Ask Corey

COVID and Bankruptcy - Your Questions Answered: In today's episode of Ask Corey, Corey Carpenter of Carpenter Law answers your questions about COVID and bankruptcy.

2020 is finally behind us. It's a New Year, which means a fresh attitude and fresh start when it comes to beating back the coronavirus - and your debt!  As mentioned in previous episodes, bankruptcy is a right, not a stigma, and Carpenter Law's mission statement is to Build Lasting Relationships One Client At A Time.

Listener Michelle works downtown at LCA, and barely avoided bankruptcy last year. She wants to know what legislation may be on the way in 2021 that may help her. Corey explores.

Matt in Southfield says he's drowning in bills every month. He needs help deciding which ones to prioritize.  Corey explains the difference between secured and unsecured debt.

Terry in Royal Oak is a small business owner who is facing mounting debt. Corey walks her through steps she can take now, as well as what information a free consultation at Carpenter Law can provide.

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How Do I Keep My Property While Filing For Bankruptcy?: The Bankruptcy Code provides exemptions for a debtor’s property.   In a nutshell, this means that a debtor has, at least, a limited right to shield his or her property from their creditors.   This includes the right to protect your household goods and furnishing, wardrobe, vehicles, retirement plans, as well as your house.

There are differences between Chapter 7 and Chapter 13 bankruptcies for consumers-and there are exemptions in each particular Chapter.

Bankruptcy exemptions are not unlimited. Because they are not unlimited, bankruptcy can often require precise planning-when to file, and which exemptions to claim, depending on what your overall debt relief goals are.

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Protecting Your Retirement and Bankruptcy: The First thing Corey Carpenter tells people considering ways to stay out of bankruptcy is: DO NOT dip into your retirement unless it is the absolute last option that is available to you. There may be tax consequences if you do so!

As a general rule, employer sponsored retirement plans (and even rollover accounts from such plans), are 100% exempt in bankruptcy, regardless of what type of bankruptcy you file.

The goal of bankruptcy is to give you a financial fresh start for your future.  And in that future, you will absolutely need your retirement; and you should be able to keep it into your retirement years.

In many instances, provided there’s a history of consistent contributions to an employer sponsored retirement plan, you can continue to do so even while going through bankruptcy.

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Mortgages and Bankruptcy: In the era of Corona-virus, consumers are falling behind in mortgage payments because of COVID-related layoffs.

Lender-offered forbearance's are attractive but can also be a trap - they may only provide temporary relief!

One option to resolve a mortgage default is a Chapter 13 Bankruptcy.  This will allow you to cure your mortgage default, while under the protection of the bankruptcy laws.

Chapter 13 also has the added benefit, in some circumstances, to allow additional time to pursue other lender-offered mitigation options, such as a loan modification, while not fearing that your home may be foreclosed upon.

In some instances, subordinate mortgages can be completely “stripped” from your property and discharged, depending on the value of your home at the time you file bankruptcy.

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Student Loans and Bankruptcy: The student loan crisis in this country sits, at last check, at $1.7 trillion dollars. Many borrowers are in default or unable to pay. Many students come out of school with not only huge student loan debts, but also huge credit card debts, which they used to survive during college.

Student loans used to be dischargeable like any other debt, now the default is that no educational loans are dischargeable, based on some loopholes in the previous system.

Corey and Jon look at the Undue Hardship Exception:- what does it mean and how have different courts interpreted & applied it?

What can bankruptcy do for you and your student loans if you can’t discharge them? It can help mitigate other debt and bring education lenders to the bargaining table.

In this episode, we also look at:

Student loans and non-bankruptcy options

Federal loans-income based repayment options and/or disability discharges.

The Future of student loans in bankruptcy proceedings

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You Aren't a Failure If You File - You're Empowered:

Congress would not have enacted the Modern Bankruptcy Code if it did not want to provide a necessary tool (i.e. debt relief assistance) to those who desperately needed it.

Seeking bankruptcy relief is NO DIFFERENT than seeking judicial relief for any number of legal grievances an individual/business may have.

Bankruptcy will help YOU take back your life from your creditors: this could include completely erasing certain debt obligations; or in other circumstances, restructuring debt obligations while preventing your creditors from harassing you while you do so.

While Bankruptcy should often be considered as a last resort because of the effect it can have, in the short term, on your credit score, it can often be cheaper than trying to deal with your creditors outside of bankruptcy (i.e. through debt consolidation companies).

Carpenter Law cares. We use empathy to help people through difficult times, and we use our knowledge of the bankruptcy laws to assist those in need through an equitable process.

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Bankruptcy is a Tool AND Your Right: In our first episode of Ask Corey, attorney Corey Carpenter joins Jon Gay to give a general overview on bankruptcy.

Modern bankruptcy structure was first enacted in 1979, and has been modified several times, most recently with the BAPCPA act in 2005.

Bankruptcies are generally bifurcated into two kinds:

For consumers (Chapter 7, Chapter 13, and in rare instances, Chapter 11). For business/corporate entities (Chapter 9-for municipal entities; Chapter 11 (including the newly created sub-Chapter 5 for small businesses), and Chapter 12 (specifically enacted for farmers). The Goal of Modern Bankruptcy Laws is to provide DEBT RELIEF to consumers and businesses.   The emphasis is on assistance, and not punishment of those seeking use of the bankruptcy laws to address their debt.

Bankruptcy is also designed to provide two specific forms of relief: Discharge (or absolution) of debt-meaning it strips creditors of the right to pursue collection of a debt obligation

Debt restructuring-this applies to both consumer and business debtors

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