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Bankruptcy Cases in the News: Federal and State Exemptions

Bankruptcy Cases in the News

Federal and State Exemptions

     Under the Bankruptcy Court, a debtor may elected between two sets of exemptions in a Chapter 7 case, the Federal exemptions, or (in Michigan) the Michigan exemptions. Generally, the Federal exemptions give the greatest coverage of property to the debtor. Exempt property is property that the debtor gets to keep from creditors and the trustee, which forms the basis of his or her fresh start going forward.

     In certain interesting circumstances, however, the Michigan exemptions are more favorable to the Chapter 7 debtor and should be elected. For instance, under the Federal exemptions, exemptions about $42,000.00 in home equity can be exempted by a married couple. However, if the home is jointly owned as entireties property (husband and wife) either may file individually a bankruptcy and exempt their entire equity, no matter how great, from all individual creditors.

     That is because the historical purposes of the state law favors protecting an innocent spouse from the debts of his or her spouse to preserve their primary residence. This concepts has been explored and defined in several published court decisions. For instance, see: In re: Trickett, 14 Br 85 (Bank W.D. Michigan) 1981; and, In re: Grosslight, 757 F2d 773 (6th Cir. 1985).

     One of the keys to this relief is the absence of joint indebtedness. So, if the non-filing debtor is jointly responsible on some of the incurred debt, the trustee may argue that it should be allowed to administer the estate (sell the martital home) to the extent of the joint obligations. Still, this type of harsh relief must be examined on a case-by-case basis as noted by Judge McIvor in In re: Edwin Harlin, 325 BR 184, 189 (Bank E.D. Mich) 2005:

“As a general rule, courts have been very reluctant to apply 11 USC §363 (h) to allow the sale of entireties property owned by the debtor, and a non-debtor spouse. The case law is well summarized in Collier on Bankruptcy as follows: Disputes over the applicability of a section (h) to tenancies by the entireties have created the largest number of reported cases under section, perhaps because of the unique nature of the ownership interest, the variations among the states as to the nature of the interest and the rather draconian remedy that section 363(h) gives the trustee, contrary to the deep historical roots of the form of title, which is supposed to protect each spouse from the unilateral action of the other… Thus, although generally speaking property held by the debtor as tenant by entirety is subject to sale under section 363(h), courts have erected various obstacles to such sale.”

     This suggests, of course, that married couples should strongly consider never co-signing for the other and avoid all joint debt. Also, they might consider making sure to concentrate payments to reduce and eliminate joint debt as a priority over individual debt, in the ordinary of their payments.

     If you or a loved one are considering whether bankruptcy relief would be helpful for you, please make sure to consult a qualified debt relief agency/attorney. Guy Vining is available for a no-charge initial bankruptcy consultation and would be pleased to meet with you.

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the downriver communities of Monroe, South Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wayne, and Ecorse. If you or a family member of friend would like a no-obligation no cost consultation/financial analysis, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]

Part 3. What to consider in hiring your bankruptcy lawyer

Guy Vining, a bankruptcy attorney, in metro-Detroit, maintains his office in Taylor, Michigan where he serves the local communities of Monroe, South Rockwood, Newport, Carelton, Berlin Township, Hamburg Township, Rockwood, Gibraltar, Brownstown Township, Grosse Ile, Woodhaven, Trenton, Southgate, Riverview, Allen Park, Lincoln Park, Dearborn, Dearborn Heights, Westland, Wyandotte, Wayne, and Ecorse. If you or a family memeber or friend would like a no obligation no cost consultation/financial analysis, just call Guy Vining of Vining Law Group, PLC to schedule a meeting.

In this part 3 of essentials in hiring your bankruptcy attorney or lawyer Guy Vining will futher explain why it is tremendously important to use care in hiring your bankruptcy attorney. As earlier indicated do not be ashamed to actually interview your prospective bankruptcy attorney. Afterall, its your financial life which is at stake and you deserve to have a bankruptcy lawyer who is both knowlegeable and also personable. In other words, legal bankruptcy counsel with whom you can trust to handle your matter in a competent manner and also who you like working with.

6.    At your initial meeting [ or before if you like ] you should be given a number of very important documents and discuss them at least in a general way. Keep in mind that a bankruptcy attorney’s time is precious, as is yours, and so many attorneys do not discuss at an initial meeting everything in great detail but deffer detailed anaylsis or discussion until they are actually retained [ hired ]. At the Vinig Law Group, PLC at every initial conference, however, the prospective client is given a number of important items to help them to assist in preparing their case and thinking through their finances. You should ask any bankruptcy attorney you interview to provide with at least the following items: 527 disclosures, checklist for required documents and detailed questionaire form.

7.    The 527 disclosure forms are actually required by the Bankruptcy Code. In the recent reformation of the Bankruptcy Code the US Congress determined that consumers MUST be give and sign to acknowlege receipt of these forms. These disclosures set forth many of your rights and also your obligations in filing for a bankruptcy. These are very detailed and can not be covered in the brief space of this posting but a few important areas follow. Among other things, the 527 disclosures cover the distinctions between common bankruptcy chapters. These chapters are outlined in a general way, the concept of a discharge in bankruptcy and what it means to you, options avalible other than bankruptcy, the need for absolute accuracy and honesty in the preparation of bankruptcy schedules, proper methods of valuation of property in your individual case and many, many other items are covered. At the Vining Law Group, PLC it is the practice to give out this material whether we are hired or not as it is important information for you to have. Generally, Guy Vining will discuss these items briefly and then if retained will answer any specific questions regarding the 527 disclosures at your second meeting with him. Make sure that you receive a copy of these important disclosures either before or at the time of your first appointment with your bankruptcy lawyer or bankruptcy attorney. They will be invaluable to you in understanding your rights and obligations.

8.    Your bankruptcy attorney should also give you a detailed checklist of what paper work is required from you to file a bankruptcy case. The practice at Vining Law Group, PLC is provide the same free of charge upon the asking or at the first meeting for a no cost consultation. You will find that most bankruptcy attorneys will have their own form of a checklist and will or should provide the same for you at no cost. These materials are essential and I repeat essential. If you file your bankruptcy case without having all the needed paper work your case might become a great deal more expensive as your attorney may need to get involved to obtain the same for you or repeated meetings of creditors may be required. In extreme cases your bankruptcy petition could even be dismissed because under the Bankruptcy Code you have an absolute duty to provide certain information and to cooperate with the trustee that is appointed to administer your estate. Under most circumstances it is the recomendation of the Vining Law Group, PLC that you do not file a bankruptcy petition until all your paper work is in order…why take a chance at something so important? Moreover, thes e documents may become extremely important in determing what your property consists of and what you can exempt [ keep ]. finally, certain documents may need to be anaylzed by your bankruptcy attorney so thet the property can be appropriately classiifed and scheduled on your bankruptcy schedules. Guy Vining will be pleased to discuss with you the documents which are required to successfully complete your bankruptcy.

9.    At your initial, no charge consultation at the Vining Law Group, PLC, its principal, Guy Vining, will also give you a detailed questionaire to complete. We call this your homework and indeed it is not easy for most folks. What’s the expression: no pain, no gain? This ” homework” must be completed as the bankruptcy process is meticulous and a good bankruptcy attorney will not file sloppy or incomplete schedules. Most bankruptcy attorneys will also provide with some document which is similar to help you help the bankruptcy lawyer help you. You see the bankruptcy petition is a series of schedules which identifies you as an individual, accounts for all of your assets, all of your liabilities, determines which items of property you wish to retain [ exempt ] and describes in great detail all of your recent income and financial affairs. Most bankruptcy attorneys have some questionaires avaliable to assist in the preparation of the schedules which need to be filed with the court. If you would like to obtain one to see what is entailed before an initial no cost meeting Guy Vining will be pleased to make the same avaliable to you. If you retain Vining Law Group, PLC, Guy Vining is most pleased to help with areas on the questionaire which you find to be difficult or complicated.

As earlier indicated when choosing your bankruptcy lawyer do not hestitate to ask a lot of questions concerning the bankruptcy attorney’s experience, philosophy of practice and about the tye of attorney client relationship that you can expect. Guy Vining has been a life long resident of the metro-Detroit so-called downriver area and has been of service to hundreds and hundreds of clients in multiple legal areas and has dedicated his professional practice to helping others. If you have any questions please feel free to emai or call Mr. Vining.

Part 2. What to consider in hiring your bankruptcy lawyer

Guy Vining, a bankruptcy attorney, in downriver Detroit, maintains his office in Taylor, Michigan where he serves the local communities of Monroe, South Rockwood, Newport, Carleton, Rockwood, Gibraltar, Brownstown Township, Woodhaven, Trenton, Southgate, Riverview, Wyandotte, Allen Park, Lincoln Park, Romulus, Dearborn Heights, Dearborn, Huron Township, Wayne, Westland and Ecorse. If you or a family member or a friend would like a no obligation no cost consultation / financial anaylsis, just call Guy Vining of Vining Law Group, PLC and we will pleased to schedule an appointment at your convenience.

In this part 2 of essentials of hiring your bankruptcy attorney or lawyer Guy Vining will further explain why it is important to select your legal counsel with care for bankruptcy and other matters. While there are literally hundreds of bill boards, yellow page and newspaper adds screaming stop foreclosure, stop garnishment, lowest prices, etc., etc. how do you really choose? How do you know? Is the lowest price really the best deal…and, what is fair value? As we saw in part 1 you must choose your bankruptcy attorney or lawyer with at least the care of purchasing a good suit or pair of shoes! It may take some shopping and an understanding that in the end we only ” get what we pay for ” whether for quality clothing or for legal services. However, since obtaining a discharge, debt relief and a fresh start are so essential to the commencement of the rest of your life Guy Vining respectfully suggests the following:

4.    Your bankruptcy attorney should use at least two fee agreements. At the Vining Law Group, PLC your first visit for an initial consultation is completely without charge. The first fee agreement from your bankruptcy attorney at the Vining Law Group, PLC will verify this. Specifically, the bankruptcy lawyer will sign a statement for your record and his that the first meeting does not create an attorney client relationship and is without any charge to you. This is your oppurtunity to get quality and free advice and to see whether your feel comfortable with the bankruptcy attorney. Afterall, an attorney client relationship is an important relationship which could span a bankruptcy alone or even many, many years. Guy Vining has dozens of clients that have done business with him for many years and have been so satisfied that they have referred many family members and friends for legal assistance.

5.    At the initial meeting all fees, costs and proceedures will be carefully explained to you. If you decide then or later to hire Vining Law Group, PLC as your bankruptcy attorney then a second and more detailed fee agreement will be prepared in writing which will guarentee to you and your family what the standard charges for services are. This document will outline what charges are for filing fee, required credit counseling courses, credit checks, and all standard services from filing to discharge. It is important to Vining Law Group, PLC that not only do you have a clear understanding of these obligations but also that there are no unpleasant financial surprises for you. Afterall, you have already had enough of financial problems!! Is some bankruptcy cases additional non-standard problems arise which your bankruptcy lawyer can not always anticipate. However, during your initial and subsequent interviews your bankruptcy attorney will attempt to guide that process and examine whether there may be some rough spots. If so, they will be discussed and all of your questions answered. The second fee agreement will be prepared to indicated what additional charges for court cost and attorney fees for your bankruptcy lawyer will be if such problems do occur.

When calling a prospective bankruptcy attorney or lawyer do not be shy. It is your case and your financial future. Make sure that you find out what their policies are in relation to attorney fees and other costs. Do they provide two written fee agreements for your protection as a consumer? Do they provide an initial consultation without a charge? In addition, make sure that during your initial conference that you discuss whether there are unusual features of your case which may require additional work for the bankruptcy attorney. If there may be additional work for the bankruptcy lawyer then get a clear understanding in wiriting of what the related charges will be. If you have any questions at all please free to contact bankruptcy attorney, Guy Vining