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Archive for November, 2012

Dangers of Debt Counseling

Posted by Peter Behrmann, Esq. On November 27th

Dangers of Debt Counseling

Beware of consumer debt counseling or debt management programs.  The truth is that not everyone offering to help you get control of your finances has your best interests at heart.  You need to understand the debt counseling/ debt management process before you ever sign up with one of these companies.

Understand what you are Getting for Your Money

In some programs, a counselor will negotiate with your creditors or makes payments on your debts for you.  Make sure this service will deal with all of your debts.  Some creditors flat out will not negotiate with these services.  You need to understand what happens to your money after you pay this service.  What the service will do with your money if they are not able to solve your debt problems.

 I have seen debt management contracts that provide the service makes several thousand dollars off of you with no guarantee.  The service will often settle a small debt right away to “earn their fees” but then leave you high and dry when a large creditor takes the step to collect from you. 

Understand who you are Hiring

So you have decided to “try” Debt Settlement prior to bankruptcy.  You are not alone; hundreds of my clients have “tried” then ultimately hired me when the settlement program failed.  Know who you are hiring!

If you are going to “try” Debt Settlement, hire a local company.  Research the company before you hire them.  Think of it like this, you are going to give this person hundreds if not thousands of dollars to solve your financial problems.  Do you know their name, do you know where they are located, their actual physical address, and do you know if you can get your money back?  Time and time again I see people fall for a program they found on the internet based outside of Michigan.  They have sent thousands of dollars to a PO Box in Florida or some other state.  They only hire me when one of their creditors sues them and they have wasted years and thousands in a program that just did not work. 

Understand what they are solving

So this company is going to resolve your $20,000 in credit card debt for only $10,000.  Do you understand that if they solve your debt for 50% of what you owe, the other 50% will be reported to the IRS as income?  That means you will owe income taxes at the end of the year!

Maybe you have credit card bills, but you also have a high interest car loan, tax debt and payday loans.  Is your “Debt Management” company going to resolve all of these issues, or just your credit card debt?

 

Understand the Chapter 13 Bankruptcy

A Chapter 13 Bankruptcy is a repayment plan in which you propose a percentage that you can repay creditors.  In a Chapter 13, your creditors are bound by a court order that they have to accept your repayment plan.  A Chapter 13 is designed to resolve all of your debt (not just your credit card debt) and protect your assets.  Best yet, the debt forgiven in a bankruptcy is not taxable like it is in a debt management program.

 

Peter Behrmann is a Livonia Bankruptcy Attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy, and Foreclosure Prevention.

Detroit Bankruptcy Conference

Posted by Peter Behrmann, Esq. On November 16th

This monday my wife and I attended a day-long Veterans Day program designed especially for Michigan Consumer Bankruptcy Practitioners. 

The conference is a must for every Michigan Consumer Bankruptcy Lawyer.  Yet only 4 attorney attorneys from Livonia attended the event, 2 of them were us.

Read more at my website www.PhoenixFreshStart.com

Phoenix Law is a husband-and-wife law firm of experienced attorneys who practice exclusively in the field of bankruptcy and foreclosure prevention. Peter and Jeri and the rest of the staff are friendly, efficient, and qualified to guide you through this difficult and emotional process.

 

 

DETROIT HEADED FOR BANKRUPTCY?

Posted by Peter Behrmann, Esq. On November 7th

The people of Michigan voted to repeal the emergency manager law.  The repeal is leaving in doubt what will be the next step for struggling governmental bodies throughout Michigan.  The Emergency Manager Law allowed the governor to declare a local government or school district in financial distress and appoint an emergency manager to take control.

 

The emergency manager law which has been controversial from its start allowed emergency managers to amend or remove collective bargaining agreements under certain circumstances.  The supporters of collective bargaining have labeled the law as “Union Busting” and ran a strong and successful campaign to have the law repealed.  The supporters of the emergency manager law urged that the emergency manager process was preventing local governments from filing bankruptcy.

 

Well the supporters of collective bargaining have won, and the next and possibly only choice will now be for distressed local governments to seek Chapter 9 Bankruptcy protection.  Chapter 9 under Title 11 of the United States Code is a chapter of the United States Bankruptcy Code available exclusively to municipalities and assists them in the restructuring of debts.  Chapter 9 is similar to an individual filing a Chapter 13 bankruptcy or a business filing a Chapter 11 bankruptcy.  Chapter 9 allows governmental entities to reorganize their financial liabilities under the laws of the Bankruptcy Code.

 

I almost think that supporters of the movement to repeal the emergency manager law did not understand what they will be getting.  What they could be getting is Chapter 9 Bankruptcy which will put municipalities and local governmental units under the exclusive control of a Bankruptcy Judge. 

 

Within Chapter 9 bankruptcy, labor contracts can be rejected, and pension liabilities can also be eliminated just like the emergency manager law.  Local governments just need to show that the labor contract is substantially detrimental to the government viability and prove they have made a reasonable attempt to renegotiate.  If they can prove that the contracts can be eliminated by the Bankruptcy Judge to make sure the governmental unit is on the right track for financial viability. 

 

The point to all of this is nothing is really going the change.  We may no longer have emergency managers or municipalities under management of the emergency manager law.  We will now have Bankruptcy Judges running municipalities under Chapter 9 of the United States Bankruptcy Code.   

Peter Behrmann is a Livonia Bankruptcy Attorney.  From my Livonia, Michigan location, I represent clients throughout Metro Detroit and beyond, including Garden City, Wayne, Westland, Redford, Dearborn, Taylor, Ann Arbor, Belleville, Northville, Novi, Farmington, Farmington Hills, Plymouth, Canton, and the Counties of Wayne, Oakland, Livingston, and Washtenaw. My practice is limited to helping consumers like you file Chapter 7 and Chapter 13 Bankruptcy.