. While we have agencies that we recommend to our clients, the Department of Justice maintains a list of approved credit counseling agencies. You can take the class from any of the agencies on that list, but it must be done within the 180 days before you filed a case.

The course we suggest is less than $10 and can be taken online in an hour. If you put in our email address we’ll get a copy of your certificate as soon as you complete the course. This eliminates the need for you to have to print it out and bring it in before we can file your case.

Required documents

The documents you’ll need to file a case depend on your situation. The Eastern District of Michigan has a handy Chapter 7 checklist for the different forms you’ll need if you’re filing without a lawyer. Some libraries will have access to computer software that makes filling out all the required forms quicker and easier. The software is expensive; buying it probably costs more than what you’d spend on attorney fees!

After you know the proper forms to file with the court you’ll still need to know which documents you’ll need to send to the trustee for your 341 meeting. You’ll need to have your Drivers License (or ID) and Social Security Card in order to verify your identity. Other common documents you’ll need include your two most recent tax statements, six months of bank statements, six months of paystubs, vehicle titles, and recorded deeds and recorded mortgages to any property you own.

Filing fee

Speaking of fees… you’ll have to pay the Bankruptcy Court in order to file a petition unless you can get it waived. You can also apply to make the payment in installments if you’re unable to come up with the full amount when you file a case. The Chapter 7 filing fee is (as of today) $335 and Chapter 13 is $310. This amount changes from time to time so make sure you’re checking the court’s website for the current fee.

Why you should come talk to us

Without an Attorney - Picture of Eastern Market

Detroit’s Eastern Market | credit: www.davechristiansen.com

Bankruptcy is not a decision to be made lightly. I’ve oversimplified the process so far to give you an idea of where to start and where to go for more information. Making a mistake on your bankruptcy schedules, petition, and forms could be far worse than your current financial situation.

Don’t risk it. Come in for a free consultation so that you can learn what to do/not to do before during and after bankruptcy. We’ll explain how the whole process works and help you decide if bankruptcy is the right choice for you.

Whatever you do, please don’t avoid talking to an attorney because you think you can’t afford it. We offer free consultation as well as easy payment plans. You also may be surprised to hear that we often recover funds for our clients that have recently been garnished from their paycheck or bank account.

Good luck!

Step Forward Michigan – Mortgage Assistance

Michigan homeowners have been hit particularly hard by the foreclosure crisis. Federal money is now available through the Michigan State Housing Development Authority (MSHDA) to stop foreclosures and keep Michiganders in their homes.

What is Step Forward Michigan?

Step Forward Michigan - Hardest Hit Funds ProgramThe State of Michigan has received nearly 500 million dollars in Federal Hardest Hit Funds from the United States Government in order to help homeowners stay in their homes. These funds are available for a number of programs and once the funds are exhausted they will no longer be available to homeowners.

Step Forward has three active Homeowner Loan Programs which will pay up to $30,000 to mortgage servicers, county treasurers or condominium associations. The loans have a 0% interest rate, no monthly payments and the full amount is forgivable in five years as long as the homeowner continues to occupy the home.

Unemployment Mortgage Subsidy Program

Receiving unemployment? This program provides mortgage assistance payments while you’re unemployed.

In order to qualify for this program, the homeowner must meet 1 of the following 3 requirements:  (1) receive Michigan unemployment benefits, (2) exhaust all  unemployment benefits in the last 12 months, OR (3) receive a 20% or greater reduction of income.

Loan Rescue Program

Behind on your mortgage and need help catching back up?

In order to qualify for this program, the homeowner must meet ALL of the following 3 requirements: (1) homeowner must be delinquent on mortgage, taxes or condo fees (2) delinquency was caused by an involuntary hardship (3) homeowners’ income was reduced by 20% or more.

Modification Plan Program

In order to qualify for this program, the homeowner must meet  1  of the following 2 requirements:  (1) Home has significant negative equity (more than 115% loan to value ratio) OR (2) Mortgage payment is unsustainable (greater than 45% to income ratio) that is caused by an involuntary hardship.

Eligibility Requirements

Step Forward Michigan can help Michigan homeowners who have a hardship if they meet the following requirements:

  • You must be a Michigan resident and legal US Citizen or legal alien
  • There must be a qualifying hardship (job loss, reduction of gross income, medical condition, death, divorce, disability, one-time critical expense, etc. MSHDA FAQ)
  • The property must be your primary residence
  • Your cash reserves must be less than $10k

Michigan’s Hardest Hit Fund is available to Michigan homeowners who are current or delinquent on their mortgages. Even Michigan residents who have filed for Chapter 7 or Chapter 13 bankruptcy protection may be eligible for the Step Forward assistance. Our office specializes in consumer bankruptcy and can help you get the proper acknowledgement or authorization needed from the Bankruptcy Court or Trustee.

How to Apply

You can apply for Step Forward online at stepforwardmichigan.org by creating an account. The website has a guide to walk you through the process with questions and goes over what information you’ll need. You’ll print the application and submit it with the other required documents.

Watch out for people trying to take advantage of you. Anybody can help you fill out the paperwork but they can’t charge the homeowner for the help. The person applying must sign the documents and answer any further questions about their application. You’ll need to give written approval before information can be shared with a third party.

You can also call 866-946-7432 if you don’t have access to a computer and internet.

Using Step Forward Michigan to Your Advantage

Lots of our clients come in who have lost their job or received reduced hours and are unable to make payments towards their home. Whether they are past due on a mortgage, property taxes, or condominium fees, Step Forward Michigan may be able to help.

Step Forward is a great option for clients that is often overlooked in favor of loan modifications through lenders. We encourage our clients to apply for Step Forward funds before they are exhausted in the next two years.  Step Forward Michigan offers assistance online or by calling 866-946-7423.

Credit Scores and Insurance Rates

Your Credit Score Affects a Lot More Than Credit

Clients often seek our help with their consumer debt issues.  We help clients with debt related to credit cards, medical bills, foreclosures, garnishments, or repossessions.  Often times we find that their best solution is to file for bankruptcy.  After this determination, the next question is usually, “how will this affect my credit score?” or “will I still be able to get a loan?.”  The short answer is, it depends and yes.

Many of these clients are aware that their credit score impacts the ability to get a loan or credit card.  However, most people do not know that credit scores also impact other areas of their life.  Over the next few blogs I will examine how your credit score affects insurance, renting, employment, and even utilities. Today we will look at the impact of your credit score on your insurance rates.

How may your credit score impact your auto insurance?

Along with your credit score, many U.S. care insurance companies use your driving history, claims history, and other factors to help determine your insurance rates.  The insurance companies believe there is a correlation between your credit score and the risk you present as a driver.  Insurance companies contend that higher credit scores indicate safer drivers and cost insurance companies less money. While I’m not completely sold on that idea, the end result remains that the car companies still use your credit score to help determine the auto insurance rates you are going to be paying.

The credit score that the insurance companies use is a little different than the credit score banks or lenders use when determining your interest rate and whether or not you qualify for a loan.  The credit score that the insurance companies use does not factor in your job, income history, gender or any other personal information.

It’s important to get quotes from multiple providers since insurance companies use their own scores and in different ways.   Don’t forget to look online, and talk to several carriers prior to selecting one.

What if you are denied insurance or your terms are less favorable?

If you are denied insurance, or offered less favorable terms, because of information on your credit report, you still have some rights.  You can request the creditor give you a notice that includes the name, address, and phone number of the credit reporting company that supplied the information.

Other questions to ask include:

  • -If a credit scoring system was used, what factors were used and how can I improve my application?
  • -Why am I not getting the best offer?

Hopefully the answers to these questions will help point you in the right direction. Regardless, the next step is going to be to increase your credit score.

How can I increase my credit score?

There are a number of factors which will influence your credit score.  Some of those factors include: payment history, debts owed, length of credit history, new accounts, and balance of accounts.

One of the most important factors in your credit score is the amount of debt you owe.  This includes the number of debt accounts you currently have, the types of accounts (credit card, installment, collection, etc.), and their balances. It is best to have a few credit cards and open credit accounts with low balances.  In general, using only 30% of the available credit improves your credit score.

Another factor in your credit score is your payment history.  A long record of on-time payments demonstrates an individual who has been reliable for a significant period of time.  It’s vital to your credit score to always pay your bills on time.

Another factor is the length of credit history.  The longer your credit history with a certain account, the better.  These long payment histories can be for houses, vehicles or even credit cards.

Once your credit score improves be sure to contact your insurance company to ask for a rate adjustment or shop around for lower rates from different insurers.

Bottom Line

The bottom line is that your credit score will impact your insurance rates and because Michigan law requires drivers to be insured, your credit score will ultimately impact your monthly expenses.  If you’re looking to save on car insurance make sure to improve your credit score, track your credit report and be proactive responding to inaccurate information.

The Fair Credit Reporting Act (FCRA) gives everyone the right to obtain a free credit report once a year.  I suggest pulling one report from each of the three major credit bureaus (Transunion, Equifax, and Experian) every four months.

Check back next Wednesday to read about how your credit score could impact your current and potential employment

 

Snow day update

Snapchat of Ford Field under a Harvest Moon

Send your snapchats @detroitlawyers. Seriously.

Worst. Winter. Ever.

Unless you’ve been inside since Halloween, you’re well aware that this has been an especially gross winter. Detroit has already locked up the bragging rights for most miserable winter. At this point, I’m cheering for the last couple inches of snow to set an all-time record for Detroit. Understandably, today’s storm made it difficult for all of our appointments to make it in. I figured I’d use my extra free time to share some of the highlights from my twitter timeline.

Corktown St. Patrick’s Parade

I’m too out of shape to run the 5k this year, but you can count me in for the parade. The 56th annual parade starts at noon from 6th street and Michigan Ave. I believe it takes about 2 hours for all the marching bands, floats, and clowns to get to 14th street. If you spot me there, say hi and I’ll buy you a green beer! Here’s the link to the 5k race in case you’re ambitious enough to run in freezing temperatures.

 Brewster Projects Demolition + Drones

ICYMI: On Monday, excavators started tearing down what remains of the  Brewster Douglass Housing Projects. You have to check out the aerial footage provided by drones.

Detroit Bankruptcy Updates

The City of Detroit Bankruptcy Plan of Adjustment has been filed in the Eastern District of Michigan Bankruptcy Court. Basically, this is how much of its $18 billion debt the city says it can afford to pay. Creditors (including city employees and retirees) will be able to vote on the plan in about a month.

The plan offers pensioners in uniform 96% of their monthly pension and 74% to general pensioners (that drops to 90% and 66% if they refuse to accept the City’s offer). If the pensioners vote no on the plan, they would be losing $820 million being raised by the state, Detroit Institute of Arts (DIA), and other foundations. General unsecured bondholders are being offered 20%.  $1.5 billion is also being set aside as part of the plan to fight blight and improve services for the residents of Detroit.

Bankruptcy Judge, Steven Rhodes, will hold a hearing on April 14th to determine if the disclosure statement contains enough information. If it does, ballots will be mailed to creditors so they can vote on the plan. Without any other delays, the final hearing would start July 16th.

Reno dog in Detroit

Reno dog in Detroit

Michigan Potholes

The good news is that spring isn’t too far away. The bad news is that the roads should be especially terrible this summer. Yesterday, Michigan lawmakers approved $215 million for pothole repair and infrastructure construction. If your car was damaged from a pothole MDOT knew about for 30 days then you might have some luck getting them to pay you back (but I wouldn’t hold my breath). The form to make a claim can be found here.

This also makes me think I should be doing something more useful with www.michiganpotholes.com and www.detroitpotholes.com. If you have any brilliant ideas I’d love to hear from you. You can snapchat me pothole pictures to the username ‘detroitlawyers’… seriously.

Stay warm.

Find Out Why You Were Denied Credit

What to Do if You’re Denied Credit

I just read about a nifty tool at reasoncode.org to help find out why you may have recently been denied credit. Run by credit scoring company, VantageScore, the tool gives the explanation behind the confusing two-digit reason code included with your denial.

Denied Credit after bankruptcy in Michigan? We can help.

Photo Credit: TravisTruman via Compfight cc

Find Out Why

Lenders are required by law to tell you why they rejected your application for credit. The problem is that the “why” is often just a two-digit code. When you match the given code to the glossary of terms you might find a vague or confusing definition. VantageScore is hoping that their new tool helps shine some clarity on why your application was denied. When you enter your two digit reason code you’ll receive a more complete breakdown of the explanation.

Monitor Your Credit Score

Knowing why you were denied credit is just the first step in rebuilding your credit score either before or after bankruptcy. Because your credit score can impact things such as whether or not you qualify to rent an apartment, credit card interest rates, and mortgage terms, it’s important to be aware of what’s determining your credit score. You can get a free credit report every year from Experian, Equifax, and Transunion. By staying on top of your credit reports and comparing them to the reasons given when denied credit, you’ll know what lenders are looking at when you apply for credit.

When you’re monitoring your credit reports you’ll know ahead of time if there are things that need to be removed. Taking immediate steps to challenging a mistake on your credit report will minimize the harm and get you started on rebuilding your credit score.

Rebuild Your Credit

I know there are a million articles out there that oversimplify the steps needed to rebuild your credit score. While we’re also guilty of trying to sum up a confusing topic in a few paragraphs, we do think that even a little knowledge will go a long way. Rebuilding your credit is really just understanding the basics and executing them consistently over time.

We’re always happy to help shine some light on the subject. We offer workshops on rebuilding your credit and will walk our Michigan bankruptcy clients through the process after they file. The first step, however, is taking control of the information in your credit reports and finding out what those dang “reason codes” even mean!

-by Nick Best

Field Trip to the 2014 Detroit Auto Show

The Detroit Auto Show is in town

So we played hooky yesterday and checked out the Industry Preview at Cobo Hall. I’ll leave it to the professional bloggers to fill you in on the latest and greatest, but if you want to watch us sit in some really expensive cars then this video’s for you! Had I known my phone was going to automatically create a video I would have taken more pictures that included us. I haven’t been to the show in quite a while and it was amazing to what’s new. All the cars are drool worthy, but I was most awestruck by how they can fit such an enormous and complex event indoors. Some of the most impressive feats of engineering are probably the displays some of the major car companies put together. Ford basically brought their assembly plant to their display to show off the robots that are used when building pickup trucks.

What’s New?

If you haven’t been to the show in a few years you’ll immediately notice how every company is making huge strides in the green car revolution. My favorite part was probably crawling around the different cars and seeing what new gizmos and gadgets are starting to come standard.  While you’re admiring all the glamour and glitz, don’t forget that in recent years both the City of Detroit and 2 of the Big 3 have filed for bankruptcy protection. I’m not trying to spoil this great event, but it’s important to remember that even big business and major cities can’t always turn things around without help.

The public show starts Saturday and is definitely worth checking out. Let us know what you liked most about the show this year.

The screenshot from the video is Cadillac’s new concept car, Elmiraj.

Cadillac Elmiraj - Concept Car | Detroit Auto Show

Cadillac Elmiraj – Concept Car | Detroit Auto Show

Nick Best

Can I Keep a Credit Card if I file Bankruptcy?

Can I keep my credit card if I file for Chapter 7 bankruptcy?

You'll Get Credit Card Offers After Bankruptcy

You’ll Get Credit Card Offers After Bankruptcy

I just had a client call with the same questions we’ve been asked a million times before… “Can I keep my credit card if I file for bankruptcy? It’s a great question that unfortunately gets the typical lawyer answer. “It depends.” Unlike a lot of legal questions, however, this is one that can get mostly explained during a quick phone call. The following information usually answers my client’s questions.

The simplest answer is that you can decide to keep one of your credit cards open if that credit card company lets you. It really comes down to the status of your credit card and which credit card company we’re talking about.

Do I have to list all my credit cards on the bankruptcy petition?

When you file for Chapter 7 bankruptcy in Michigan you are required to list all your creditors on your petition.  Whether or not you have to list a creditor depends on if there is currently a balance on that card. If you are in default (haven’t paid in a while) or have a balance and making minimum payments you have to list them on the bankruptcy petition.  Most credit card companies will cancel your credit card with them unless you reaffirm (agree to pay back) the debt.

It’s a different story, however, if your account is open but paid off at the time of filing. An open account with no balance isn’t considered a debt, and so you don’t have to list them on the bankruptcy petition so that they receive notice. Some clients decide they want to pay off the balance on one of their credit cards. Either they like the bank that issued the card, they’re afraid of not being able to get a credit card after bankruptcy, or they don’t consider that their “main” debt  and so they want to pay it off.

What happens if my credit card company finds out that I filed for bankruptcy?

Clients are sometimes surprised to find out that even if they pay off one of their credit cards, the credit card company can still close the account if they find out about the recent bankruptcy filing. In fact, they’ll probably find out about it through the credit bureaus or other reporting agencies. The danger is that even after struggling to get a credit card paid off before filing bankruptcy, the company may still decide that you’re a higher credit risk now that you have a history that includes bankruptcy.

Will I be able to get a credit card after filing for bankruptcy?

The reason I usually don’t suggest trying to keep a credit card while filing bankruptcy is because you’ll get plenty of offers in the mail once you file. Although your current credit card company may decide that you’re a higher risk because of the filing and cancel your card, there will be plenty of other companies that see you as a much safer bet since you don’t have all that other debt to worry about after bankruptcy. You have to be careful, however, as many of these offers come with very high interest rates. While I like to reassure clients that bankruptcy won’t prevent them from obtaining credit in the future, there are a series of steps that should be taken to rebuild your credit as quickly as possible.

As usual, these blog posts shouldn’t be taken as legal advice nor does it form an attorney-client relationship. Laws are always changing and every state and situation is unique. Contact us or your local bankruptcy attorney for specific advice for your situation. Michigan consultations are always free if you call us at (248) 237-7979.

-by Nick Best