Debt and Bankruptcy in Michigan and Toledo, Ohio

Debt can destabilize a person, a family, or a business. It can make moving forward with life activities or business operations challenging. You may plan. You may struggle. You may make genuine efforts to get ahead, but simply cannot. You need a fresh start or a reboot. Sometimes that means filing for bankruptcy. Other times that might mean another form of debt relief or debt reorganization. The important thing is knowing there are solutions and maximizing their implementation with efficiency.

A fundamental goal of the federal bankruptcy laws enacted by Congress is to give debtors a financial "fresh start" from burdensome debts. The Supreme Court made this point about the purpose of the bankruptcy law in a 1934 decision:

“[I]t gives to the honest but unfortunate debtor…a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.”

Local Loan Co. v. Hunt, 292 U.S. 234, 244 (1934).

This bankruptcy goal is accomplished through the bankruptcy "discharge", which is granted at the conclusion of the bankruptcy process and releases debtors from personal liability from specific debts and prohibits creditors from ever taking any action against the debtor to collect those debts. The bankruptcy process extinguishes the debtors' qualified debts and allows debtors to keep certain property that is exempt from surrender to the Trustee for liquidation and payment of the proceeds to creditors. The consequences of this process are that your credit and credit score are affected for many years after the discharge but there are ways to build your credit to minimize the amount of time of your financial disability post-bankruptcy. This process should be discussed with an attorney as it is rather complicated and there are risks and rewards to be weighed before making a decision. I can help you understand your options and guide you through the process.

At John V. Deku, PLC, I tailor solutions to your specific needs. If you or your business has debt, I thoroughly review your relevant documents and your unique situation and advise accordingly. We know from experience that informed clients make the best financial decisions for themselves, their families, and/or their businesses. Contact me at (734) 854-4535 to schedule a phone conference and receive smart legal counsel.

Understanding Bankruptcy

Bankruptcy law provides individuals and businesses with a legal framework to address overwhelming debt and financial difficulties. Bankruptcy offers a fresh start by allowing debtors to eliminate or restructure their debts under the supervision of a court through a Trustee.

But filing for bankruptcy, whether it's for yourself or a business, is a long, tedious process that must be undertaken carefully and with relevant deadlines in mind. The law is very specific as to what must be done in order for the bankruptcy to be successful. Creditors may choose to challenge your bankruptcy so that they can uphold their rights during the bankruptcy. These challenges, however, can complicate the process but are manageable and be forewarned that you will actually be an active participant in the process.

At John V. Deku, PLC, we know what your rights are as well as the rights of creditors, and use this knowledge to ensure we keep the bankruptcy moving along with minimal delays, if any, and maximum results.

I provide representation for individuals and businesses in the following:

Chapter 7 bankruptcy
Chapter 13 review and analysis
Bankruptcy litigation

Our bankruptcy legal services include but are not limited to:

Reviewing and analyzing your financial situation
Advising you on your best legal options
Preparing your bankruptcy paperwork and financial schedules
Filing your bankruptcy paperwork
Representing you at hearings
Reviewing and assessing reaffirmation agreements
Procuring the Discharge order

Your success at filing for bankruptcy or committing to a debt relief program is dependent on the work you put in to the process and decisions you make, so make sure they are informed decisions. I will work with you regarding the due diligence, keep you informed, and help you get back on the right financial track.

Types of Bankruptcy

Several types of bankruptcy exist, and each is designed to help specific situations for both individuals and businesses.

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the sale of a debtor's non-exempt assets to repay creditors. Individuals and businesses can obtain a discharge of most debts, providing a clean financial slate. Common concerns that arise under this type of bankruptcy include understanding what happens if the debtor(s):

Are divorcing
Own a house
Own a vehicle
Have student loans
Have a personal injury claim

Chapter 13 bankruptcy allows individuals to reorganize their debts into a manageable repayment plan lasting three to five years. Debtors can retain their assets while making affordable monthly payments to creditors. This type of bankruptcy is often preferred by individuals and sole proprietors.

Chapter 11 bankruptcy is primarily designed for businesses. It allows for the reorganization and restructuring of debts to maintain operations and repay creditors over time. Chapter 11 enables the debtor to continue operating while implementing a court-approved plan.

Chapter 5 bankruptcy, more accurately referred to as Subchapter V of Chapter 11, is a newer specialized form of bankruptcy designed for small businesses seeking reorganization and debt relief. It was established by the Small Business Reorganization Act of 2019 (SBRA) to offer a streamlined and more affordable process compared to traditional Chapter 11 bankruptcy

Chapter 12 bankruptcy is specifically tailored for family farmers and fishermen. Chapter 12 allows for the adjustment of debts and provides relief to financially distressed agricultural businesses.

There's also what's known as a "Chapter 20 bankruptcy", which is not a “type” of bankruptcy on its own. Rather, Chapter 20 refers to a situation where a debtor has completed a Chapter 7 bankruptcy (with discharge of debts issued) and then files a Chapter 13 bankruptcy.

Indicators that an Individual Should File Bankruptcy

Not all individuals should file for bankruptcy when they are experiencing financial difficulties. Sometimes alternatives are a better solution. If, however, any of the following situations exist, you may want to talk to me to determine the your options and the best course of action.

Overwhelming Debt. When debts, such as credit cards, medical bills, or personal loans, become unmanageable and exceed the individual's ability to repay, bankruptcy may be a viable solution.
Wage Garnishments and Collection Actions. If creditors initiate wage garnishments, lawsuits, or aggressive collection efforts, filing for bankruptcy can halt these actions and provide a fresh start.
Foreclosure or Repossession Threats. When facing the risk of losing a home to foreclosure or having assets repossessed, bankruptcy can invoke an automatic stay, preventing such actions and providing an opportunity to address the debt.
Inability to Meet Basic Living Expenses. If debts consume a significant portion of an individual's income, making it difficult to cover essential living expenses, bankruptcy may provide relief and enable financial stability.

Indicators that a Business Should File Bankruptcy

When a business is in dire financial straits, restructuring debt is often best done through bankruptcy, but not always. If any of the following situations exist, however, it is best to speak to our debt and bankruptcy attorney to determine the best legal path to save your company and put it back on track to success.

Cash Flow Problems. Persistent cash flow issues, including the inability to meet payroll, pay vendors, or cover operational expenses, may signal that a business should consider bankruptcy as a means of restructuring debt and stabilizing finances.
Mounting Debt and Creditors' Claims. When a business accumulates substantial debt and creditors aggressively pursue collection efforts, bankruptcy can provide a legal framework for debt resolution and asset protection.
Declining Revenues and Market Challenges. If a business experiences a significant decline in revenue, faces increased competition, or struggles to adapt to market changes, bankruptcy can provide an opportunity for reorganization and a chance for the business to regain profitability.
Legal Actions and Lawsuits. When facing multiple lawsuits, judgments, or enforcement actions from creditors, bankruptcy can offer protection and an opportunity to address and resolve outstanding legal claims.

Alternatives to Bankruptcy

Many consumers and businesses alike do not like the idea of bankruptcy, and in many situations, bankruptcy is not necessary. Alternatives to bankruptcy exist and can prove more beneficial.

Debt negotiation or settlement is one alternative to bankruptcy. Negotiating with creditors to reduce outstanding debt, establish a repayment plan, or settle for a lump sum payment can be an alternative to bankruptcy for individuals and businesses.

Debt consolidation is often a popular option for individuals. Consolidating multiple debts into a single loan with more favorable terms can make the debt more manageable, avoiding the need for bankruptcy.

Credit counseling and debt management plans are also popular options, especially for individuals. Working with a credit counseling agency can provide guidance on budgeting and financial management. The agency will also help negotiate lower interest rates or reduced payments with creditors.

Asset liquidation is an option more popular among businesses. Selling non-essential assets to generate funds and repay creditors may help alleviate financial burdens without resorting to bankruptcy.

Why Choose John V. Deku, PLC

Having a debt and bankruptcy lawyer will help you identify your best course of action for financial freedom and security. At John V. Deku, PLC, I offer a comprehensive approach to solving your debt issues, including but not limited to helping you with:

Complex Legal Procedures. Bankruptcy involves intricate legal procedures, documentation, and court filings. I will navigate these complexities, ensuring compliance with legal requirements and maximizing the benefits available under the chosen bankruptcy chapter.
Determining the Most Appropriate Chapter. I will assess your unique financial circumstances and help determine the most suitable bankruptcy chapter or alternative that aligns with your goals and offers the greatest relief.
Protection of Rights and Interests. I safeguards your rights, protects assets, and ensure that the you, the debtor, receive the maximum allowable exemptions under bankruptcy law.
Negotiating with Creditors. I may negotiate with creditors on behalf of individuals or businesses, seeking favorable terms, reduced debts, or repayment plans.

If necessary, I will also represent you in court proceedings. We will advocate for your interests, present the case before the bankruptcy trustee or judge, and ensure fair treatment throughout the process.

Contact John V. Deku, PLC Today

At John V. Deku, PLC, I understand that financial hardships and debt pose real problems, and the only solution in many cases is bankruptcy – though there are alternatives. Contact the office today by filling out the online form or calling me at (734) 854-4535 to schedule a phone conference and to learn more about how we will help you overcome your dire financial situation.

RESOURCES:

Bankruptcy Basics - U.S. Federal Courts Literature on Bankruptcy

"Bankruptcy Basics is a publication of the Bankruptcy Judges Division of the Administrative Office of the U.S. Courts. It provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process. Bankruptcy Basics is not a substitute for the advice of competent legal counsel or a financial expert, nor is it a step-by-step guide for filing for bankruptcy. Neither the Bankruptcy Judges Division nor the Administrative Office of the United States Courts can provide legal or financial advice. Such advice may be obtained from a competent attorney, accountant, or financial adviser."

U.S. Bankruptcy Code