Under the Bankruptcy Code, the value of personal property is determined under § 506(a)(2) which provides: If the debtor is an individual in a case under chapter 7 or 13, such value with respect to personal property securing an allowed claim shall be determined based on the replacement value of such property as of the date of the filing of the petition without deduction for costs of sale or marketing.  With respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined. A starting point is an appropriate number taken from either the NADA Official Used…

If you are behind on your real property taxes and in danger of forfeiting your house or on the brink of foreclosure, filing a Chapter 13 Bankruptcy may be the right solution for you. The Automatic Stay provisions of §362 will stop the foreclosure and the ability to cure any arrearage over the course of your Chapter 13 Plan will allow you to keep your house. Under Michigan law, there is a 2 year limit on being delinquent in paying your taxes. A tax is considered delinquent if it remains unpaid for one year after it is due. For example, a tax billed by your local municipality in 2012 will be turned over to the County Treasurer on March 1, 2013. Then, one year later…

§366 of the Bankruptcy Code governs matters relating to Utility companies, like Consumers, Bay City Power & Light and DTE. Typically, the utility company will close out the Pre-Petition account and all charges that accrued prior to filing your bankruptcy will be included in that account. §366(a) provides the general rule that a utility may not alter, refuse, or discontinue service to a debtor solely on the basis of the commencement of a case under this title or that a debt owed by the debtor to such utility for service rendered before the order for relief was not paid when due. This general rule, however, is subject to the conditional language set forth in §366(b), which provides that a utility may discontinue service if neither…

Mortgage Servicers frequently inflate their pre petition arrearages, including interst and penalty charges, in Chapter 13 proceedings. The Mortgage Committee of the National Association of Chapter Thirteen Trustees (NACTT) recently released a Best Practices guideline for trustees and mortgage servicers. as follows: The NACTT Mortgage Committee is comprised of Chapter 13 trustees, mortgage servicers, mortgagees and creditors’ counsel. The committee’s mission is to foster communication between the parties, resolve differences and to recommend best practices of conduct for all stakeholders. Our goal is to improve the bankruptcy system. Although the committee recommends the practices set forth below, we recognize that there may be other acceptable procedures, Therefore, we remain open to further discussion and review. BEST PRACTICES FOR TRUSTEES and MORTGAGE SERVICERS IN CHAPTER 13…

Under the provisions of Bankruptcy Code amendments of 2005, you are required to provide a copy of your tax return to any creditor who requests it.  Section 521(e)(2) provides that you are required to provide any creditor a copy of your income tax return if you file for Bankruptcy in Michigan. But – timing of the Creditor’s request is critical. Courts with reported decisions  (See  Fontaine, 397 B.R. 191; Collins, 393 BR 835) made it clear that the Creditor is only entitled to a copy of your return – if Creditor requests the return before you submit it to the Trustee.  These courts have held that if a Creditor requests your income tax return  before your attorney submits it to the Trustee, you are required provide it to…

The Next Financial Crisis Is Upon Us For many, a college education is one very important part of achieving the American dream. Post-graduate degrees have traditionally lead to higher paying jobs and have allowed many of us to enjoy a higher standard of living. Over the course of the past 30 years, 37 Million Americans have funded their “dream” with Student Loans; 6 Million of those borrowers are in default. Student Loan debt has surpassed credit card debt and auto loan debt at $1 Trillion dollars. The Staggering Statistics In March of 2012, the Federal Reserve Bank reported that 47% of outstanding Student Loans were in deferment or forbearance.  27% of Student Loan borrowers are delinquent and the default rate is almost 20%. The lives…

 In re Ragos, the Fifth Circuit Court of Appeals held that a Chapter 13 debtor’s Social Security income is not included in the debtor’s projected disposable income. Since Congress excluded Social Security income from “current monthly income” in Code § 101(10A) and “disposable income” in Code § 1325(b)(2), the court reasoned, it made little sense to circumvent that prohibition by allowing Social Security income to be included in projected disposable income. The conclusion that Congress exempted Social Security benefits was bolstered by two independently-enacted provisions of the Social Security Act, 42 U.S.C. § 407(a) and § 407(b). Even the fact that a debtor’s disposable income was negative did not constitute a “special circumstance” that would permit complete abandonment of the disposable income figure for purposes of establishing projected disposable income. The Ragos Court also…