What's the Difference Between Unsecured and Secured Debt?

When considering filing for bankruptcy it is important to consider what sorts of debts you have and what will happen to them when you file. The two broadest categories of debt are secured debt and unsecured debt. Secured debt differs from unsecured debt as having some sort of collateral that the creditors use as security in case you are unable to pay the debt. Debts of this sort include car loans, where the car itself is the collateral that the creditors can collect in case you are unable to pay off the debt. Unsecured debt includes most other kinds of debt, like credit card debts, medical debts, etc. One thing to keep in mind when filing for bankruptcy is that most unsecured debts will automatically be discharged, but you do have the option to discharge your secured debts usually at the cost of your collateral. If you are worried about losing your property like houses/cars when filing for bankruptcy, one thing to consider is that you are able to exempt a certain value from your property using your bankruptcy exemptions. Alternatively, if you choose to file a chapter 13 bankruptcy, you will have the opportunity to either completely pay back or catch up on your unsecured debts, so that you won’t have to lose that property.

If you have any other questions or concerns about if you'll be able to exempt your property when filing for bankruptcy, it would be to your advantage to set up a consultation with a local bankruptcy attorney.

Can I Discharge Criminal Restitution in Bankruptcy?

Unfortunately, criminal restitution is not able to be discharged during bankruptcy. Nevertheless, one of the features of filing for bankruptcy called the automatic stay can prevent creditors or courts from attempting to collect any debt that you may owe them. There are a few exceptions to the protection of the automatic stay, but none of them apply towards criminal restitution. This automatic stay is case dependent, and can last up to 5 years. In general, however, chapter 7 bankruptcies offer a shorter automatic stay compared to chapter 13 bankruptcies. If you do end up filing for bankruptcy under chapter 13 you will have the option to restructure your debt into manageable monthly payments, which will give you more time to pay your criminal restitution.

To better understand if filing for bankruptcy is the right action for you, it is recommended that you set up a consultation with a local bankruptcy attorney.

Smart Money: Your Tax Return Could be a Ticket to Financial Freedom

This tax season, the average American taxpayer is receiving a $3,000 return. What

will you spend your tax return on this spring? Studies have shown that 43% of

Americans put their tax return into savings, 36% put the money towards paying off

their debt, 10% put money towards vacation, 6% purchase a luxury item, and 5%

make a necessary purchase, such as a house or car. While all are worthy ways to

spend money, paying off your debt could be the best investment you can make

with your tax return if you are in debt. Carrying around high-interest debt, with

interest compounding against you every month can be especially stressful. Surveys

tell us that debt is the most common cause of financial stress in the United States.

Your tax return could be a ticket to financial freedom.

If you have excessive amounts of debt that you are struggling to pay off, you could

spend your tax return most efficiently by putting the money towards filing for

bankruptcy. Bankruptcy offers the opportunity for you to get caught up on mortgages

or car loans without the threat of repossession or foreclosure and sometimes you can

be relieved from the legal obligation to pay some debts. To better understand if this

is something worthy of investing your tax return in, set up a consultation with your

local bankruptcy attorney to learn more.

After Bankruptcy: What is Next?

Bankruptcy gives you a fresh start in your financial life. But once you’ve received your discharge from
your bankruptcy, you may not know exactly what steps to do moving forward.

1. Collect and file all your bankruptcy paperwork

Be sure to keep a copy of your bankruptcy petition, the 40-50 page document that details your
financial information. Also keep your notice of bankruptcy filing  as well as a copy of your discharge
order that you received from the court.

Why should you do this? Sometimes when lenders are considering you for new credit, they want to
see your bankruptcy papers. It is also important to keep these documents in case anyone wants to
collect on your old debt in the future.

2. Start a budget and review it frequently

Many bankruptcies begin as a result of unforeseen medical expenses, job losses, or sudden family
changes such as divorces or birth of children. Creating a budget allows you to prepare and set goals
for the future. There are many great budgeting tools you can access through apps on your phone.

3. Start an emergency fund

As part of starting a budget, you will want to designate some funds for unforeseeable emergency
financial events. This fund could even turn into retirement savings or college tuition savings in the
future.

Why should you do this? This fund will prevent you from creating new debt when emergencies arise.
This fund will also make you feel less anxious about your finances and prevent panic when
emergencies happen.

4. Think about ways to improve your credit

Fresh out of your bankruptcy, you will have little to no debt. This is a great opportunity to build
your credit. However, be careful not to let yourself get carried away. Begin with a small credit
limit, monitor your charges, and pay more than just the minimum amount every month. Another
opportunity for building credit is by investing in a secured-CD.

5. Explore financial management resources in the area

Because bankruptcy allows a fresh start on your financial life, it never hurts to learn more tips
and tricks to navigating personal finance in the future. You can check out free seminars offered by
local non-profits or community colleges.

Discharging Student Loans

If you are looking to discharge your student loans, it is a complex process, but not impossible.

After 1990, student loans are no longer considered “dischargeable.” This means that in order

to seek relief, an adversary proceeding is required--a lawsuit must be filed separate from the

bankruptcy case. You must prove that the payment on your student loans causes an undue

hardship. Most courts use the Brunner test to measure the burden of the debt. It is a three-

pronged evaluation that requires the following: 1) the individual and their dependents

cannot maintain a minimal standard of living if they were required to pay the student loan,

2) there must be additional factors that guarantee this poor standard of living will continue

throughout the whole payment period, and 3) the individual has made good faith effort to

pay the loans. If you can demonstrate that you meet these conditions, your student loan

could be cancelled as a whole.

There are advantages and disadvantages to discharging student loans. To better understand

if filing for an adversary proceeding is for you, it is recommended that you set up a

consultation with your local bankruptcy attorney.

Motion To Dismiss

Motions to Dismiss can arise on a Chapter 7 or Chapter 13 bankruptcy case when there are issues or irregularities that must be resolved.  More often than not, a Motion To Dismiss can be resolved very quickly between yourself, your attorney, and the Bankruptcy Trustee assigned to your case, by providing requested documentation or making necessary changes to a Bankruptcy Plan.  If you receive a notice in the mail of a Motion To Dismiss on your case, it is important to contact your attorney right away to discuss steps toward resolution.  In most cases, your attorney will already have started taking steps toward possible solutions and will be able to give you a quick breakdown of what is needed.  For questions concerning Motions To Dismiss in bankruptcy, it is recommended to consult a local bankruptcy attorney.

Bankruptcy 341-Hearing

Typically 7 days after you file, you (and the individuals you list in your bankruptcy documents) will receive a notice that a "creditors meeting" had been set. Your bankruptcy trustee runs the meeting and, after swearing you in, may ask you questions about your bankruptcy and your papers you submitted. Your bankruptcy attorney will be at that meeting with you. In the vast majority of Chapter 7 bankruptcies, this is the debtor's only visit to the courthouse.

For more information on our services and to speak with a lawyer, feel free to call our Grand Rapids' office at (616) 920-0555.