A word that is growing more and more popular today is foreclosure. We hear on our televisions at night and read about it in the news. Foreclosures seem to be every where so what do you do when the bank tells you they are foreclosing on your house?
The first reaction is a wave of emotion. We might feel angry, sad, or scared. We might feel all of these emotions at once. I mean this is our home after all. Where are we going to live? What are we going to do? The first thing to do is to relax. This is not the end of the world.
Many people get caught up with an emotional attachment to their homes. In reality it is just a place to keep your stuff. Think of yourself as a business. You bring in money and your spend money. At the end of the day if you have spent more then you brought in, you are going to go out of business. Any business in this position will look cut costs.
This is the same mentality we need to take when deciding whether you want to keep your house after it has been foreclosed on. If your house is bleeding you dry then its time to part ways with it. A $100,000 mortgage for a house that is only valued at $50,000 to $75,000 is not worth it. Cut ties to the old place and keep more money in your pocket.
Going through the hassle of reworking your mortgage or calling up one of those commercials you see on television usually ends up costing more time and money then is worth it. The number of people that attempt to go down that path and end up getting burned is alarming.
The law protects homeowners that are foreclosed on. When the bank is only able to sell your house for $25,000 when you owe $100,000, they cannot come after you for the difference and say you owe them $75,000. Unless you give the bank a personal guarantee, they are only allowed to receive the amount they sell the house for as compensation for the mortgage.
So before coming up with a game plan on how to save your house, take a step back and try to be as objective as possible. Is it worth saving the house? Is the house actually holding you back? In the end, more often then not it is better in the long run to let it go and look to the future then to try and recover the past.
Monday, November 30, 2009
What is the difference between Chapter 7 and Chapter 13 in bankruptcy?
One of the most popular questions you hear about bankruptcy is, “what is the difference between a Chapter 7 and a Chapter 13 filing?” In reality there are quite a few differences because they are two different forms of bankruptcy. It depends on each individuals situation and goals on which chapter is the best for them. There are some people that do not qualify for Chapter 7 because either they make too much money or they owe too many debts. This is a real basic coverage of these two types of bankruptcy and a bankruptcy attorney should be contacted before deciding which to file.
Chapter 7:
Chapter 7 is the more traditional bankruptcy. Most people prefer this form of bankruptcy because it is less expensive and is over the quickest.
Chapter 7 is sometimes called a straight bankruptcy. In this chapter, the debtor will turn over non-exempt property to be liquidated and distributed to the creditors. After this has taken place, the debts are discharged and the debtor has his or her fresh start.
I know that the thought of turning over any of your property makes your stomach turn but here is the kicker: most property falls into the category of exempt property and doesn’t get turned over. That means you get to keep it. The general rule is you are striped of all excess property in a Chapter 7. That means if you own extra vehicles, vacation property, lots of jewelry, etc., those types of property are the ones that get liquidated in the Chapter 7 procedure.
Chapter 13:
Chapter 13 does generally cost more then a Chapter 7. This is because a Chapter 13 plan needs to be put together for the debtor that has to be approved by the trustee. Also the debtor is not discharged as quickly as he or she would be in a Chapter 7.
Chapter 13 is like a forced budget. The plan that is put together forces the debtor to pay the trustee a certain amount for 3 to 5 years. This means that the debtor’s discretionary income will go to pay his creditors.
An example of this can be seen with some simple numbers. If a debtor makes $4000 a month and has $3000 in expenses per month (not including paying off unsecured creditors), that leaves $1000 in discretionary income. The Chapter 13 plan will require that $1000 to be paid to the trustee who distributes it evenly amongst the creditors. Over 60 months that is $60,000 going to the creditors, so if you owe over $100,000 you can see the benefits.
Generally the numbers are not this clean and $1000 is a pretty high number for the discretionary amount but it gives you an idea of how the process works. But the best part about filing a Chapter 13 plan is no matter what property is owned the debtor is permitted to keep it.
Chapter 7:
Chapter 7 is the more traditional bankruptcy. Most people prefer this form of bankruptcy because it is less expensive and is over the quickest.
Chapter 7 is sometimes called a straight bankruptcy. In this chapter, the debtor will turn over non-exempt property to be liquidated and distributed to the creditors. After this has taken place, the debts are discharged and the debtor has his or her fresh start.
I know that the thought of turning over any of your property makes your stomach turn but here is the kicker: most property falls into the category of exempt property and doesn’t get turned over. That means you get to keep it. The general rule is you are striped of all excess property in a Chapter 7. That means if you own extra vehicles, vacation property, lots of jewelry, etc., those types of property are the ones that get liquidated in the Chapter 7 procedure.
Chapter 13:
Chapter 13 does generally cost more then a Chapter 7. This is because a Chapter 13 plan needs to be put together for the debtor that has to be approved by the trustee. Also the debtor is not discharged as quickly as he or she would be in a Chapter 7.
Chapter 13 is like a forced budget. The plan that is put together forces the debtor to pay the trustee a certain amount for 3 to 5 years. This means that the debtor’s discretionary income will go to pay his creditors.
An example of this can be seen with some simple numbers. If a debtor makes $4000 a month and has $3000 in expenses per month (not including paying off unsecured creditors), that leaves $1000 in discretionary income. The Chapter 13 plan will require that $1000 to be paid to the trustee who distributes it evenly amongst the creditors. Over 60 months that is $60,000 going to the creditors, so if you owe over $100,000 you can see the benefits.
Generally the numbers are not this clean and $1000 is a pretty high number for the discretionary amount but it gives you an idea of how the process works. But the best part about filing a Chapter 13 plan is no matter what property is owned the debtor is permitted to keep it.
Wednesday, November 25, 2009
New Business Today
With the economy in such a state of flux it is a great time to expand your current business or even start your own business. I know it sounds as if it is going against the grain. The business world is so uneven as in normal times, why doesn’t it make more sense to baton down the hatches and ride out these times?
The first issue is when trying to endure the economic storm reducing your work force and telling everyone else they need to take on more is not going to help your business move forward. Even though times are tough does not mean you can remain stagnant. In the world of business, if you are not moving forward, you are moving backwards.
So why is it a good time to retool a business, expand a current business or even start a new business? The answer is because the economy is so slow that suppliers, real estate owners, and all the other people you need to work with are willing to work with you at reduced rates.
If a business was originally started on the east side of Michigan and over the past years has expanded and has a satellite office in West Michigan now. It might be a great time to develop that satellite office. The Detroit area is still in decline where as the Grand Rapids area is seeing some growth. Why not do some reorganizing and test the waters to see if you can generate more business in West Michigan? If your numbers are already on the decline then the worst thing that can happen is they stay on the same path.
You can even hire new employees and pay them less then they are worth. There is so much unemployment in Michigan that people are getting desperate to find work. As more and more people flood the market, you might be able to get an employee that was making $40,000 2 years ago for closer to $30,000 now. That is $10,000 less you have to pay and they are still doing the same quality work they were for $40,000.
The other thing that most people overlook is that you have all the power. You can negotiate with anyone on anything. If you are starting a business, negotiate the rent of a building down to where you want it. Negotiate the price of your inventory down so your prices are more competitive then the market is used to. Advertise at reduced rates. The fact is all of these other businesses are not getting the amount of business they used to so they are trying anything to get new clients. They need the business but you have the power to go somewhere else. The worst thing they can say in no.
In the end you will be surprised that you can probably reorganize or expand your current business or start a new business for much less then you could have even 2 years ago. So what is the harm in testing the waters, testing some numbers and see if you can make it work?
The first issue is when trying to endure the economic storm reducing your work force and telling everyone else they need to take on more is not going to help your business move forward. Even though times are tough does not mean you can remain stagnant. In the world of business, if you are not moving forward, you are moving backwards.
So why is it a good time to retool a business, expand a current business or even start a new business? The answer is because the economy is so slow that suppliers, real estate owners, and all the other people you need to work with are willing to work with you at reduced rates.
If a business was originally started on the east side of Michigan and over the past years has expanded and has a satellite office in West Michigan now. It might be a great time to develop that satellite office. The Detroit area is still in decline where as the Grand Rapids area is seeing some growth. Why not do some reorganizing and test the waters to see if you can generate more business in West Michigan? If your numbers are already on the decline then the worst thing that can happen is they stay on the same path.
You can even hire new employees and pay them less then they are worth. There is so much unemployment in Michigan that people are getting desperate to find work. As more and more people flood the market, you might be able to get an employee that was making $40,000 2 years ago for closer to $30,000 now. That is $10,000 less you have to pay and they are still doing the same quality work they were for $40,000.
The other thing that most people overlook is that you have all the power. You can negotiate with anyone on anything. If you are starting a business, negotiate the rent of a building down to where you want it. Negotiate the price of your inventory down so your prices are more competitive then the market is used to. Advertise at reduced rates. The fact is all of these other businesses are not getting the amount of business they used to so they are trying anything to get new clients. They need the business but you have the power to go somewhere else. The worst thing they can say in no.
In the end you will be surprised that you can probably reorganize or expand your current business or start a new business for much less then you could have even 2 years ago. So what is the harm in testing the waters, testing some numbers and see if you can make it work?
Tuesday, November 24, 2009
Saving a House from Foreclosure
The day you knew was coming has arrived. The bank has finally given you notice that they are foreclosing on your house. Many times life throws us curveballs that put us in a situation like this. An unexpected medical emergency, unemployment or any number of things could have set us back but we just could not get back on track before we were given notice. Is there anything we can do to save the house?
Everyone in this situation has options. The biggest being whether or not to keep the house or let it go. One path that many people attempt is to work things out with the bank. This is a treacherous road to navigate. The bank is looking out for itself and will do anything to recover as much money as possible from this situation. There are also a lot of people out there that will offer to help you by working with the bank too.
Priority number one for any one that attempts this is to get everything in writing. A workout with the bank should be in writing containing the essential terms of the deal and be signed by the bank. Any person that agrees to help you should sign a contract specifying what you are paying for and what they are going to do for you. Many people forget that they are dealing with businesses that are looking to make money. You have to protect yourself.
Another common path is bankruptcy. Although it’s not ideal this is the more secure path because you know what you are going to get out of the deal. Normally if your house is being foreclosed on so you are experiencing some sort of financial hardships. In a normal situation I would not recommend filing bankruptcy unless there are additional debts owed besides just the house but there are extraordinary situations out there that go against this.
Bankruptcy can be used to halt the foreclosure process but there are no guarantees that it can reverse it. Banks look to what chapter you file to determine their course of action. In a Chapter 7 they will normally wait to see if you attempt to reaffirm the debt or what course of action you will be taking. In a Chapter 13, depending on your filing history, they will cancel the foreclosure because they know you are going to have to put together a payment plan so instead of fighting it they are willing to take part in the bankruptcy.
Each chapter has its advantages and disadvantages so a bankruptcy attorney will be able to explain the differences and should be consulted prior to making this decision. But if you hire an attorney you are guaranteed to have someone zealously represent your interests where other methods leave you on your own to protect yourself.
Everyone in this situation has options. The biggest being whether or not to keep the house or let it go. One path that many people attempt is to work things out with the bank. This is a treacherous road to navigate. The bank is looking out for itself and will do anything to recover as much money as possible from this situation. There are also a lot of people out there that will offer to help you by working with the bank too.
Priority number one for any one that attempts this is to get everything in writing. A workout with the bank should be in writing containing the essential terms of the deal and be signed by the bank. Any person that agrees to help you should sign a contract specifying what you are paying for and what they are going to do for you. Many people forget that they are dealing with businesses that are looking to make money. You have to protect yourself.
Another common path is bankruptcy. Although it’s not ideal this is the more secure path because you know what you are going to get out of the deal. Normally if your house is being foreclosed on so you are experiencing some sort of financial hardships. In a normal situation I would not recommend filing bankruptcy unless there are additional debts owed besides just the house but there are extraordinary situations out there that go against this.
Bankruptcy can be used to halt the foreclosure process but there are no guarantees that it can reverse it. Banks look to what chapter you file to determine their course of action. In a Chapter 7 they will normally wait to see if you attempt to reaffirm the debt or what course of action you will be taking. In a Chapter 13, depending on your filing history, they will cancel the foreclosure because they know you are going to have to put together a payment plan so instead of fighting it they are willing to take part in the bankruptcy.
Each chapter has its advantages and disadvantages so a bankruptcy attorney will be able to explain the differences and should be consulted prior to making this decision. But if you hire an attorney you are guaranteed to have someone zealously represent your interests where other methods leave you on your own to protect yourself.
WELCOME
I have started the West Michigan Business & Bankrutpcy Lawyer to inform the public on current issues in the areas of business law and bankruptcy. Obviously because I am located in West Michigan the topics will be centered on the law that is applicable to this region.
Also because of the difference between these two areas of law not all the posts will be applicable to everyone but I hope that you will be able to find the information you are looking for. If you can't find what you need or have a question, you can contact me and I will be sure to add this information in the future or I can respond directly to you.
Some of the business law topics that will be covered will be infomation of business etities, business transactions, property law, contracts, negotiations, torts and more. Some of the bankruptcy topics will include the differences between the different chapters, information of foreclosures, debts that can be discharged and more. I will also try to post any current news articles that I notice too.
Thank you for your time and I hope that I can help you.
Also because of the difference between these two areas of law not all the posts will be applicable to everyone but I hope that you will be able to find the information you are looking for. If you can't find what you need or have a question, you can contact me and I will be sure to add this information in the future or I can respond directly to you.
Some of the business law topics that will be covered will be infomation of business etities, business transactions, property law, contracts, negotiations, torts and more. Some of the bankruptcy topics will include the differences between the different chapters, information of foreclosures, debts that can be discharged and more. I will also try to post any current news articles that I notice too.
Thank you for your time and I hope that I can help you.
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