Can Utility Bills Be Included In Chapter 7 Bankruptcy?

Even if you have fallen behind on your utility bills, filing for Chapter 7 bankruptcy might be able to keep your utility services connected, including electricity, gas, water, or phone.

Utility debts are typically discharged or wiped out in bankruptcy. If you owe back payments on utilities and file for bankruptcy, the utility provider is not permitted to alter, refuse, or terminate your service.

Utility services cannot be denied in a bankruptcy

Because it is not covered by the automatic stay in bankruptcy, this restriction is located in a different part of the bankruptcy code. It also bans utility companies from shutting off or denying service to you just because you filed for bankruptcy.

Unsecured debts, such as overdue utility bills, are wiped out in Chapter 7 and in Chapter 13. Babi Legal Group can help you while filing bankruptcy to fully understand what happens to delinquent utility bills.

What happens to past-due utility bills after bankruptcy?

You will need to convince the utility company that your payment assurance is good enough so they will not turn off your power or you will need to get the court to order the utility to accept your payment assurance.

The bankruptcy law is unclear about whether the utility can cut off your service after 20 days unless it asks for court permission first. A bankruptcy attorney can guide you through the steps that provide adequate assurance for you in the bankruptcy court.

Most utility companies will simply just refuse to service you, but in most cases, if you file bankruptcy on outstanding utility debts, then the utility company upon filing a bankruptcy case, will establish a new account for your service and include the old account in the bankruptcy.  The catch is that the utility company can now require you to pay a security deposit towards the new account and service before they continue to serve you.

Act soon

Do not wait until the last minute to take care of the issue of whether you have enough money to keep your home. If you hire a bankruptcy lawyer, work with them so that you do not lose your services.

Will my utility company shut my service off after bankruptcy?

No, they cannot do that. Chapter 7 bankruptcy may provide immediate relief if you are facing a utility shut-off, such as your gas or electricity.

If the utility bill is overdue and they have already disconnected your service, they will be required to reconnect it. Utility providers also cannot harass you for payments.

How to keep the utility company providing the utility service?

However, to keep the service running, you must provide acceptable assurance that you will be able to pay future utility expenses within 20 days of filing.

Cash deposits, letters of credit, certificates of deposit, surety bonds, and prepayment of utility expenses are examples of adequate assurance.

Under the Bankruptcy Code, consumers are protected from post-petition service disconnection by ensuring that utility providers have adequate assurance of payment.

How many days do I have until a utility shut off after bankruptcy?

According to bankruptcy schedules, you must show the utility company that you will be able to pay future utility bills within 20 days of filing bankruptcy.

This is referred to as giving “sufficient assurance,” and if you don’t follow this procedure, the utility provider can cut your service – even if your debts are ultimately settled through bankruptcy.

How can I provide adequate assurance in my bankruptcy case?

A letter of credit may suffice. A cash deposit, a surety bond, or even a certificate of deposit might also be provided as assurance.

What if my utility company asks for the adequate assurance I cannot give?

If you and your utility company can’t agree on whether or not your payment assurance is sufficient, you may seek the assistance of the bankruptcy court through a lawyer. The deposit amount may be modified after negotiating with the lawyer that represents you as once the issue is brought to the Court’s attention a Bankruptcy Judge can order the utility company service the account on different terms.

What happens to the future utility bills I owe to utility companies if I am filing for bankruptcy?

To begin, verify that your outstanding utility expenses are listed on your bankruptcy plans.

Your attorney will send a letter to the utility company, which will notify them that you’ve filed for bankruptcy. This will ensure there is no utility shut-off because of your pre-bankruptcy utility bills.

The utility company cannot try to collect past-due utility bills after you file bankruptcy protection. Then the law prohibits utility companies from making phone calls or contacting you for assurance of payment as this violates the bankruptcy automatic stay provision that protects the person filing for bankruptcy.

Don’t forget you still have to pay future utility bills

Even if you filed for bankruptcy, any services you receive after the filing will still be subject to new utility costs.

If you don’t pay, the energy provider may attempt to collect your new liabilities or turn off your service.

Why file for bankruptcy within an attorney-client confidential relationship?


If you want to request adequate assurance that you are filing bankruptcy correctly within the federal law, we recommend you do not go to a debt relief agency. Unlike a serious attorney-client relationship, these agencies cannot guarantee to keep your sensitive or confidential information safe.

Benefits of filing bankruptcy with a bankruptcy lawyer

On the other hand, bankruptcy attorneys evaluate every aspect of the bankruptcy process with you. They will go with you in your bankruptcy case to understand how to handle your past-due utility bills and prevent the companies from shutting off their services.

How to find the best bankruptcy lawyer?

We recommend you do not do a zip code search for a top-rated bankruptcy attorney and conduct a few consultations to determine who you feel most comfortable with assisting you in your case. The best way to find a serious law firm is by recommendation or by getting a free evaluation where the attorney explains everything she or he has to offer you in respect to their future service towards bankruptcy protection and in front of the bankruptcy court.


Can You Refinance After Covid Forbearance?

What Is Covid Mortgage Forbearance and How Does It Work?

A loan servicer or lender may delay, suspend, or lower your mortgage payments via a mortgage forbearance. During this period, the bank also agrees not to start foreclosure procedures.

Homeowners with a federally backed mortgage who are experiencing Covid 19 pandemic-related problems could apply for an 18-month forbearance up to Sept. 30, 2021.

What Happens After Covid Forbearance Ends?

The CARES Act’s deadlines are fast approaching. Many homeowners who went through Covid forbearance agreements are now finding themselves stuck with expensive mortgage payments. This could be a huge setback for people who are just starting to get back on their feet.

Thinking About Refinance?

If the homeowners miss payments, they will need to make them up. The missed payments may be put off until the end of their mortgage term or added to the mortgage balance. In these cases, a refinance might help.

Many homeowners can lower their monthly mortgage payments or reduce the length of their loan and make the loan less risky for both the borrower and lender by taking advantage of today’s low-interest rates.

Rules For Covid Refinancing

Now that we’re in a pandemic, the rules are different. How soon you can refinance after forbearance ultimately depends on your loan type.

Freddie Mac and Fannie Mae loans

If you do not know if either Fannie Mae or Freddie Mac owns your loan, you can search them through these links:

To refinance your Fannie Mae or Freddie Mac, you must make at least three consecutive on-time payments following your forbearance term. You can then refinance the complete loan, including any missed payments, into a new loan.

FHA loans

Borrowers with FHA loans, like all other loan types, must refinance their mortgages. To refinance, FHA borrowers will need to get out of their forbearance plans. Borrowers must make three consecutive on-time payments before applying for a new loan is accepted.

To refinance your loan and get cashback, you’ll need to have made at least 12 consecutive payments after finishing your forbearance period.

If you want to explore a streamlined refinance, lenders will expect you to have made six or more consecutive payments.

USDA and VA loans

Contact your loan servicer using the Mortgage Electronic Registration Systems to review your options after forbearance.

After a period of deferment, VA borrowers may be eligible for a loan modification. There’s also a chance that USDA borrowers’ monthly payments might be delayed until the end of their loan term.

If you were unable to continue making payments during forbearance, you will be able to refinance your mortgage after 3 months have passed and 3 consecutive mortgage payments have been made.

Why Go Through Refinance With A Lawyer?

No two borrower circumstances are alike, especially when forbearance is taken into account. That’s why it’s critical to understand your financial situation and long-term goals hand in hand with an expert before applying for a refinance.

There’s never been a better moment to refinance your mortgage. Those who qualify may save hundreds of dollars each month.

Go Through Refinance With A Forbearance Attorney

There are regulations to follow if you’ve been in forbearance. An expert law firm can help you figure out your best options and make sure the process goes as smoothly as possible.

To be eligible for a new loan, you must make three months’ worth of payments before being released from hardship. These circumstances might cause issues if not handled properly.

You must make your payments on time. If you make three payments on time, you can refinance.

If you put your loan on forbearance, you must notify the lender and prematurely terminate the suspension. When this happens, you’ll want to get in touch with your lawyer.

An attorney might also assist you in avoiding making another error by not simply getting a letter, but having your property evaluated, and so on.


Do self-employed borrowers have trouble obtaining loans?

Lenders put in place new policies during the pandemic. Some of these policies were for self-employed borrowers. These borrowers will now see some of these policies phased out. However, self-employed borrowers still require more work to be approved.

How much money could you save by refinancing your mortgage?

If you are considering refinancing, a new home loan at today’s historically low mortgage rates could save you a lot of money.

If you refinance your 30-year fixed-rate mortgage in 2020 when mortgage rates are at all-time lows, Freddie Mac found that you would save an average of $2,800 each year.

According to the report, refinancing your mortgage can lower your mortgage rate by more than 1%.

What other options do I have apart from refinancing?

The first obvious option would be to continue to pay the original rate as well as the same amount. Talk to your lender to see if it is possible and under which conditions.

A loan modification is another good option. With it, you can lower your term or your rate. Just make sure you understand a mortgage modification, which is not the same as a loan refinance.

One final resort would be to sell your home. Yet this can help to pay off your loan and forget about any foreclosure.

Is refinancing a fast option?

In some situations, it’s feasible to refinance right after and even during forbearance. However, you must fulfill the criteria to show that you are in excellent financial condition either before or after the forbearance for this to be possible.

To refinance, you’ll want to keep up with payments, boost your credit score, and minimize your debt.


What Are The Loan Modification Fees You Need To Know About?

A loan modification differs from refinancing your mortgage in that it entails changing the terms of your existing loan rather than replacing it with a new one.

Refinancing, on the other hand, is when you replace your loan with a new loan.

To avoid foreclosure, many people may seek to change their mortgage payment or their loan term for several reasons.

If this is your situation, you will have to contact your loan servicer and tell him about your finances to get information about how to modify loans.

Here we will discuss some mortgage relief options that your mortgage servicer may offer you and the fees you may be subject to if you decide to go for a mortgage loan modification.

What Are the Ups and Downs of Loan Modifications?

A loan modification will have a considerably milder negative influence than a foreclosure, bankruptcy, or a succession of late payments.

Benefits Of A Loan Modification

Some of the possible benefits of a loan modification from your mortgage lender on your mortgage payments are that it may (depending on the terms of your mortgage):

  • help you get current on your monthly mortgage payments if you’re behind
  • lower your monthly payments- reduce the interest rate on your loan
  • extend the term of your home loan
  • forgive a portion of your debt

Downsides Of A Loan Modification

Loan modifications, on the other hand, might have a negative influence on your credit score. An initial drop in your credit score is possible after a loan modification.

If your loan modification is only for a limited period, you’ll have to resume your original mortgage conditions and repay the amount that was deferred before obtaining a new purchase or refinancing.

Lenders may want to see a record of 3 on-time payments following permanent adjustments to assess your repayment capacity for a new loan.

If you’re currently on the monthly payments of your mortgage, it’s a good idea to look into your alternatives and see if you can apply for refinancing so you can change the terms of your loan.

Who Can Get a Loan Modification?


In general, homeowners must be behind on their mortgage payments or about to go into default to be eligible for a loan modification.

Homeowners must meet specific criteria to be eligible for a loan modification.

If you are unable to refinance or are experiencing a long-term financial hardship, if you have several months’ worth of mortgage payments outstanding or will soon fall behind, or if refinancing is not an option because of your income or other factors, a loan modification may be the best alternative.

The loss of a job, the death of a spouse, an illness that has reduced your capacity to repay your mortgage on the original terms, or a disability or calamity that has prevented you from doing so are all examples of good cause for loan modifications.

Can A Loan Modification Be Denied?

Yes, a loan servicer can deny a loan modification.

A mortgage loan is a contract, and the lender is not required to accept a loan modification and the final determination is usually in the hands of the mortgage company.

Borrowers who will never be able to repay their mortgage loan, as well as borrowers who do not respond to lender demands, are unlikely to obtain a loan modification.

Revising your mortgage contract and your current financial situation with the assistance of a professional law firm, especially if you are facing financial hardship, can save you money and help you find solutions, like loan modification programs that are perfect for you. Mortgage underwriters are usually dealing with numerous files at one time and it is important to make sure you have the right attorney on your side to ensure the mortgage company did not mess up in reviewing your file for a modification.  As this does happen, with the right attorney you can avoid a modification denial for mortgage company mishaps. 

How Long Is a Mortgage Modification?

The duration of your loan modification procedure will depend on the severity of your situation. Expect it to take anything from one to three months.

Is a Mortgage Loan Modification Permanent?

A loan modification will permanently change your home loan terms, such as the interest rate, repayment term, monthly payment, and in some cases a reduction in the principal mortgage balance.

After your loan modification has been accepted, your interest rate and loan conditions are set in stone.

If you are choosing between modification programs because you are experiencing financial hardship, it is advisable to work with your existing loan conditions with the help of an expert that can help you understand solutions.

Why Do I Have To Pay a Fee For A Loan Modification?

If you try to change the terms of your loan through a loan modification process, you may have to pay a fee.

These fees may be charged by the lender or by a professional who helps negotiate the loan modification.

A mortgage modification does not include any closing costs, but your existing lender may charge a processing fee.

If you get a mortgage modification that extends the term of your loan, you’ll pay more interest throughout the life of your loan.

Do I Have To Pay Back Loan Modifications?

There are different types of loan modifications.

Your payment amount will depend on the type of mortgage loan modification you receive.

On the backend, your loan servicer may apply a lower interest rate to the principal of your loan and you must reimburse it later.

If you get a principal deferral loan modification, your lender reduces the amount of money you have to pay each month.

Nonetheless, the amount of principal your mortgage servicer has deferred will be due when the property is sold or as time goes by and it applies to your existing mortgage.

Different Loan Modification Programs

Conventional loan modification

There are different ways to modify a loan, depending on who provides the loan. Fannie Mae, Freddie Mac, and private lenders all have their processes and criteria for modifications.

Freddie Mac and Fannie Mae offer a Flex Modification program that can help borrowers reduce their mortgage repayments by about 20%.

The interest rate, forbearing a portion of the principal balance or extending the loan’s term to make monthly payments more affordable for the homeowner are all common in a Flex Modification.

The Department of Veterans Affairs, the Department of Housing and Urban Development, and government loans are not eligible for Flex Modification programs.

FHA loan modification

The Federal Housing Administration also provides its loan modification solutions to assist struggling borrowers to make their payments more manageable.

FHA borrowers who require additional help might be eligible for the FHA-Home Affordable Modification Program (FHA-HAMP).

To qualify for a loan modification or the FHA-HAMP program, FHA borrowers must participate in a trial repayment strategy. This entails making timely payments under the new terms for three months.

VA loan modification

Veterans and military personnel who have loans guaranteed by the Department of Veterans Affairs can inquire about VA loan modifications with their servicer.

A VA loan modification can roll back missed payments and other delinquent housing expenses like unpaid property taxes and homeowners insurance.

The borrower and servicer collaborate to establish a new repayment schedule that is achievable for the veteran once these charges are added to the loan.

A Streamline Modification is available to some homeowners whose VA loans have been suspended.

The streamlined modification procedure does not need as much documentation as a VA loan modification plan, but it has two extra criteria:

  1. The combined principal and interest payment must decrease by at least 10%.
  2. To show that they can make the modified payments, the borrower must complete a 3-month trial repayment plan.

USDA loan modification

Missing mortgage payments (including principal, interest, taxes, and insurance) may be rolled back into the current loan balance under a USDA loan modification.

USDA modification plans allow you to extend the term of your loan up to 480 months, or 40 years in total, which can help you save money on interest.

Using a mortgage recovery advance, servicers may cover up to 30% of the homeowner’s unpaid principal balance.

Benefits Of Going Through A Mortgage Loan Modification With An Attorney

At Babi Legal Group, P.L.L.C., you will always meet with a competent and experienced attorney who will assess your financial and mortgage situation to determine whether you qualify for loan modification assistance and what benefits you can reasonably expect to obtain from a loan modification. 

Many homeowners try to obtain a loan modification without the assistance of an attorney, only to find their request denied for a slew of reasons. In fact, many of these applicants would have actually received a loan modification had they initially hired an attorney to help them navigate through the maze of paperwork and red tape of the mortgage companies. 

If you are behind on your mortgage payments and facing foreclosure or if you merely want to see if a loan modification can help you, don’t hesitate to contact Babi Legal Group at 248-434-4110 today for a free consultation!


Cash-out Refinance After Covid Forbearance

Many measures have been implemented in reaction to COVID-19 to assist those who are having difficulties.

The option to seek forbearance, or a delay in mortgage payments, was made available to anyone who had been affected by the virus or its repercussions on the economy.

COVID-19 forbearances, which Congress stated were meant to be non-credit impacting, are included in the same category as other natural disaster grants.

What Is a Mortgage Forbearance?

To provide relief for people who are financially distressed for any reason, a mortgage forbearance program is available.

Congress has given Americans impacted by COVID-19 the option to ask for up to a year of mortgage payment forbearance as part of the CARES Act.

A forbearance provides the necessary support for those who need it so they don’t worry about missed payments for a while.

It’s important to note that forbearance doesn’t forgive outstanding debts. When you’re exiting forbearance, you’ll want to chat with your mortgage servicer to see whether other choices are available to resolve the outstanding forbearance amount as the mortgage company will ask that you repay the entire outstanding forbearance amount in one payment. A lawyer that knows your financial situation may also be of help for exiting forbearance more smoothly.

What Happens With Your Mortgage Payments If You Get a Mortgage Forbearance?

If you are having difficulty making your mortgage payments, you may temporarily pause or reduce them.

Forbearance is a period in which your mortgage servicer or lender permits you to cease or decrease your mortgage installments while you build back up your finances.

Remember: under the CARES Act, help is available. It is not an automatic program and it may not cover the entire loan amount. Nevertheless, you can ask for up 1o 180 days (and even 180 days more) to stop any regular monthly payment.

Your missed payments still need to be repaid, so this is where it can get complicated.

There will be no additional costs, penalties, or extra interest added to your account as a result of this loan (beyond scheduled amounts).

To qualify, you do not need to provide any additional documentation. Simply state that you are having financial difficulty as a result of the epidemic.

Any federal government-backed mortgage or loan terms can enter this program, even conventional loans with private insurance.

For example, if you have your loan term under Fannie Mae or Freddie Mac, or if you have a USDA loan, FHA loan, or VA loan like many homeowners, your loan servicer can help you through the CARES Act loan program.

What Happens After My Mortgage Forbearance Is Over?

If you did request forbearance under the CARES Act (Coronavirus Aid, Relief and Economic Security), you can extend it up to a year.

This may mean your forbearance term may be coming to an end soon. What happens next? You will have to resume payments and take care of your new financial situation.

A mortgage refinance can lower your monthly payments and make your home loan more affordable even when interest rates are still historically low.

Mortgage Forbearance Repayment Under COVID-19

Once your forbearance has come to an end, you must make up for the missed payments. Your loan officer will work with you to determine whether there are any loss mitigation options available to assist you in regaining financial security.

You must be current or keeping up with your payments under any post-forbearance workout program that you may have.

Payments missed are damaging to your credit score, which might or may not have already been harmed by the forbearance.

May I Refinance my Mortgage Loan After Finishing a Mortgage Forbearance Plan?

In some cases, it is possible to refinance right after and even during forbearance.

You’ll have to fulfill the criteria to demonstrate to your mortgage lenders that you’re in good financial condition, either during or after the forbearance.

Can Mortgage Forbearance Affect Refinancing?

Fortunately, after you’ve been out of forbearance, you may refinance. However, there are some restrictions to bear in mind.

To refinance and obtain a loan modification, you must continue to pay your mortgage payments on time and improve your credit score.

An Excellent Idea Before Exiting Your Forbearance Program

Even before you exit forbearance, one excellent idea is to decrease your loan debt. Forbearance will not diminish your current mortgage repayment plan. It will only make it longer.

If your mortgage servicer requires you to pay back the forbearance in one lump sum, then it is recommended that you hire an experienced law firm that handles loan modifications and retain them to prepare a loan modification application right before the expiration of your forbearance.  

This will delay any foreclosure action that may be taken by the mortgage company, which will allow you the necessary time to submit your completed loan modification application. 


Why Do I Need to Do Three Consecutive Payments?

Refinance after forbearance is possible.

Your refinance timetable is determined by the type of mortgage loan you have.

If you have a regular loan backed by Fannie Mae and Freddie Mac, you must make three consecutive payments after exiting forbearance before even thinking about refinancing.

This means the three payments have to be consecutive on-time payments.

If you have a government-backed loan, such as FHA, USDA, or VA loans, the terms may differ.

Covid-19 Help Can Also Help You Refinance

Until Before 2020, homeowners had to wait 12 months after completing a forbearance plan before applying for a refinance.

The new rules after this international financial hardship enable borrowers who have experienced financial strain to obtain reduced rates, resulting in additional economic assistance and a better opportunity to make timely payments.

Will I Be Able To Ask For A New Loan After a Forbearance Period is Over?

Yes, it’s entirely feasible.

But before you make a decision, you should first calculate how much you’ll be paying each month and whether you can afford a new loan.

You may use a mortgage refinance calculator to compare your current loan and rate to a new one to ensure you’ll save money over time and can pay the same monthly amount on your mortgage rates.

Before submitting a mortgage application for new loan options, be sure to obtain a copy of your credit report and double-check your FICO score and payment history.

Why Think About Cash-Out?

Cash-out refinancing is a loan modification in which an old mortgage is replaced by a new one with a higher amount than what was owed on the prior loan, allowing consumers to use their home mortgage to acquire cash in their wallets.

Benefits From Cashing Out

In a cash-out, you receive more money in exchange for your current mortgage amount than your old one was worth. The difference is given to you in cash.

You often pay a higher interest rate but have direct access to funds you may need for an emergency. This might imply a greater monthly payment, but it may also assist you in overcoming your financial difficulties.

With cash-out refinancing, a lender will assess your borrowing limitations based on bank rules, the loan-to-value (LTV) ratio of your property, and your credit history.

Put your property to good use for you. Contact your attorney and inquire about options.


In conclusion, keep in mind that any missed payments from your forbearance period will have to be made up.

There are several alternatives for refinancing, so be sure to inquire about them with your servicer.

Depending on the terms of your current plan, forbearance may or may not affect your ability to refinance and affect your credit report.

Finally, make sure you are prepared to submit a loan modification application if the mortgage company is asking you to repay the entire forbearance amount in one payment and you cannot afford to pay it.


Tips for Getting your Loan Modification Approved in Michigan

It’s possible that your mortgage payment will be lower or your house may be foreclosed. If you’re having trouble making mortgage payments, it’s worth exploring the possibility of a loan modification.

A home loan modification might involve extending the terms of your loan, lowering your interest rate, or switching from an adjustable-rate mortgage to a fixed rate.

A mortgage modification is a change in the terms of an existing mortgage that lenders make.

A modification is usually made because the borrower is unable to pay the original loan that was caused by hardship. Some individuals may be eligible for government aid in loan modification.

Six things nobody tells you about loan modification and foreclosure

  1. The most effective loan modification procedures are handled by an attorney or a settlement business.
  2. Modifying a mortgage isn’t nearly as expensive to the lender as default or foreclosure.
  3. Mortgage lenders must make reasonable efforts to communicate with late payers.
  4. The loan company wants you to remain in your house just as much as you do.
  5. Modification may harm your credit score, but not as much as a foreclosure would.

  1. The mortgage company needs to assign someone who can answer the borrower’s questions and help them with the available loss mitigation options.

Ten good ideas to get approved for a loan modification in Michigan (and avoid foreclosure!)

  1. Check out the Michigan Homeowner Assistance Fund (MIHAF), which may provide you with up to USD 25,000 to assist you to pay late mortgage/housing payments, such as property tax and insurance escrow shortages. With this help, getting a modification may become easier.
  2. You must currently be living in and using the property as your primary residence to obtain a loan modification. Make sure your lender knows this and you can demonstrate it easily.

  1. Keep your receipts well-organized, because you might need them to show an increase in your household expenses, such as:
  • increase in household size
  • inadequate medical insurance
  • costs to reconnect utility services directly related to coronavirus pandemic
  • medical expenses
  1. Propose a repayment plan that includes your regular payments over an extended time, as well as your past-due payments. You’ll save time by not having to pay a lump sum if you move your payments over.
  2. If you can, choose to reinstate your loan. This will let you pay off the total amount you owe in one payment by a specific date. A reinstatement is easier to get approved.
  3. If you have been subjected to racial or ethnic prejudice or cultural bias in American society, there’s a good chance that you are a socially disadvantaged individual. This is out of your hands, such as poor command of the English language. There are special programs that can assist you in this case. Contact your lawyer for them.
  4. Check that your home is not in any of these categories:
  • A vacant lot without a dwelling
  • An abandoned house
  • A 2nd home
  • An investment property
  • A property where the owner has received Emergency Rental Assistance Funds
  1. Document your income through recent tax returns, W2 forms, 1099 forms, and/or pay stubs. You’ll also need to include an estimate of any other income you have coming in, such as:
  • spousal support payments
  • alimony payments
  • child support payments
  • disability benefits
  • pension benefits
  • social security benefits
  • unemployment
  1. Insurance verification is required. You’ll need evidence of insurance to give to the lender and your counselor.
  2. Keep good records of everything related to the loan modification. Write down the conversations you have, the names of the people and organizations you spoke with, their phone numbers, when you spoke with them, and what was discussed. Make copies of all communications exchanged during the procedure.

Trial mortgage modification

It’s not uncommon for a loan modification to take days, weeks, or even months. Even after your lender accepts your application for modification, the process isn’t finished.

Your lender may also request that you go through a trial modification period. This trial period allows your lender to see if you’re capable of making the new mortgage payment.

How long is the trial loan modification?

If you obtained your loan modification through the government’s HAMP program, you must complete this trial period. The typical trial modification duration is 90 days.

What happens if you miss the trial mortgage modification?

If you miss payments during the trial period, your lender has the option to withdraw its previous approval of your modification application.

In conclusion, remember that you’re having trouble making your mortgage payments, don’t hesitate to reach out for help. There are many agencies and resources available to assist you. Contact Babi Legal Group immediately to see how we can assist you today!


Does Covid-19 Hardship Forbearance Affect Credit?

The coronavirus/Covid-19 epidemic has caused significant economic uncertainty, putting millions of Americans in financial distress and forcing them to cope with bills they were unprepared for, such as rent and insurance premiums.

A lot of people have lost their jobs, been furloughed, or had their pay cut because of Covid-19. For these people, lenders and creditors are offering a lot of different ways to repay debt.

One of your choices may be forbearance, which is an agreement with a lender or creditor that enables the borrower to delay or suspend loan payments for a set amount of time.

In this article, we will talk about how Covid-19 hardship forbearance may affect your credit score. Many people are struggling during the pandemic and have had to put their loans into forbearance. This means that they are not making payments on their loan for some time.

We will go through the ins and outs of forbearance and how it can benefit you or harm your credit score.

What happens if you have missed payments in your mortgage payments?

Missed payments can result in a tremendous drop in your credit score, resulting in increased late payments and fees.

Your lender will report your failure to pay your mortgage to the three main credit bureaus if you don’t make timely payments. Your credit score will be lowered as a result.

Also, a late charge will be assessed on the payment you failed to make. Late fees are usually charged after a seven- to 15-day grace period following the due date.

If you miss one mortgage payment, will you lose your financial footing?

On the bright side, failing to make a single mortgage payment seldom results in foreclosure. You usually have to fall at least three months behind and fail to communicate with your lender for this to happen.

Multiple missed payments might result in foreclosure, further damaging your credit. There can also be penalties or additional interest added to most mortgages.

What is forbearance in the US?

If you’re having trouble making your mortgage payments, you may stop or reduce them temporarily. This is called forbearance.

The forbearance period is a time in which your mortgage servicer or lender permits you to pause or lower your mortgage payments while you restore your finances.

What mortgage forbearance does NOT mean

Forbearance does not imply that your debts are forgiven or erased. You remain liable to pay any payments, which in most situations may be paid back gradually or when you refinance or sell your property.

Your loan servicer will contact you before the end of the forbearance to let you know how to repay the missed payment.

What is financial hardship in the US?

When the debtor’s current and projected income and liquid assets are insufficient to meet basic living expenses at present and anticipated ordinary intervals over the anticipated period of collection, hardship is assumed.

Financial hardship is an unfavorable event that has harmed your finances beyond your control and for which you may ask for suspended payments or reduced payments.

Layoff or a reduction in salary, significant sickness or injury, new or worsening disability, imprisonment, natural disaster, and long-distance job transfer are all examples of financial difficulties that a lender might consider making a repayment plan.

Will your credit scores be affected by forbearance?

You can’t just neglect a payment and expect no consequences without discussing your issue with your lender.

If you agree to forbearance with your lender, they may report it to the credit agencies. However, as long as you stick to the agreement and make all of your payments on time, your credit score will not be affected.

If you are having trouble making your payments on time, or if you think you might lose your home, one thing you can do is to ask for help. You can ask your lender to work with you, and they may be able to help you avoid late payments or foreclosure. This will help protect your credit score.

Before canceling any sort of loan, you’ll need to work out a bargain with your lender — otherwise, your credit score may be harmed.

What is the COVID forbearance plan?

If you have a federally backed mortgage and are having economic hardship as a result of the coronavirus pandemic, you might be eligible for COVID hardship forbearance under the CARES ACT.

What are federally backed mortgages?

These mortgage loans include HUD/FHA, VA, USDA, Fannie Mae, and Freddie Mac loans. They can enter loan forbearance programs by your loan servicer.

What if my mortgage payments are not federally backed?

Servicers may provide comparable forbearance choices for mortgages that are not federally guaranteed. It is possible to reach a forbearance agreement with your servicer.

If you are struggling to make your monthly mortgage payment, your servicer is required to discuss payment relief options with you, also known as loss mitigation options. This is regardless of whether or not your loan is federally backed.

There will be no more fees, penalties, or extra interest (beyond expected amounts) charged to your account as a result of this pandemic, and you do not need to submit any new documents to qualify. All you have to do is tell your servicer that you’re having difficulty with the financial situation due to a pandemic. It is improper for the mortgage company to charge you late fees and penalties if you have received a forbearance due to Covid-19.

Will Covid-19 count as forbearance?

The term “forbearance” is commonly linked to home mortgages, but any loan agreement you’ve signed up for can be accepted. There can be many forbearance options for a home loan that can avoid foreclosure actions.

Because of the massive and immediate economic impact of the Covid-19 pandemic, several creditors and lenders are providing unique debt repayment choices on many obligations. This includes mortgages, student loans, auto loans, credit card bills, utility bills, property taxes, and small business loans.

Depending on what agreements you reach with your creditors, they may agree to allow decreased or delayed payments for a specific time of up to 12 months. Paused payments or deferred payments until your forbearance period ends might not affect your payment history nor your credit report if you come to an agreement that is financial hardship-related.

Some companies may offer to reduce the interest rate on your debt. However, there are no specific federal guidelines that all companies must follow when it comes to forbearance agreements. You will have to request forbearance to learn what additional resources can your lender directly give to you for late payment.

Mortgage requirements for requesting forbearance plans due to Covid-19

The eligibility requirements for debt forbearance vary depending on the type of debt you have. Each lender and creditor has its program with its own set of rules.

For example, most mortgage forbearance programs require that you are experiencing a “financial hardship” due to the pandemic of Covid-19. This could be due to job loss, reduced hours, or illness.

You may be asked to provide documentation of your financial hardship, such as pay stubs, bank statements, or doctor’s notes.

Borrowers who have conventional mortgages guaranteed by Fannie Mae or Freddie Mac, which underpin the majority of loans in the United States, or the U.S. Department of Veterans Affairs (VA), Federal Housing Administration (FHA), or USDA can get assistance as well as deferment and postponed payments options.

What if my loan is not federally backed up?

If your loan isn’t federally backed, you can still have a payment deferral. You will need to contact your mortgage servicer to learn if they provide any Covid-19 pandemic relief.

Check with your monthly statement or go to the website of your mortgage servicer for information on how to reach a customer service representative.

What if I don’t know if my mortgage is back up federally?

If you’re a homeowner who isn’t sure which corporation guarantees your mortgage, go to the US Department of Housing and Urban Development’s website for more information on Coronavirus/Covid-19 actions.

What are the drawbacks of Covid-19 loan forbearance?

Although forbearance can help you deal with your short-term money problems, it has some disadvantages. For example, if you use a forbearance period, your credit rating and credit scores could be affected.

You’re not receiving “free money” if you enter into a forbearance agreement for your mortgage loans. Depending on the repayment plan you choose with your lender or creditor, you may have to pay back the interest that accumulates during your approved deferral period, and late charges might still apply.

You will also have to repay the forbearance amount at the end of the forbearance, which may in itself cause a new hardship for you.  

If that’s the case, then you need to make sure to seek a loan modification to account for the forbearance amount.

Notify your lender if you’ll still be charged late fees, when and how they will be levied, and how your forbearance agreement will be recorded with the national credit bureaus.

Covid-19 pandemic forbearance for mortgages

For those who are having trouble making mortgage payments, the federal government has announced a temporary nationwide moratorium on foreclosures and evictions. This has also expired.

People who have lost their jobs as a result of the Covid-19 epidemic can qualify for payments to be halted or reduced for up to 180 days, depending on their circumstances.

To qualify for this forbearance, you must contact your loan servicer and request it.

You can look up your loan on and to see whether one of them purchased it from your original lender, or contact your mortgage servicer directly if you have questions about your payment status.

In addition, Fannie Mae and Freddie Mac have halted foreclosures and evictions during the Coronavirus/Covid-19 pandemic, so visit their websites for regularly updated information on how to get relief.

Covid-19 pandemic forbearance relief for credit cards

Every credit card company has different options and eligibility requirements for forbearance or payment deferrals on your credit card debt. If you are thinking or asking for payment forbearance for your credit card balances in a way that will not affect your credit reports, ask your servicer for their relief options.

To find out what alternatives are available and what you need to do to get assistance, go to the website of your credit card company. Even if yours doesn’t currently offer a solution that meets your needs, it may add new choices shortly, so keep an eye on updates.

Card issuers generally provide forbearance on a case-by-case basis, and they may not give all relief possibilities to everyone who qualifies.

Your credit card companies will have specific choices accessible to you based on how long you’ve been a cardholder, how serious you’ve been about making timely payments, and the amount of your outstanding credit card debt. So your credit history might help get you more options for monthly payments.


Key Terms to Understand about Loan Modifications

Buying a house is an exciting event, but it may also be one of the most difficult if you don’t know anything about mortgages.

Buying a home can be a very complicated process. There is a lot of paperwork that needs to be completed.

It is important to know what to expect, especially if you are buying a home for the first time. This will help you make the best decisions for your family.

What is a mortgage loan modification?

Loan modifications are changes made to a borrower’s terms of an existing loan by a lender. The changes can be made to the interest rate, principal balance, or length of the loan.

What are the benefits of a loan modification?

Loan modifications can provide borrowers with much-needed relief from unaffordable mortgage payments. By reducing the monthly payment, borrowers may be able to avoid default and keep their homes.

What kind of modified loan can you acquire?

A loan modification might be thought of as:

  1. an extension of the length of time for repayment
  2. a reduction in interest rate
  3. a different type of loan
  4. any combination of the three above

Why would you do a mortgage modification?

Changes are made frequently because the borrower is unable to pay the original loan.

If you are struggling to make your mortgage payments each month, you may want to consider a loan modification. A loan modification can change the terms of your loan to make it more affordable for you.

Some common modifications include extending the length of the loan, reducing the interest rate, reducing the principal balance, or changing the type of loan.

How can you apply for a mortgage loan modification?


The most effective loan modification techniques are handled by an attorney or a settlement firm. Some people might qualify for government aid in loan restructuring.

The ultimate goal, in any case, is to save money the borrower owes. Sometimes you do it through a new loan or you might use a flex modification program.

It is important to understand how loan modification works, so contact your loan servicer today or call us for additional resources that might help you get a loan modification.

Do you understand how mortgage payments work?

Taking out a mortgage is usually the first step in purchasing a house for most people. It’s one of the biggest loans we’ll ever take out, so it’s critical to know how your payments work and what options are available to cut them down.

When you acquire a home, you must pay a deposit and a mortgage. The larger your deposit, the less of a mortgage you will require to borrow.

The term of the mortgage and the interest rate will determine how much it costs you to pay off your mortgage.

You’ll then make a monthly payment to the existing mortgage so that it is paid off when you finish repayment.

The importance of a loan estimate

Your loan officer must provide you with a loan estimate within three business days of applying.

The loan estimate is an overview of your mortgage loan terms and settlement fees, which are also referred to as closing costs or the cost of closing your mortgage transaction.

With this data, you may evaluate your mortgage loan offer and explore a few more options before accepting it. Call another real estate agent or visit other mortgage lenders that can reduce your monthly payment.

Loan modifications dictionary

Adjustable-rate mortgage

An adjustable-rate mortgage (ARM) is a home loan with a changing interest rate. For a length of time, the starting interest rate on an ARM is set.

After that, the outstanding balance is re-fixed at yearly or monthly intervals.

Bank statements

A bank statement is a document sent to the account holder every month that summarizes all transactions in an account over some time.

Closing costs

Closing costs are the fees you pay to your lender when you close on your loan. This includes processing fees as well as other costs associated with the loan.

Conventional loan

A conventional loan is a mortgage loan that isn’t guaranteed by a government agency.

There are two types of conventional loans: conforming and non-conforming.

  • Conforming loans are those that meet the requirements set by Fannie Mae and Freddie Mac.
  • Non-conforming loans don’t meet those requirements.

Credit reports

A credit report is a statement that shows your credit history, including how you have historically paid back loans and the status of your credit accounts.

The majority of people have 3 credit reports provided by Experian, Equifax and Transunion.

FHA loan

The Federal Housing Administration insures an FHA loan, which is a government-backed mortgage. Mortgage insurance protects consumers against mortgage default.

An FHA loan is more readily available to first-time buyers than conventional alternatives since it requires lower minimum credit scores and down payments.

This type of loan, however, carries with it an additional monthly premium amount to insure the loan.

Federal Housing Finance Agency (FHFA)

The Federal Housing Finance Agency was established by the Housing and Economic Recovery Act of 2008 (HERA).

The FHFA is in charge of ensuring that Fannie Mae and Freddie Mac (the Enterprises, as well as the Federal Home Loan Bank System) are operating by their charters.

The Federal National Mortgage Association is often referred to as Fannie Mae. It is a government-sponsored organization and a publicly-traded business based in the United States.

This association promotes the purchase, refinancing (or loan modification), and renting of homes for everyone.

The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a government-sponsored corporation that is publicly traded.

Financial hardship

Financial hardship is when someone is having a lot of trouble paying back their loan.

If you have a lot of trouble paying your bills, or if you can’t pay back your loans and debts on time, then you’re in financial hardship.

According to credit law, there are certain things you can do to protect yourself and get help.

Fixed-rate mortgage

A fixed-rate mortgage is a home loan where you agree to pay the same interest rate on the loan for the entire term. The interest rate on the loan will not vary during the term, and the borrower’s monthly interest and principal payments will stay constant.

Forbearance period

Forbearance is a lender’s concession to allow a borrower to avoid foreclosure or default through a temporary suspension of loan payments.

A forbearance period is established between the borrower and lender. The key factor in a forbearance period is that the borrower will be obligated to repay the number of suspended payments once the forbearance expires.

Hardship statement

A hardship letter is a document you send to a lender to explain why you have not been able to make your debt payments. This letter should include specific details such as when the hardship began, the cause, and how long you expect it to last.

Home equity

Equity is the difference between how much your mortgage is and how much your home is worth right now.

There are two ways that your equity can increase:

  • As you pay down your mortgage, the amount of equity in your home will go up.
  • Your equity will also increase if the value of your home goes up.

Your equity may decrease if the value of your house drops faster than you’re paying down the principal amount on your mortgage.

Interest rate

The interest rate indicates the amount that you’ll pay in interest on a loan. It also shows how good the benefits are of saving money. If you’re a borrower, the interest rate is the amount you pay for borrowing money as a percentage of the total loan sum.

Interest rate cap

The terms “interest rate cap” and “rate ceiling” are often used interchangeably.

An interest rate cap structure is a set of rules regulating how much an interest rate can rise on variable-rate loans.

Interest rate caps may be put in place on all sorts of variable-rate debt.

However, interest rate limits are often utilized in variable-rate loans and especially adjustable-rate mortgage (ARM) loans.

Life of the loan

The average life is the time it takes for a debt to be repaid through amortization or sinking fund payments. The average life calculation is used by investors and analysts to evaluate the risk involved in amortizing bonds, loans, and mortgage-backed securities.

Loan modification programs

A loan modification program helps to change the original terms of your mortgage loan.

A loan modification differs from a refinance in that it does not refund your outstanding mortgage and replace it with a new one. Instead, it adjusts the terms of your existing loan.

A loan modification is a change that can imply a new monthly payment. Your loan terms might change so much that your financial hardship is relieved.

Loan payment

The monthly payments are the amounts required to be paid back by the borrower following the terms of the loan agreement, note, and bond.

Loan term

A term loan is a loan that is repaid in installments over a set time, usually one to ten years.

Term loans generally offered by the mortgage company range from 15 years to 30 years. In some loan modifications, the lender can extend the loan to a period of 40 years to allow for a more affordable payment.

Missed payments

If you don’t make a payment on time, it’s called a missed payment. This happens when you send the money to the lender or service provider after the date that the monthly mortgage payment was due or after a grace period for the monthly mortgage payments has passed.

Missed payments can lead to other charges you agreed to pay in the mortgage and note signed at closing, such as late fees and penalties. 

Monthly payments

The monthly payment is the amount paid each month to pay off the loan within the agreed deadline. When a loan is taken out, it isn’t simply the original sum borrowed that has to be repaid; rather, accrued interest must also be reimbursed.

Mortgage contract

The mortgage contract allows most consumers to buy real estate and protects the interests of lenders and borrowers.

Mortgage lender

Your mortgage lender is the company that loaned you the money to buy your house. Your mortgage servicer is the company that sends you your mortgage statements and who also handles any day-to-day activities with your loan.

Personal loans

A personal loan is a loan provided by a bank, credit union, or an online lender that you repay in monthly installments or tranches over two to seven years.

Personal loans can be a viable alternative for non-essential purposes, such as debt consolidation. 

Personal loans can either be secured or unsecured loans.  

A secured loan is a loan that has some type of collateral pledged to protect the lender in case of a default. A typical example is a home you purchased or a car loan.  

An unsecured loan is a loan that only carries a guarantee to repay without any pledge of security.

Title/Settlement companies

A settlement firm is a business that manages the closing of real estate transactions, such as title insurance and escrow. It may also be known as a real estate closing company, a title agency, or an escrow company.

A settlement firm’s goal is to assist with the closing of a property that is being purchased. Not all firms handle every aspect of closing.

Private mortgage insurance

If you have a regular loan and take out private mortgage insurance, also known as PMI, you may be required to pay for it. If you stop making payments on your loan, like other forms of mortgage insurance, PMI protects the lender—not you—from defaulting.

Urban development

A city’s development is the growth of cities and their surrounding areas. This includes the social, cultural, economic, and physical aspects of city life.

VA loans

A VA loan allows active-duty military personnel, veterans, and their surviving spouses to borrow money to purchase a house with no down payment, no mortgage insurance, and light credit standards.

If you’re considering a VA loan, learning how they work will help you decide if it’s the right one for your purchase or refinancing plans.

You can reduce your monthly mortgage payment today!

Mortgage refinancing or having a loan modification is one way to do this.

When you refinance, you simply renegotiate your existing loan with a new one, typically with a lower interest rate. This can reduce your monthly mortgage payments and save you money over the life of the loan.

You can also choose to refinance your home loans for a shorter term, which will also lower your monthly payments.

Another option is to make a lump sum payment towards the principal of your loan.

This will reduce the amount of interest you pay over the life of the loan, and can also help you pay off your mortgage sooner.

Babi Legal Group can help you obtain a loan modification

If you’re struggling to make your mortgage payments, a loan modification may be an option for you. Your loan services must offer mortgage assistance according to your case and mortgage term.

Babi Legal Group has over 15 years of experience in helping its clients to avoid foreclosure and lower the principal balance of their existing mortgage.

No matter what your annual income is or who is your loan servicer, Babi Legal Group can help you refinance your mortgage term and mortgage payment so the terms of your loan are not laying heavy on you.

Avoid the foreclosure process if you cannot do any regular payments. We will help you look for real alternatives for an alternative healthy personal finance situation.


Five Questions to Ask Yourself Before Filing for Bankruptcy

Filing for bankruptcy is not something to be done lightly, and it is far from the only solution for every problem. Filing for bankruptcy is not the best option for everyone, and it’s not a quick fix.

However, if you are having trouble making ends meet due to an overwhelming number of creditors as well as difficult-to-pay medical bills, filing for bankruptcy may be the best option for you.

Common questions about filing for bankruptcy

Before you decide to file for bankruptcy, you must ask yourself the following questions:

1. Do I understand what filing for bankruptcy will do?

If you file for bankruptcy, it might be possible to stop the foreclosure on your property or mobile home and allow you to catch up on past payments.

Bankruptcies may also stop wage garnishment, debt collection harassment, and other creditor actions to recoup a debt.

A bankruptcy “discharge” of obligations occurs when you finish the bankruptcy. It may be possible for you to get rid of the obligation to pay most or all of your bills after bankruptcy. The discharge of debts is intended to provide you with a fresh financial start.

The ins and outs of filing bankruptcy

A bankruptcy will allow you to refute claims filed by creditors who have committed fraud or are attempting to collect more than you owe.

However, there are a few things that people frequently say bankruptcy will assist them with, such as eliminating your property’s obligations and liens, which is not the case.

The solution is to engage a reputable bankruptcy lawyer who can assist you in determining whether or not personal bankruptcy is appropriate for you based on your current financial situation.

2. Will bankruptcy give me the fresh start I need?

In Michigan, most unsecured debt may be canceled.  However, this is not the case for all debt obligations.

Alimony and child support are two examples of this. Almost recent outstanding income tax liability is also included in this category.

Unsecured debts like fines and penalties for breaking the law, luxury goods or service purchases made right before the bankruptcy filing, and most tax debts on your bankruptcy petition will not be erased.

It is a good idea when you file for bankruptcy and debt relief to have an attorney that understands bankruptcy cases to help you file correctly. Look for a small law firm that can offer you a free evaluation and where you can build a real confidential relationship.

3.  Can I afford to file for bankruptcy?

It is critical to understand how much it will cost you to file for bankruptcy in Michigan and how to pay for it.

The Court filing fee for a Chapter 7 bankruptcy in Michigan is $338. The Court filing fee for a Chapter 13 bankruptcy is $313 in Michigan. 

Other options

If you can’t afford to pay and owe money, you may ask for payments or the fee to be waived completely if you meet certain income requirements set by the federal government.

You may apply for a fee exemption if your annual income is less than 150% of the poverty level in Michigan. You can discover more about it on this site:

How to manage to pay for filing bankruptcy in Michigan

If your court waiver request is denied or you are unable to pay the full fee, you may apply for installment payments.

This is an alternative that individuals employ when they need to file fast to avoid creditor action, such as wage garnishment. The automatic stay goes into force as soon as you submit your case, preventing wage garnishment and other collections.

If you miss a payment, the court might dismiss your bankruptcy case and you will not get your money back. That is why it is important to wait until you have enough money to pay the full court fee so you don’t risk a dismissal.

It pays off to have a good attorney-client relationship through bankruptcy

Once again, even if you have to add the attorney fees, having a professional bankruptcy attorney guide you through the bankruptcy process is your best bet so creditors stop calling you and you receive bankruptcy relief soon.

4. What are the long-term effects of bankruptcy?

The procedures you select will produce varied outcomes, depending on the type of operation you pick.

The goal of bankruptcy is to eliminate debt, but the amount of debt that can be canceled varies based on each person’s circumstances.

One, future credits

In the long run, each bankruptcy type has a different impact on the individual, with credit being one of them. After a person files for bankruptcy, their capacity to get new credit from financial institutions is typically diminished.

It’s possible that taking out another loan will be difficult for you. Financial institutions are typically hesitant to lend money to someone who has gone bankrupt.

Two, marks on your credit score

If you file for Chapter 7, it will be recorded on your credit report for the following 10 years. The debtor is liquidated through Chapter 7.

Nevertheless, when you check your score in the future, it will take into account all the good things you’ve done to improve your credit since bankruptcy.

Three, the law that governs bankruptcy is complicated.

When you file your bankruptcy petition with a law firm by your side, you will know that the specific bankruptcy questions for your case will have been well answered.

Not only that, attorneys evaluate all your monthly income, how much debt or medical bills you have, whether it is a car loan or monthly expenses.

Do not face the bankruptcy courts alone if you can prevent it

With this information, including your retirement funds, your business debt (if it is such), and any other personal loans or credit card debt you might have, they can offer solid legal advice that will guide you safely through a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.

How to file bankruptcy in Michigan?

In Michigan, bankruptcy is filed under federal legislation rather than state legislation.

Filing bankruptcy relieves you of your obligations to creditors, which is what gives you a second chance.

Michigan’s rules apply in a bankruptcy proceeding to determine what property you can keep.

The majority of consumers file either a Chapter 7 bankruptcy or a Chapter 13 bankruptcy. If you’re unfamiliar with the distinctions between the two or if you have any other bankruptcy questions when deciding to do your bankruptcy filing, look for legal advice.

Benefits of having an attorney during the bankruptcy process

A bankruptcy attorney can guide you to do what is best to get rid of your secured debts and unsecured debts, as well as explain the bankruptcy code and federal law according to your case.

Many people have discovered that they don’t need to file bankruptcy because there are other alternatives to debt collectors. These alternatives lead you to a repayment plan where you can keep your retirement savings, bank accounts, and personal property intact.

Do student loans end up in bankruptcy in Michigan?

If you live in Michigan, you can discharge your student debts through bankruptcy, but there are a few things to keep in mind first.

With few exceptions, student debts obtained from the federal government and private lenders are not dischargeable in Chapter 7 or 13 bankruptcy without the showing of an extreme hardship that must be proven through a separate lawsuit in the bankruptcy.

If you have any of these obligations, they won’t go away if you write them down in your petition.

Chapter 11 can be the solution

However, if you file for Chapter 11 bankruptcy protection, you may be able to get rid of both federal and private loans that are stalling your progress toward financial independence.

This type of filing lets you keep your assets and repay your debts differently. This includes student loans that were consolidated under one lender’s repayment plan before you filed Chapter 11.

The majority of Michigan citizens who choose Chapter 11 do so because their finances were not bad enough to necessitate the filing.

What is the Bankruptcy Abuse Prevention and Consumer Protection Act?

The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) states that student loans are only dischargeable in bankruptcy upon the Debtor proving the inability to repay the student loan due to extreme hardship.

Even though you may owe a lot of money, you may still have to repay these loans. It rendered certain educational debts nondischargeable in bankruptcy.

Don’t go to bankruptcy court on your own

If you are thinking about filing for bankruptcy, it is a good idea to contact an experienced Michigan attorney instead of trying to do it yourself. A lawyer can assess your situation and give you advice based on your individual needs.

What should I know about bankruptcy court in Michigan?

A bankruptcy court is a specialized component of the federal court system.

There are two jurisdictions for federal bankruptcy courts in Michigan: the U.S. Bankruptcy Court for the Eastern District of Michigan and the U.S. Bankruptcy Court for the Western District of Michigan.

There are many of these courts in each district. At least one bankruptcy court exists in every state.

Kinds of bankruptcy

The three most frequent types of bankruptcy proceedings are:

  • Chapter 7 for liquidations
  • Chapter 11 is most commonly used for corporate reorganization.
  • Individuals with steady income might find Chapter 13 debt bankruptcy relief beneficial. It includes re-organizations for people who have regular earnings.

At the end of the procedure, each case aims to get rid of (or cancel) the debtor’s obligations.

When does a bankruptcy begin?

Chapter 7 or 11 bankruptcy may be filed by individuals or businesses. Only individuals are allowed to file for Chapter 13.

When a petition is submitted to the bankruptcy court, the process of declaring bankruptcy begins. There are some court filing fees you have to cover.

How to find the best bankruptcy attorney?

In Michigan, a bankruptcy petition’s debtor is generally represented by an attorney.

An attorney might also act as the Chapter 7 trustee’s representative. However, in many situations, the Chapter 7 bankruptcy trustee is an attorney.

An attorney may represent the creditors’ committee in Chapter 11 proceedings. In most cases, Chapter 13 trustees are attorneys as well.

What to avoid when hiring a lawyer to file for bankruptcy

When looking for a lawyer, beware of paid attorney advertising or attorney listings.

Since you will be sharing sensitive or confidential information (like what you have in your bank account, how much is your tax debt, if you can pay child support or your total monthly income) with your lawyer, it is always better to find someone by personal recommendation.

Tips to hire a good bankruptcy attorney

Although you can file bankruptcy on your own for free in Michigan, using a lawyer referral service is not a bad idea. Any bankruptcy case can get better debt relief when going to bankruptcy court if you have legal advice.

When you give your contact information, choose attorneys to contact you back. Although message and data rates may apply, you will be sure this law firm is interested in representing you.

Ask your attorney the correct questions so you find someone that is on your side, that will be available for you to answer anything, from the court mails to find out about the bankruptcy exemptions that apply for you.

Filing a bankruptcy petition or going through a repayment plan is not the end of the world. With a professional and experienced lawyer by your side, you will be able to get through it and start over.



Questions to Ask a Real Estate Attorney

Finding a good real estate attorney can assist you and your business in all stages of a real estate deal when you’re selling, buying, or just renting out any property.

The appropriate real estate lawyer will be knowledgeable in your local real estate market and available to oversee the legal particulars of your real estate transactions as your legal representation.

A real estate attorney can help you in a variety of legal matters, no matter which side of the bargain you are on: buyer or seller. That is why it’s critical to select the ideal person for the job.

Get a real estate attorney to help you with real estate law

An experienced real estate lawyer will help in a different way than a real estate agent. Any real estate transaction needs to go through stages that need legal advice.

A real estate attorney and his law office will help you go through a smooth transaction.

To ensure that you fully comprehend your responsibilities as a property owner, the right real estate attorney can also assist with contracts, lease agreements, and loan papers. Even when it comes to setting up your overall company structure, a real estate attorney can help you.

Why get legal support in real estate transactions?

A real estate attorney will turn out to be invaluable for you, your family, and your business.

Traditionally, every person that wants to close any real estate deal wants to hire legal counsel that is specialized in this area of law to avoid the traps and assure a positive outcome.

Legal assistance for real estate purchases can prevent litigation, allowing you to regain your rights. Whether you are engaging in a selling process, boundary disputes, or title search, the right attorney will offer legal protections and you will end up saving money.

What are real estate attorney fees?

When it comes to legal costs, you should consider the possibility of losing your investment properties if something goes wrong against the expense of employing a competent professional to assist and ensure that does not occur.

Hiring a real estate attorney is generally considered an essential expense by many real estate agents and real estate investors, and, as it should be, they are well-justified.

Although some real estate attorneys charge flat fees for their services, most charge by the hour. The lawyer will inform you of this before the attorney-client relationship begins.

Why hire a real estate lawyer?

A real estate attorney is usually required at closing in many jurisdictions. Even if your state does not demand it, you may want to hire a real estate attorney.

In closing, you will have a real estate attorney on your side. They’ll go over all of the documents in advance and identify any issues or omissions with them.

All of the papers that are signed after a real estate transaction are prepared or reviewed by a real estate attorney.

Real estate is regulated differently in each state and municipality. So getting a great real estate attorney will help you solve any real estate legal issues.

What are the best real estate law questions you can ask your real estate lawyer?

Here are some of the best questions that you can ask your real estate attorney, whether you are buying or selling commercial real estate or residential real estate:

1. What is your experience in real estate law?

You’ll want to discover how much experience the real estate firm has handling real estate matters as well as legal practice in general.

You’ll want someone who has handled a lot of real estate cases and is up to date on state and local real estate laws.

If you don’t find the lawyer to be reputable, professional, and competent in his or her area of expertise, it’s probably best if you look for someone else.

While you may believe that any lawyer at a law firm has the appropriate legal accreditation, this is not always the case.

So ask your potential real estate lawyers about their legal credentials. You may also double-check this information by visiting your state’s bar’s website.

You should inquire about the attorney’s real estate legal training, too. This might be a law degree or certificate in real estate law depending on the law school they attended.

Finally don’t forget to ask how long has this person been practicing law. A good attorney and the best law firms know that every year in this profession counts a lot.

2. Do you have a solid understanding of my local real estate laws?

Why do real estate regulations differ from one state to the next? The answer is that federalism is a feature of our system of government.

The United States is not a single political entity, but rather a federation of 50 states with their own distinct and particular qualities and regulations.

The state government, in contrast to the federal government, governs and regulates a variety of economic and social problems.

Even the structure of each state government is unique.

Real estate is a great illustration of the local being superior to the national market.

Is it more probable that a far-flung organization like Washington, DC sets real estate prices, or that they are determined by local circumstances and authorities?

In reality, each state manages its real estate sector, because federalism is a system in which power is divided between the states and the federal government.

3. What are some of the most common problems that arise during a real estate transaction?

Real estate has a lot of moving parts, which can lead to problems during a property transaction.

You might have difficulties with appraisal values or realize that a property you want to purchase has a lien on it.

You may also be close to purchasing a home that requires renovations the seller agrees to but then refuses. These problems can result in lengthy battles.

Consider asking your potential lawyer how many times in the past he or she has dealt with similar real estate matters.

4. How can I usually get in touch with you?

One of the most frequent reasons individuals choose to employ a real estate attorney is because they want assistance in dealing with unpredictable emergencies.

If you’re working with urgent deals, knowing when and how to contact your attorney can be beneficial.

They should always be able to respond within a day.

Where can I find real estate attorneys in Michigan?

Be careful when you are looking for a real estate lawyer not to follow the first results for legal services near you that Google or any other search engine shows you.

If you are in the real estate market for any reason (either selling real estate, a commercial property, buying a bank-owned property, or ready for a short sale), one real estate lawyer by your side can make the whole difference.

Finding the best real estate lawyer will not be as easy as finding a good real estate agent.


What should you look for when hiring real estate attorneys?

Do not think that if you save money now by going on your own in any closing process in real estate problems cannot happen.

Look for a seasoned real estate attorney with relevant experience, which is more than important than hiring large firms, where usually junior attorneys end up with your case.

Experience does matter!

Whether you are about to close some real estate business selling property or facing real estate disputes with commercial properties, put your real estate legal issues in the hands of a real estate lawyer that has been practicing law with real estate transactions.

Usually, a real estate attorney will offer a free consultation where you can talk about your case and, when meeting him or her in person, decide if they are the right attorney for you.

At Babi Legal Group, our real estate attorneys are also licensed real estate brokers and agents with a combined 20 years of real estate experience.  


What does the law say about not paying your debt in Michigan?

When it comes to their finances, Michigan residents have significant underlying debt problems.

On the surface, issue areas are rarely apparent since Michigan keeps debt levels lower than the national average

Michigan consumers and debt

One of the key reasons is that many Michigan consumers use bankruptcy to discharge their debts, lowering the state’s average debt levels.

Michigan law is quite extensive, going far beyond the federal government so it can protect consumers more than other states.

Michigan’s credit scores

The average credit score for Michigan is 653, which is just shy of the national average of 661.

The FICO scoring system ranges from 300 to 850, with higher numbers indicating a higher chance of paying debts on time.

Other reasons, such as high bankruptcy rates and frequent late payments, are more common in Michigan.

Is there a Michigan statute of limitations debt?

The statute of limitations for unpaid bills in Michigan is six years, regardless of the type of debt.

The debt can be personal loans, household debts, auto loans, credit card debt, payday loans, medical bills, medical emergencies, and most secured and unsecured debts.

What happens after six years of consumer debt?

The state law in Michigan implies that creditors cannot take legal action against you if a debt has been outstanding for more than six years or hasn’t been paid for more than six years.

Creditors and debt collectors are then prohibited to collect debts owed to them, but you would need to seek a court order to enforce the statute of limitations if the creditor does not comply.

What is debt collection in Michigan?

Certain types of income and property are considered exempt from debt collection under state and federal law. A creditor or debt collector cannot make you use exempt income or property to pay outstanding debt.

Debt collection may include several different types, but certain benefits cannot be collected. Amongst these are Public Assistance (PA), Social Security Income(SSI), and Social Security Disability.

Workers’ compensation, unemployment insurance, and VA benefits are also excluded.

You can work with an attorney and hire legal services (which usually include a free consultation) so debt collectors stop contacting you and you stop receiving such calls or certified mail which can even be illegal.

The Collection Practices Act

The Collection Practices Act is Michigan’s equivalent of the federal law known as the Fair Debt Collection Practices Act (FDCPA).

The state’s consumer protection statute, like the FDCPA, prohibits harassment, fraudulent, incorrect, and false statements or conduct to collect a debt.

Michigan limitations on debt collection

The limitations on debt collection in Michigan forbid debt collectors from making threats or using shaming tactics to collect debts.

The limitations Michigan faces also prohibit a debt collector from engaging in harassing, abusive, or otherwise detrimental ways to collect a debt.

Differences in federal law and state law

The most significant difference between the Michigan Collection Practices Act and the federal FDCPA is that it does not apply to credit repair.

The state’s debt collection law applies directly to lenders and creditors, whereas the national regulation only applies to outside debt collectors.

What you have to know about debt collectors in Michigan

The Fair Debt Collection Practices Act (FDCPA) classifies a debt collector as someone who regularly collects, or attempts to collect, consumer debts for another person or business, or refers to himself/herself as anything other than his/her own when collecting his/ her consumer debts.

According to numerous laws in Michigan, your creditor has up to six years from the date of your previous payment to attempt to collect a debt.

What is a judgment?

A judgment is a final order from a Court of Law that allows your creditor to pursue collections or wage garnishments as long as they re-open the judgment every ten years.

If your creditor obtains a judgment or default judgment and keeps it active by renewing it, the statute of limitations may not apply.

Third parties hired by lenders for debt collections on their behalf are known as third-party debt collectors.

Even if a debt has gone dormant for years, it may be collected again many years later or sold to a debt collector down the road.

When you sell a debt to a collection agency, the collection agency is likely to resume aggressive collections efforts to recoup its expenses.

How long can a debt collector in Michigan pursue a debt?

In the state of Michigan, a lot of consumers are struggling with outstanding debt.

When a consumer debt goes unaddressed for an extended period, creditors may file a lawsuit against the customer to get a judgment.

A judgment allows you to collect money against the debtor’s (i.e., the person who owes the debt) earnings, through methods such as wage garnishments or bank account seizures.

A lawsuit will be filed by creditors who are owed money if they claim you breached your obligations under your contracts.

In Michigan, the statute of limitations for a breach of contract is six years.

If debt collectors are harassing you, you can contact the Michigan Attorney General’s office at 877-765-8388 to make a complaint.

Another way to protect yourself from scams is to report them to the Federal Trade Commission. You can do this by going to their website or by calling them toll-free at 1-877-382-4357.

If you feel that your consumer protection rights are being violated by creditors, then you are recommended to document the contacts made by the creditor, including the person who contacted you, which company they are from, the time of the correspondence, and what was said by the debt collector.  With this information, you may be able to file a civil complaint against the creditor for violating both the federal and Michigan rules and get a judgment against them.

How can a lawyer help me get out of debt?

Both in the case of oral contracts and written contracts, it is better to hire professional legal services so you have an attorney on your side explaining the limitations and options until you are no longer legally obligated to pay.

The creditor wins the case and is awarded a judgment once that occurs. Many consumers opt to defend themselves against this.

An attorney’s legal services can help you figure out how to defend yourself against the creditor or assist you in working out a resolution with the creditor that makes sense for you.  Once you have an attorney involved the creditor understands that you may now be a viable bankruptcy candidate and may be more willing to work with you before you file bankruptcy. 

Benefits of working with an attorney

An attorney will be able to advise you of all your options to make the best decision for you and create a plan of action to get the debt relief you are seeking.

A debtor must be informed that judgments might be renewed by the collector on behalf of the debtor for an additional 10 years.

Both the Consumer Financial Protection Bureau and your lawyer are experts at finding ways to protect you as a consumer.

A lawyer can provide a precise amount of information to credit reporting agencies. They are not permitted to harass you, but they may attempt to get money from you.

Debt consolidation loans are one of the most popular methods to combine consumer debts in Michigan to get you a fresh start.

Debt consolidation loans are offered to help many people pay off their debts more quickly over time by lowering their payments and interest rates.

Benefits of consolidating loans

These loans give people a sense of security by lowering their debt levels. They also alleviate the worry of losing their house or car because of unmanageable auto loans, credit card bills, or medical expenses.

This consolidation can be the best course to cut your monthly payments and interest rates in a new contract.

Remember that if you have a legal contract with a creditor to whom you owe money in Michigan, you are required to pay it.

Learn how to deal with unprofessional debt collectors and your rights as a debtor.

The Babi Legal Group can assist you in finding better ways to deal with debt, credit, and payment.