Chapter 7

Chapter 13

Michigan Foreclosure Law

Chapter 7

Eight Easy Steps Through Chapter 7 Bankruptcy

What is Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy was enacted to allow persons who are hopelessly burdened by debt to have an opportunity for a new beginning by wiping out unsecured debts (debts that aren’t tied to any specific item of property, most commonly credit cards). Chapter 7 is designed for persons who cannot afford to pay a significant portion of their debt back to lenders. Chapter 7 is available to individuals, couples and businesses. The process is often referred to as "liquidation." In theory, you are surrendering your assets to the court in exchange for a discharge (elimination) from all of your debts. However, individuals and couples are allowed to keep certain "exempt" property that varies by category and value.

Step 1: Before You Can File
At the initial consultation your attorney will give you a list of documents that you need in order to prepare your Bankruptcy Petition and schedules. Your attorney will also provide you with an intake form to complete. Once the listed documents have been assembled and the intake form is completed, a second appointment will be scheduled where the documentation and intake form is reviewed.

Step 2: Credit Counseling Commences
After the second appointment and the documents are ready, you will attend Credit Counseling and obtain a Credit Counseling certificate. While Credit Counseling is sought, your attorney will prepare your court papers. We will then have a final in-office appointment, where an attorney will completely review your bankruptcy petition and schedules with you, and you will sign your petition and schedules.

Step 3: Bankruptcy Papers are Filed
We file your case with the court. Your papers are filed electronically with the Bankruptcy Court, and immediately you will receive lawful protection from harassing creditors. Immediately after filing, We will provide you with your bankruptcy case number. If you continue to receive phone calls from bill collectors, you can give the creditor your case number and the telephone number. Debt collectors, after your Bankruptcy is filed, should then deal with your attorney directly. If you have creditors who are garnishing, foreclosing or repossessing property, We will notify that creditor immediately a bankruptcy is filed and the debtor is protected from this kind of harassment.

Step 4: Financial Management Course
After your case is filed, you will need to attend “The Financial Management Course” approved by the United States Trustee's office — ). After completion, you will bring this certificate to your attorney for the Meeting of Creditors.

Step 5: Attend Meeting of Creditors
Approximately 30 days after your case is filed, we will attend a hearing with you that is called a 341 Meeting of Creditors. At this meeting, a U.S. Trustee, who is appointed to your case, will interview you for approximately 5-10 minutes and ask you some basic questions about your case. This meeting is mandatory, and you must appear with proper identification (current picture identification and Social Security Card). You must also bring a copy of your most recent statements for all financial accounts and the pay stub(s) that you receive after your case is filed. The meeting is called the Meeting of Creditors because this is also an opportunity for the creditors to come and ask you questions. However, in most cases creditors do not appear.

Step 6: 60 Days Later
In each case, the Trustee and Creditors are given time to object to various aspects of the filer’s petition and schedules. Although objections are rare, in some cases, they do occur. All objections are due within 60 days after the Meeting of Creditors. Quality preparation of your petition, schedules, and statements will help prevent most unnecessary objections.

Step 7: Receive Discharge
If no party files an objection in your case, you should receive a discharge shortly after the 60-day waiting period expires.

Step 8: Post-Discharge Asset Administration
In some cases, where non-exempt assets are turned over to the bankruptcy estate, your case may remain open until all of the assets are received and distributed.

Chaper 13

Get started for filing a Chapter 7 and/or a Chapter 13 bankruptcy

Bankruptcy is a legal proceeding afforded to people who are unable to handle a financial crisis. Bankruptcy is available so that you can have a fresh start.

Bankruptcy comes in two varieties: Personal Bankruptcy (which is sometimes called Consumer Bankruptcy) and business bankruptcy. A Personal Bankruptcy (Consumer Bankruptcy) is the right to discharge a debt by an individual or a married couple. This is usually what people think of when they hear about filing bankruptcy.

The business bankruptcy is what a major corporation or business will file when they want to file bankruptcy. This type of filing is usually a Chapter 11 Bankruptcy. These are very complex cases, and often to go to a bankruptcy attorney who specializes in this specific subcategory for bankruptcy information.

There are two types of Consumer Bankruptcy options available for an individual or married couple, a Chapter 7 Bankruptcy or Chapter 13 Bankruptcy. There are specific forms and information needed prior to filing bankruptcy. What follows is some of the information you will need to fill out on the documents required for filing bankruptcy.

• Basic contact information including name, address, social security number of you and your spouse.

• General information about real estate you own and the value of the property and its assets.

• Information and lists of all your debts — who you owe, and the creditors claim that you owe.

• Lists of any leases or contracts that are still current you are a party to including residential, car and business leases.

• Information about your current income.

• Lists of your current expenses including utility bills, entertainment resources, business operational costs, etc.

• Statement of financial affairs including income from employment, payments to debtors, repossessions, foreclosures, and returns, closed financial accounts, etc.

There are many other important aspects to filing a Chapter 7 or Chapter 13 Bankruptcy that will be covered during your initial consultation at the our offices. For more information please use the resources on this web site or call (517) 775-5169.

Michigan Foreclosure Laws

How are mortgage liens treated in Michigan?
Michigan is known as atitle theory state where the property title remains in trust until payment in full occurs for the underlying loan. The document that secures the title is usually called adeed of trust but in Michigan this is also referred to as a trust mortgage.

How are Michigan mortgages foreclosed?
The primary method of foreclosure in Michigan involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly calledforeclosure by advertisement. When themortgage is initially signed it will usually contain a provision called apower of sale clause which upon default allows an attorney to foreclose on the property in order to satisfy the underlying defaulted loan which is sometimes referred to as abond. The attorney acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Auctions are conducted by the Sheriff. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain thepower of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1.Prior to initiating a foreclosure the lender must publish a notice of sale date for four (4) consecutive weeks in a newspaper of general circulation in the county in which the property is located. Within 15 days of the first publication of the notice a further notice must be posted at the property to be foreclosed. Although there is no default notice requirement under Michigan law the mortgage document will govern such notice provisions and if contained in the trust mortgage they must be adhered to.
2.Notice of foreclosure as described above must contain certain information including the name of the mortgagor the name of the mortgagee the name of any party or assignee, the date of the mortgage and it's recordation, the delinquent amount, a legal description of the property, the length of any applicable redemption period and the place and date of foreclosure sale.
3.Foreclosure sales must take place between 9AM and 4PM as part of a public auction. The trustee orsheriff will auction the property to the highest bidder including the lender. The foreclosure sale may be postponed by posting a notice of postponement at the same location the sale was originally going to occur at. Postponements more than one week must be re-published in accordance with the original sale notice procedure.
In Michigan, the lenders can also go to court in what is known as ajudicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain thepower of sale language the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known alis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a Michigan mortgage?
The documents are known as the trust mortgage ordeed of trust,note/bond, and in a commercial transaction, asecurity agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, amortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in thenote.

How long does it take to foreclose a property in Michigan?
Depending on the timing of the various required notices, it usually takes approximately 60 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files forbankruptcy.

Is there a right of redemption in Michigan?
Michigan has astatutory right of redemption, which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. The redemption period varies but adeed issued as part of a foreclosure only effectuates a transfer after the expiration of the redemption period.

Power of Sale Notice Requirements:

1.If the property is residential and does not exceed four (4) units and is not more than 3 acres, if the defaulted amount at the date of the notice of foreclosure is more than 2/3 of the original face amount of the debt secured by the mortgage, the redemption period is six (6) months.
2.If the property is abandoned based on either a personal inspection conducted by the lender or a statutory mailed notice asserting abandonment which has not been responded to by borrower, the redemption period is shortened to thirty (30) days.
3.In all other cases the redemption period is one (1) year. The redemption payoff includes the amount of the bid at the time of the foreclosure sale, interest at the note rate for the mortgage, and any taxes or hazard insurance paid with respect to the property after the foreclosure sale up until the date of redemption.
4.Mortgagors who do not redeem but remain upon the foreclosed property after foreclosure sale can be evicted through a summary proceeding in district court which usually takes thirty (30) days

Are deficiency judgments permitted in Michigan?
Yes. Foreclosure is the sole remedy against a property unless there is a separate legal document which obligates a borrower to a specific amount of money. This is usually in the form of anote andguaranty. Adeficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures. The borrower can claim that the foreclosure sale was not forfair market value of the property as adefense.

What statutes govern Michigan foreclosures?
The laws that govern Michigan foreclosures are found in Chapter 451 of Michigan Compiled Laws.