EIDL Loan Forgiveness Application Guide: Steps to Secure Your Relief

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During the COVID-19 pandemic, many businesses saw their operations get completely upended overnight. Many businesses were forced to shutter their doors as a result of lockdown measures, while others had to adjust operations to the “new normal.”

For many, it was a nightmare scenario, and one that threw their ability to stay afloat into serious question.

Luckily, the federal government provided some financial relief through loan programs designed to help weather the storm. One of those was called the Economic Injury Disaster Loan program, which offered low-interest loans to qualifying businesses.

While these loans provided much-needed relief, plenty of borrowers who took advantage of the offer are still struggling to meet their repayment schedule. So, what can you do if you’re struggling to repay?

We’ll cover some of your options below.

Introduction to COVID-19 EIDL Forgiveness

The COVID-19 EIDL program was an expansion of the EIDL program that was already in place. By declaring the entire country a designated disaster zone, the federal government was essentially making this loan program available to every business.

Both the main EIDL program as well as the EIDL Advance program — administered through the Small Business Administration (SBA) — provided loan funding that businesses could use for working capital so they could meet their ongoing financial obligations. 

Unlike loans from the Paycheck Protection Program (PPP), EIDL loans had to be repaid, although the terms were quite advantageous. That makes understanding the loan details crucial in understanding what options you have if you’re struggling to pay.

Understanding Economic Injury Disaster

The EIDL program was available to small businesses, some nonprofit organizations and small agricultural cooperatives. It was designed to help small businesses meet their necessary financial obligations that they had trouble meeting due to the disaster that was the COVID-19 pandemic.

The idea behind the program was to directly support small businesses throughout the country so they could sustain operations and staffing levels as much as possible. In this way, it would help promote economic growth.

The interest rates on EIDL loans were not to exceed 4% per year. The details of the repayment term were also determined by each individual borrower’s ability to repay.

EIDL Advance and Loan Details

The normal EIDL program offered loans that had to be repaid. However, there was also an EIDL Advance program that offered funds that were essentially a grant that didn’t need to be paid.

The SBA described these Advances as grants without the typical requirements of other U.S. government grants. While EIDL Advances don’t have to be repaid, they were only awarded to existing COVID-19 EIDL applicants who met specific criteria.

Some of the limitations of the program was that the funding had to be used only for certain business-related expenses.

Applying for an Economic Injury Disaster Loan

The SBA made the application process for an EIDL loan quite easy. Businesses could submit an application for the loan directly through the agency’s website, or they could call a representative on the phone and do so that way.

The application process took roughly seven to 10 days to complete, during which time applicants had to provide information and documentation to support their application for the loans. The SBA then reviewed that information to determine whether the applicant was eligible.

Businesses who applied for an EIDL loan could also apply for a PPP loan, since that was a separate program. Those loans could be converted into fully-forgivable grants, as long as the funding was used for specific purposes.

PPP Loan Considerations

PPP loans were so popular when they were available because they basically offered free money to small businesses. While the application process was similar to that of a loan, and while it was in essence a loan that had to be repaid, it could be converted to a fully-forgivable grant as long as the borrower met certain requirements.

The main requirement to have your PPP loan forgiven was that you used a certain percentage of the funds on specific expenses such as payroll and rent. The business also had to maintain employee wages and headcount, which is what the loan funding was for.

The SBA ultimately decided whether an applicant was eligible for a PPP loan, and whether it could be converted into a forgivable grant.

Hardship Accommodation Plan

While EIDL loans have to be repaid, the SBA did provide a special program for those who were struggling to meet the repayment schedule. It was called the Hardship Accommodation Plan (HAP), and it was designed to provide borrowers with temporary relief from loan payments.

The HAP allowed businesses to continue recovering from any economic hardship they were suffering by delaying monthly payments for a certain period of time, or reducing how much they owed for a limited time. 

The SBA worked directly with businesses to develop a plan that met their circumstances and needs.

Unfortunately, as of March 2025, the HAP program ended, removing one option for EIDL borrowers having trouble meeting their repayment schedule.

EIDL Program Updates

As with any government program, the EIDL is always subject to changes and updates, which could include new requirements and/or policy changes. Whenever this happens, the SBA provides information on the updates through its website as well as other channels.

To ensure compliance with the new requirements, businesses have to stay informed as to what’s going on.

Required Documents for Loan Forgiveness

Those who wished to apply for loan forgiveness under the HAP program were required to provide documents as proof of their ongoing economic challenges, which could include tax returns and other financial statements. The SBA then reviewed all of this information to determine whether a borrower was eligible for help under the HAP program, or total loan forgiveness under the PPP.

The SBA also provided guidance on what documents were required, so that businesses could easily prepare this information beforehand. This is important, as the SBA would only consider applications if all information was accurate, thorough and submitted in the proper fashion.

Review and Approval Process

Typically speaking, the SBA needed several weeks to complete the review process once a borrower submitted an application. Once completed, the SBA would notify the borrower directly of its final decision.

For PPP loans, if the forgiveness application were approved, the SBA would fully forgive the loan, which meant the business didn’t have to repay any of the outstanding loan. In the case of the HAP program, the SBA would modify the repayment schedule to reflect a reduction in monthly amount or a delay for a certain period of time.

If the SBA denied the application for relief or forgiveness, the borrower had the chance to appeal the decision or re-apply again in the future.

Avoiding Fraud and ID Theft

Fraud was unfortunately rampant during the pandemic, especially in the EIDL and PPP programs. That’s why it’s so important that businesses be aware of the risks of ID theft and fraud while applying.

The SBA provided a lot of guidance on how to avoid these risks, including tips for protecting business and personal information. It was also essential for businesses to work directly with only authorized SBA lenders and/or representatives.

Common Challenges and Solutions

When applying for a PPP or EIDL loan, businesses encountered common challenges such as difficulties with the process itself. The SBA did its best to provide guidance on overcoming these challenges, including tips on what documents were necessary.

If any borrower or prospective borrower needed assistance, they could always contact the SBA directly or one of the agency’s authorized lenders.

Consult with an Experienced Attorney About Economic Challenges

The EIDL program was a great way for small businesses to receive economic relief from the federal government through loans with favorable terms. These loans have to be repaid, though, which might be causing some financial trouble for businesses still struggling to recover.

With the HAP now ended, automatic temporary relief is no longer available directly through the SBA. If you took out an EIDL loan and are struggling to repay, it’s important to contact an experienced bankruptcy attorney to discuss your options.

At Babi Legal Group, we have more than 10 years of experience in business, bankruptcy, debt collection and debt settlement law, and can help you navigate the challenges associated with outstanding EIDL loans.

For more information, and a free consultation, please contact us today.

Understanding the SBA Hardship Accommodation Plan for COVID EIDL Loans

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During the COVID-19 pandemic, millions of businesses all across the country were upended due to lockdown orders and a massive alteration to how people lived. This overnight wave of change caused catastrophe for many businesses, as they were forced to find new and innovative ways to stay afloat.

Because of the sheer magnitude and significance of the pandemic, the federal government stepped in to provide financial assistance to U.S. residents and businesses through many programs.

One such program was known as the Economic Injury Disaster Loan, or EIDL. While the program is no longer available for new applicants or extra money for current applicants, it did provide many business owners with the opportunity to receive immediate financial assistance through loans that have favorable terms.

Despite the favorable terms, some borrowers still struggled repaying their EIDL loans. If you find yourself in this situation, what are your options?

We’ll discuss the options that used to exist if you were experiencing economic hardship, and what options are available to you today.

Introduction to the EIDL Hardship Accommodation Plan

The EIDL program was offered through the Small Business Administration (SBA), a federal government agency that has been providing assistance and resources to small businesses throughout the country for years. 

Knowing that the pandemic was a very unique situation, the federal government and SBA recognized that some EIDL borrowers would still have trouble repaying their loans. That’s why they created what’s known as the Hardship Accommodation Plan, or HAP.

The HAP was designed to provide borrowers temporary relief from their monthly payments, which allowed them more time to recover from any financial hardship they were still experiencing. 

As of March 19, 2025, the HAP for the COVID-19 EIDL program is no longer open and accepting new applicants. This means that borrowers who are having trouble repaying their EIDL loan have to look for other options to avoid defaulting on their loans.

Eligibility and Application

To be eligible for the HAP, borrowers had to prove that they had taken out a COVID-19 EIDL loan and that they were still experiencing financial hardship that would make repaying the loan difficult.

When making their decision as to whether to approve applicants to the HAP program, the SBA considered factors including total loan balance, the interest accrued as well as the borrower’s payment history.

The process for applying for the HAP typically required documentation and proof of financial hardship, along with a written explanation of the borrower’s financial situation.

Borrowers had the option of applying for the HAP directly through the SBA’s online portal, or they could contact the COVID-19 EIDL Customer Service Center directly.

COVID-19 EIDL Loan Details

COVID-19 EIDL loans offered very favorable terms for borrowers. They came with repayment terms as long as 30 years, and offered a fixed interest rate of only 3.75%. 

This program was designed to provide working capital to small business owners who were affected by the pandemic. They were able to use the proceeds from the loan to cover expenses such as rent, utilities and payroll.

While it sounds similar in many ways to the Paycheck Protection Program (PPP) that was also created during the pandemic, there was one major difference. EIDL loans were not forgivable and had to be repaid.

PPP loans, by contrast, could be converted into forgivable grants if the borrower used a certain percentage of the proceeds toward certain expenses.

Benefits and Features of the Accommodation Plan

The HAP program provided a lot of benefits to borrowers. First and foremost, it gave them the temporary relief they needed from monthly repayments, which allowed them to focus wholeheartedly on their operations and full recovery.

The program was one way the SBA was attempting to help borrowers avoid defaulting on their loans, which in turn would prevent them from damaging their credit score.

While interest continued to accrue during the period where borrowers didn’t have to make monthly repayments, the HAP allowed them to avoid late fees and penalties.

The HAP was only available for a limited time, though, and borrowers had to reply for assistance once that initial period expired. 

The COVID-19 EIDL Program and Its Impact

The COVID-19 EIDL program provided essential funding to small businesses throughout the country that were significantly affected by the pandemic. It provided many borrowers with working capital, which helped them to maintain staffing levels and avoid massive layoffs.

Since the EIDL program began, the SBA has approved millions of dollars in loan funding, giving a vital lifeline to many small businesses that likely would have failed without it. 

The EIDL program itself has been in existence before the pandemic, helping small businesses recover from natural disasters and other economic disruptions. But during the pandemic, the program was expanded so that all small businesses in the country — regardless of where they were located — could qualify for the program.

Next Steps for COVID-19 Economic Injury Disaster Loan Borrowers

The HAP was a valuable resource for small businesses struggling to meet their COVID-19 EIDL loan repayments. Those who have already qualified for the plan should carefully review and follow all the terms and conditions to ensure they don’t fall behind.

Now that the HAP program is no longer available, though, borrowers who are still having trouble making repayments should contact the SBA directly for additional guidance and resources. While the SBA may not be able to provide direct relief, they could provide information on other options you have.

It’s also likely a good idea to consult with an experienced bankruptcy attorney who can guide you through the other options you might have to avoid delinquency.

At Babi Legal Group, our expert attorneys have more than 10 years of experience in bankruptcy, business, debt collection and debt settlement law, and can help guide you through all of your options if you’re still struggling to repay your EIDL loan or any other loan.

For more information, or to receive a free consultation, please contact us today.

What Does SBA Consider to Forgive EIDL Loans: Key Criteria Explained

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The COVID-19 pandemic caused significant financial challenges for all types and sizes of businesses all across the country. When the pandemic broke out in March 2020, business owners saw their companies’ normal operations upended overnight.

Not surprisingly, many found themselves in very difficult financial positions, having to adjust for the new world in which we all lived. The federal government responded by stepping in to provide special and additional aid to those businesses that were affected.

The Small Business Administration (SBA) was at the forefront of much of this work, with new loan programs created and others expanded significantly. One such program was the Economic Injury Disaster Loan (EIDL).

Below, we’ll discuss what the EIDL program was and what options borrowers have if they’re struggling to repay these loans.

Introduction to EIDL Loan Forgiveness

During the height of the COVID-19 pandemic, the federal government expanded the EIDL program to provide near-term financial relief to small businesses that were affected by the dramatic financial challenges that they faced.

The EIDL program was in place before the pandemic, but it was only available to a limited number of businesses in very specific circumstances. The pandemic called for more dramatic measures, so the program was opened up to more businesses.

Unlike some of the other financial aid programs created during the pandemic — namely, the SBA’s Paycheck Protection Program (PPP) — loans taken out through the EIDL program had to be repaid.

That being said, there were ways that business owners who were still struggling to repay their loans could apply for relief. One such program was called the Hardship Accommodation Plan (HAP), which gave temporary relief from repayments to any borrowers who were still experiencing financial hardship.

The SBA considered many different factors when determining whether a borrower was eligible for loan assistance or forgiveness, including the borrower’s ability to repay the loan.

Unfortunately, the HAP program ended on March 19, 2025. Borrowers who are still experiencing trouble repaying an EIDL loan, though, can reach out directly to the SBA to figure out other options.

EIDL Program Overview

The COVID-19 EIDL program was established to help small businesses by providing them extra financing options if they were impacted by the pandemic. There were two types of funding that businesses could qualify for.

The first was the main part of the EIDL loan program, which allowed for funds to be used toward working capital and other regular operating expenses. While the loans were not forgivable and had to be repaid, they did offer very favorable terms, including low interest rates and a repayment period of as long as 30 years.

The SBA also offered the EIDL Advance program, which was available to borrowers who already applied for a COVID-19 EIDL loan and met other criteria. These Advances were like grants, but they didn’t have the typical requirements that U.S. government grants have. 

The EIDL Advances didn’t have to be repaid.

In addition to these direct loan programs, the SBA also offers ongoing resource partners, who can provide support and guidance to small business owners.

COVID-19 Economic Injury and Eligibility

In order to be eligible for the EIDL loan program, a small business had to be located within a declared disaster area. During the pandemic, though, the SBA expanded that definition and declared that the entire country was in such an area.

That meant that all small businesses initially met that criteria. From there, the SBA used a number of different factors to determine eligibility — namely, that the small business was experiencing economic injury because of the pandemic.

To make that determination, the SBA considered factors including increased expenses, reduced demand from customers and decline in revenue, among other things.

The SBA provided in-depth eligibility criteria on its website and other materials, and officials with the government agency are always available to answer more in-depth questions.

COVID-19 Economic Injury Disaster Loan Forgiveness

As mentioned, the SBA didn’t offer loan forgiveness for the EIDL program, unlike the PPP. That being said, the HAP was available to provide borrowers with temporary relief from their regularly monthly loan repayments.

Any borrower could enroll in the HAP to reduce their loan repayments all the way down to only 10% of the original amount. This program was available for six months, and after that time, the borrower had to continue making their regular monthly payments.

To be eligible for this plan, the borrower couldn’t be in a charged-off status, and they also had to provide a written explanation of what their temporary financial hardship was.

The SBA would then review these applications on a case-by-case basis to determine whether the borrower was eligible for the plan.

Again, though, the HAP program ended in the first quarter of 2025, removing that financial relief option for borrowers.

COVID EIDL Loans and Borrowers

While the COVID-19 EIDL loan program stopped accepting applications for new loans or advances at the start of 2022 — and stopped processing loan increase requests by May of that year — there are still resources available for borrowers who took out a loan under the program.

Those who are still repaying a loan but need assistance can contact the SBA’s EIDL Customer Service team directly to request assistance or guidance with their loan. While the HAP program is no longer available, the agency still does offer a lot of guidance and resources to help small businesses manage loan payments or navigate any other challenges.

The SBA’s online portal for the EIDL program is still open, and this provides information about loan balances and the ability to repay them online.

COVID-19 EIDL Program Resources

The SBA’s main purpose as a government agency is to help small businesses succeed. They do these in various ways, not just limited to the EIDL program or other financial assistance programs.

At the agency’s website, they provide free resources for small businesses, including FAQs, webinars and tutorials. Small business owners who wish to have further help can contact the SBA’s resource partners to get more hands-on support and guidance.

Consult with an Experienced Attorney if You’re Having Trouble Repaying EIDL Loan

The COVID-19 EIDL program provided additional resources and financial assistance to small business owners experiencing significant challenges during the pandemic. While the loans had to be repaid, unlike PPP loans, they offered very favorable terms and conditions.

The SBA no longer offers the HAP program, which provided temporary financial assistance to borrowers having trouble repaying their loans. That being said, there are still resources and options available for those who need help, such as bankruptcy relief, which will provide for a discharge of the EIDL loan obligation.

If you’re having trouble repaying your EIDL loan, it’s best to consult with an experienced bankruptcy attorney so you can avoid negative consequences.

At Babi Legal Group, we have more than 15 years of experience in business, bankruptcy, debt collection and debt settlement law. Our dedicated attorneys can help you navigate your financial situation so that you avoid more disastrous outcomes.

For more information and a free consultation, please contact us today.

Understanding Defaulting on an EIDL Loan: Consequences and Next Steps

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The U.S. Small Business Administration plays a vital role in supporting small businesses throughout the country. The government agency does this in a number of ways, including providing guidance and resources to business owners, as well as offering special loan programs.

One of those loan programs is called the Economic Injury Disaster Loan, or EIDL. These loans became well-known during the COVID-19 pandemic, when many businesses in the U.S. became eligible for them all at once.

EIDLs have been around for a while and are available for many different situations. Unlike some other loan programs the SBA sponsors, EIDLs must be repaid, though their terms are often very favorable compared to other available loans.

Below, we’ll discuss what EIDLs are, the impact of not paying them back on time and what options are available to business owners who are struggling to pay.

Introduction to EIDL Loans

Small business owners who have “suffered substantial economic injury” and are located in an area that’s been declared a disaster area are often eligible to get an IEDL from the SBA. Entities that are eligible for these loans include small businesses, most non-profit organizations and small agricultural cooperatives.

This loan program is meant to offer eligible entities the working capital that they might need to recover from the economic injury that they have suffered. 

According to the SBA, the proceeds from these loans can be used to fund debt payments, operating expenses and other types of business-related financial needs. 

At the start of 2022, SBA stopped accepting new applications for EIDLs in relation to the COVID-19 pandemic. While the program is still around, these loans are only available in very limited scenarios where disaster areas have been declared.

The many business owners who took out an EIDL during the pandemic can still manage their loans, including repaying and refinancing, if necessary.

Economic Injury Disaster

The SBA created the EIDL program to support small businesses that have suffered a substantial economic injury. The main eligibility criteria is that the business has to be located in a declared disaster area.

While these loans have to be repaid, they offer much more favorable terms than many other loan programs available from private lenders, including lower interest rates and longer repayment periods. The SBA also provides small business owners with a lot of guidance and resources for how they can recover from such an economic disaster, in addition to the actual loans that they provide.

COVID-19 EIDL

In the early stages of the COVID-19 pandemic, the SBA significantly expanded its EIDL program. One of the major changes was that the entire country was declared a disaster area for qualification purposes, as there was no part of the U.S. that wasn’t affected in a major way by the pandemic.

As such, millions of more businesses than normal were instantly eligible to apply for the EIDL program. That could be seen in the sheer number of businesses who obtained these loans.

In total, the SBA distributed 4.1 million loans under the EIDL program, for a total amount distributed of about $400 billion. The program was so popular because of its relatively easy access to funds with favorable terms at a time when many businesses needed the help.

The main COVID-19 EIDL loan program allowed small business owners to apply for up to $2 million in funds that could be used for normal operating expenses such as payroll. There were different requirements that varied depending on the size of the loan, and applicants could obtain loan increases until all the funds were exhausted.

As mentioned, these EIDLs were not forgivable, like those offered through the Paycheck Protection Program (PPP), and had to be repaid.

The other program was called the EIDL Advance program, and these funds were given to existing applications to the EIDL program who met certain criteria. These Advances operated more like grants, since they didn’t have to be repaid, but they weren’t available to nearly as many businesses as the main EIDL program.

Default Status and Consequences

While COVID-19 EIDL loans were part of a special program, there are still serious consequences for borrowers who default on them. Some examples of what could happen with a default include triggering collection actions by the SBA and negatively affecting the borrower’s credit score.

The SBA has the ability to consider the loan in default status if the borrower fails to make loan payments. Unfortunately, a sizable portion of EIDL borrowers did default on their loans. 

The SBA has reported that about 1.3 million borrowers were in default of their EIDL loan, were in liquidation status or had their loans completely charged off.

If the borrower is sent to collections, they might be personally liable for the debt. The SBA also has the right to garnish a borrower’s wages and also seize some of the business assets to cover the outstanding amount of the loan.

Those who default on an EIDL loan may also find it challenging to obtain future funding from other federal loans or programs. 

Business Debt and Financial Hardship

Anticipating that some borrowers may continue to experience financial hardship and have trouble repaying EIDL loans, the SBA set up the Hardship Accommodation Plan (HAP). This special program was created to help borrowers modify loans if they were having trouble making repayments.

However, that program ended on March 19, 2025. That means that borrowers who are having trouble making payments can no longer automatically qualify for reduced monthly payments for a specified period of time. 

Today, EIDL borrowers who are still facing financial challenges might be best considering other debt relief options such as bankruptcy filing.

Federal Programs and Payments

When a borrower defaults on an EIDL loan, they may see that other federal payments are affected. This could include any tax refunds that they were supposed to get.

The U.S. Treasury Department has the ability to withhold any federal payments to satisfy outstanding EIDL debt if it is not repaid according to terms of the loan. This is why it’s so important to seek out assistance if you are having trouble repaying your loan.

While the SBA no longer offers the HAP program, the agency does still offer support and resources to help borrowers manage debt so they can avoid default.

Avoiding Default

Aside from making regular on-time payments, EIDL borrowers should communicate directly with the SBA if they are having trouble repaying their loan. The agency may be able to help with options such as modifying the loan or loan deferment, if those programs are available, to help them make the payments more manageable.

Even if the SBA isn’t offering direct aid in this way, the agency can still provide guidance, support and resources for other options that borrowers might have to avoid defaulting on their loan.

Next Steps for Borrowers

Aside from contacting the SBA directly, borrowers who are having trouble repaying their EIDL loan payments may consider seeking the advice of an experienced financial advisor or attorney.

These professionals will have the wherewithal and expertise to guide borrowers through all the options they may have to avoid defaulting on an EIDL loan. Borrowers should leave no stone unturned when searching for options, including other debt relief programs and bankruptcy filing.

At Babi Legal Group, we have more than 10 years of experience in business law, bankruptcy, debt collection and debt settlement, and can help small business owners who may be struggling repaying their EIDL loan debt.

For more information, and for a free consultation, please contact us today.

Can You Still Get Your SBA Loan Forgiven in 2025?

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During the COVID-19 pandemic, the federal government created many economic assistance programs for individuals and businesses that were facing significant financial challenges.

For individuals, this included multiple direct stimulus payments as well as enhanced unemployment benefits for those who lost their jobs either permanently or temporarily.

The federal government also created new loan programs such as the Paycheck Protection Program (PPP) through the Small Business Administration (SBA), which could be converted to grants if the money were used to fund certain expenses. 

With the pandemic a few years in the rear view mirror now, business owners may be wondering whether they can still get their loans from the SBA forgiven. We’ll discuss that topic in more depth below.

Introduction to Loan Forgiveness

During the COVID-19 pandemic, the SBA offered loan forgiveness options through programs such as the PPP. Loans equal to 2.5 times a business’ average monthly payroll cost for 2019 were available to small businesses, with a $10 million maximum amount.

To qualify to have the full amount of the loan forgiven, all borrowers had to meet specific requirements. This included using at least 60% of the total amount of the loan to cover payrolls costs. 

The remaining 40% could be used for things such as mortgage interest, as long as your mortgage was signed before February 15, 2020; rent, as long as your lease began before February 15, 2020; or utilities, as long as those services began before February 15, 2020.

The process for having your PPP loan forgiven was often complex, though, which meant that businesses needed to fully review the terms of their loan to determine whether they were eligible and what they had to do.

In most cases, they needed to submit an application to either the SBA directly or to their specific lender requesting forgiveness. 

At the start of 2025, nearly all PPP loans have been forgiven. In fact, the SBA says that 98% of all PPP loans had been forgiven. The remaining loans were either repaid for various reasons, or businesses simply haven’t applied for it yet.

Economic Injury Disaster Considerations

Another popular loan program created during the pandemic was called Economic Injury Disaster Loans (EIDL), which all small businesses that suffered substantial economic injury could apply for. This program gave businesses working capital so they could help recover from any economic losses they suffered, up to a maximum of $2 million. 

To be eligible for these loans, a business had to be located in a declared disaster area and prove they suffered economic injury. There are several factors that the SBA takes into consideration when determining eligibility, including the financial condition of the business and its ability to repay the loan.

These funds could be used to pay for operating expenses such as payroll, utilities and rent.

EIDL loans were not forgivable and had to be repaid, though the requirements varied depending on how big the loan was.

Managing Loan Repayment Challenges

Some small businesses might face continued challenges in repaying their SBA loans, whether they took out an EIDL loan or whether they didn’t qualify for full forgiveness of a PPP loan.

This could include difficulties with cash flow or debt accrual.

Until recently, the SBA offered what it called a Hardship Accommodation Plan (HAP) that was meant to help borrowers who were still experiencing financial difficulties. 

The program allowed businesses that received an EIDL loan to pay only 10% of their normal monthly payment so they could get short-term financial relief. This allowed businesses extra time to recover from economic hardship.

However, this program ended on March 19, 2025. 

As a result, any borrower who still wanted to qualify for a one-time option had to provide the SBA’s COVID EIDL Customer Service Center with a written explanation for why they needed this temporary financial hardship. 

Borrowers also could consider option options, such as refinancing or loan consolidation to help them manage debt.

Luckily, the SBA provides many resources and support so small businesses can navigate the loan repayment process so they can avoid liquidation.

Disaster Loan Forgiveness Options

While EIDL loans given out during the pandemic are no longer eligible for automatic temporary relief, you can still apply for loan forgiveness if you received a PPP loan. No new loans can be awarded under the program, but you can apply for forgiveness still if you haven’t already.

Businesses that received a loan of $50,000 or less can receive full forgiveness of their PPP loan, even if they reduced their number of full-time equivalent employees, or reduced their salaries or wages.

If you meet all of the other criteria for loan forgiveness, you don’t have to go through the complicated calculations around payroll expenses and FTE employees to qualify.

Not only that, but there is still a simplified process for applying for PPP loan forgiveness if your loan was $150,000 or less. This provides a great option for small businesses, as it reduces the amount of paperwork of applying.

To apply for PPP loan forgiveness, you have to fill out an official form that is available on sba.gov. That form also provides instructions on what other documents you have to provide as proof that you used the proceeds of the loan in a way that qualifies you for forgiveness. 

Either the lender or the SBA will review your application and must give you a written determination within 60 days of them receiving the application form. Any loan payments that you are required to repay would start at that point.

Again, if you don’t qualify for loan forgiveness under the PPP, or if you took out an EIDL loan, you still may have options for financial relief. Contact the SBA directly to find out your options, and also consider consolidating or refinancing the loan with a different lender to avoid potential disastrous consequences.

Work with an Experienced Bankruptcy Attorney if You’re Struggling to Repay

Many small businesses were hurt significantly during the COVID-19 pandemic, forcing them to turn to the federal government for economic relief. A lot of businesses took out EIDL or PPP loans because of the quick access to funds, favorable terms and ability to have at least a portion of the loans forgiven.

Even though the pandemic is over now, some businesses still face economic challenges. If their loans didn’t qualify to be forgiven, they might have trouble repaying them.

If your business finds itself in this position, it’s important to consult with an experienced bankruptcy attorney to evaluate your options.

Babi Legal Group has more than 10 years of experience in business law, debt collection, debt settlement and bankruptcy. We can help you explore your legal options if you find yourself having trouble repaying your pandemic-era loans.

For more information, please contact us today.

Tax Foreclosures and Recouping Your Overage Funds: A Practical Guide

Tax Foreclosures and Recouping Your Overage Funds: A Practical Guide

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Foreclosures are rarely if ever a pleasant thing for homeowners.

However, they may be able to recoup the equity in the property after the foreclosure if there were surplus funds after the sale of the house.

How to Claim Surplus Funds

The primary purpose of a tax foreclosure sale is to recover any property taxes that are unpaid. Any money that is left that is above and beyond that owed amount, is considered the overage or surplus.

To claim these tax foreclosure surplus funds, a borrower will have to file a motion with the court in order to be entitled to the surplus. It’s important that you understand what the official process is in your jurisdiction, so it’s always advisable to consult with an experienced attorney.

The lawyers at Babi Legal Group, for example, have many years of experience defending the rights of homeowners who are facing foreclosure, including helping them claim surplus funds.

An important step is to track the foreclosure process so you can learn about the potential for surplus funds, including noting when the foreclosure sale will take place and the contact information of the foreclosing party.

In Michigan you are required to petition the court to seek your surplus prior to your home ever being auctioned whether or not you have a surplus.  However, this law is currently being challenged and may be changed to make it more equitable towards the homeowner that was foreclosed upon.

Laws Governing Foreclosure Surplus Funds

Each state has its own laws that govern foreclosure surplus funds, and these are usually outlined specifically in state statutes. Not only will these laws determine how surplus funds are handled in tax foreclosures, they’ll also explain who’s entitled to receive them.

If your state allows for original borrowers to claim surplus funds, its laws should outline the process for claiming them, as well as the timeline for when you should expect to receive them.

Make sure that you’re aware of your state’s applicable laws so you can understand your obligations and rights. This is also why it’s important you work with a lawyer who’s experienced in real estate law in your state.

Calculating Surplus Funds

How can you calculate surplus funds in a tax foreclosure sale? It’s actually quite simple.

First, add up how much was owed in taxes, and any other fees.

Then, subtract that amount from how much the property sold for at auction.

For instance, if the total amount owed was $650,000 and the home sold for $700,000, the surplus funds in this case would be $50,000.

Again, make sure that you are factoring in any and all costs associated with the foreclosure process and the sale of the home into the calculation, as those will need to be taken out.

Who is Entitled to Surplus Funds

The primary rights to surplus funds lie with the former homeowner. That being said, if there were other liens on the property — such as judgments or a second mortgage — then those creditors might also have a claim to the surplus.

These junior lienholders, as they’re referred to, are typically paid in their order of seniority before the prior homeowner can receive any proceeds from surplus funds if they petition the court to obtain the surplus.

The Tax Sale Process

Property Tax sales are completed to recover any unpaid property taxes, with overages being any amount that results from the sale above what’s owed, including penalties, costs and other liens.  In Michigan, they are held once per year and only allow a 30 day redemption period to payback the property tax balance, otherwise the homeowner will lose their interest in the property.

Avoiding Unclaimed Surplus Funds

In most states, it’s incumbent on you to claim the surplus funds. If you don’t do so within the requisite time period, those funds could be distributed to the unclaimed property division in your state and in some cases, the state simply keeps your money.

All unclaimed assets in the state of Michigan, for instance, are held by the Michigan Department of Treasury if the prior homeowner doesn’t claim them on a traditional foreclosure, but in the event of a tax foreclosure, at this time, the County keeps your money.

To claim them if this happens, you’ll need to initiate a claim on the department’s website and fill out required forms along with proof of identification. 

Protecting Yourself from Surplus Funds Scams

Foreclosure records are public, which means that anyone can review these records and see whether a foreclosure sale resulted in surplus funds. This environment unfortunately creates a fertile ground for scammers who are looking to take advantage of vulnerable homeowners.

You should immediately contact an attorney after the tax foreclosure sale to assist you within the allotted time frame to reclaim your surplus funds, usually for a flat or contingent fee, as it could be a complicated process, while if you delay you may forfeit your right to any surplus.

Timeline for Receiving Surplus Funds

To claim a tax foreclosure sale surplus in Michigan, the process involves several steps as outlined in the Michigan Compiled Laws (MCL).

First, a claimant must submit a notice of intention to claim an interest in any applicable remaining proceeds from the transfer or sale of foreclosed property. This notice must be submitted using a form prescribed by the Department of Treasury and must be filed by July 1 immediately following the effective date of the foreclosure of the property Breiner v. State, 344 Mich. App. 387.

If the property was sold after July 17, 2020, the notice must be submitted pursuant to subsection (2) of § 211.78t. Notice of intention to claim interest in proceeds from sale of foreclosed property.. For properties sold before July 18, 2020, a claim may be made only if the Michigan Supreme Court orders that its decision in Rafaeli, LLC v. Oakland Cty., 505 Mich. 429 applies retroactively, and the notice must be submitted pursuant to subsection (6) Breiner v. State, 344 Mich. App. 387.

Once the notice is submitted, the foreclosing governmental unit is required to pay the amounts ordered by the court to the claimants within 21 days of the order. The claimant must file a motion with the circuit court in the same proceeding in which the judgment of foreclosure was effective to claim any remaining proceeds payable to them § 211.78t. Notice of intention to claim interest in proceeds from sale of foreclosed property.

Common Mistakes When Claiming Surplus Funds

It’s important to avoid common mistakes that often occur when claiming surplus funds. First, make sure to act quickly, not underestimate how complex the process can be and/or attempt to claim funds without seeking an attorney’s help.

If you make any of these common mistakes, you could miss the deadline to claim funds and not be prepared for the process. This is why it’s important to have an experienced and knowledgeable attorney on your side to help you navigate the process.

Additional Resources

If you are a resident of Michigan and need help retrieving surplus funds, reach out to the state Department of Treasury. They can help guide you through the process of searching for and claiming unclaimed surplus funds.

Before it gets to this point, though, consult with a foreclosure attorney to advise you on or tax collector for how you can claim the funds.

Babi Legal Group Can Help You Claim Surplus Funds

If your home was sold at a tax foreclosure auction, you might be able to claim any surplus funds. Figuring out whether there were surplus funds, whether you’re entitled to them and how to go about getting them, though, can be a complicated and complex process.

At Babi Legal Group, we specialize in real estate and foreclosure law, and have helped many people like you claim the surplus funds they’re entitled to, but do not wait as the window to claim your surplus is very short.

For more information, contact us today.

Exploring Bankruptcy and Security Clearance in Law Enforcement and Government Jobs

Exploring Bankruptcy and Security Clearance in Law Enforcement and Government Jobs

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Bankruptcy can often be a financial lifeline for people who find themselves in a mound of debt they can’t get out from under. In many ways, it can be sought as a restart of sorts from a financial perspective, allowing certain debts to be discharged.

Of course, there are ramifications of bankruptcy, including a hit on your credit score, which can affect your ability to get new loans for a certain period of time. That being said, the positives often outweigh the negatives for people who are considering bankruptcy.

One often overlooked aspect of bankruptcy is the fact that it can also affect future job prospects. It’s not always negative, though, as declaring bankruptcy can actually be seen as beneficial to people who need security clearance to work their public-sector jobs or even private-sector jobs.

Below, we’ll dive deeper into bankruptcy and security clearance in law enforcement and government jobs.

Understanding Bankruptcy and Its Implications

There are some implications to bankruptcy that you should be aware of before you file. 

Impact on Credit History

Perhaps the biggest bankruptcy implication is the impact it will have on your credit score and history. From strictly a credit score perspective, bankruptcy is perhaps the most damaging thing that can happen.

In some cases, it may reduce your credit score by 200 points or more. But, it’s not just about the reduced credit score. A bankruptcy will also act as a “stain” on your credit report for many years — 10 years for Chapter 7 bankruptcy and seven years for Chapter 13.

This could affect your ability to get new loans and credit cards for that period.

At the same time, declaring bankruptcy could actually be much better for your credit score and history long term compared to constantly missing payments and getting behind on your debt.

Legal Protections

There are some legal protections that people who file bankruptcy enjoy, especially from an employment perspective.

No public institution — whether it be a local, state or federal government agency — can use a person’s bankruptcy as part of the decision-making process for hiring or firing employees. 

Similar protections are in place in the private sector in terms of firing decisions. However, private companies are allowed to take bankruptcies into consideration when making hiring decisions.

Security Clearance Requirements in Law Enforcement and Government Jobs

Some law enforcement and government jobs require people to obtain a security clearance. Obtaining this clearance essentially certifies that someone is reliable enough to be trusted with confidential information. 

There are various levels of security clearance, and steps that people need to go through in order to obtain them. While having a bankruptcy in your history doesn’t automatically bar you from getting a security clearance, it could affect it in some ways.

Levels of Security Clearance

There are three main types of security clearance — confidential, secret and top secret. Each refers to how severe the risk that the information poses to national security if it were to be compromised. 

The higher the security clearance, the more intense and rigorous the process is for obtaining it.

Background Investigations

Every person who wishes to obtain security clearance must undergo a comprehensive background check. This will involve scrutinizing credit reports, criminal records and personal conduct, which is done through interviews. 

How in-depth the background check will be depends on the type of security clearance a person is seeking. Generally speaking, they will all cover criminal history, work history, overall behavior and financial status.

The goal of background checks is to identify any potential warning signs that might suggest a person is either unreliable or vulnerable to being influenced by outsiders. If any questions are identified, a person might be designated as not dependable enough to handle certain sensitive information. 

Financial Responsibility

The reason why financial responsibility serves as an essential aspect of security clearance is that money troubles could make a person susceptible to bribes — especially for those who deal with sensitive national security information. For instance, if an outsider identifies that a person with security clearance is in financial trouble, they could exploit that to gain access to government secrets.

On a simpler basis, though, financial struggles could also suggest poor decision-making, especially if there’s a long history of unresolved debts, charge-offs and late payments. 

All of this could speak to an individual’s reliability and character.

The Effect of Bankruptcy on Security Clearance

While you might think that a bankruptcy would instantly be a bad thing for security clearance, that’s not necessarily the case. While bankruptcies certainly aren’t something to be desired on a background check, they are viewed as better than other financial troubles.

That’s because bankruptcies could help solve a person’s financial troubles, thereby removing a major concern when issuing security clearance. The ideal scenario is a clean financial picture, but bankruptcies are often preferred to mounting debt and being way behind on payments.

Navigating Bankruptcy Court

If you’ve decided that bankruptcy is the best route for you, it’s important that you understand exactly how it works from a legal perspective. The better prepared you are, the more successful your filing will be — and the more you will be able to take advantage of protections offered under U.S. Bankruptcy Law.

Hiring an Attorney

It’s always important to consult with a local attorney who’s experienced with bankruptcy cases in your state. That’s because each state might have different laws when it comes to bankruptcy and different protections that are available.

Doing this on your own is possible, but it’s certainly difficult, to say the least. The professionals at Babi Legal Group can help guide you through your bankruptcy case so you know what’s best for you. 

Preparing for Court

Your attorney will help guide you through everything that you need to prepare for court. This includes getting all pertinent financial paperwork together, including tax returns, deeds and personal identification.

The court will want to see a complete and precise representation of your finances, as that will play a critical role in whether your bankruptcy petition is approved. The more prepared you can be, the more likely it is that your case will be approved.

Post-Bankruptcy Steps

Once your bankruptcy is approved, there are certain things that you’ll have to do, depending on what type of bankruptcy you filed. If you still owe some debt as part of a Chapter 13 repayment plan, you’ll need to make sure you make those payments.

In all cases, it’s important to come up with a good budget and a concrete plan for not falling into the same debt hole as you did before. This will be especially important as you look to obtain and/or keep the necessary security clearances for your job.

Improving Credit History

While a bankruptcy will be damaging to your credit score, there are steps you can take to improve it over time. You may not be able to qualify for unsecured credit cards right after bankruptcy, for instance, but secured credit cards that are backed by a deposit of cash can help you build your credit score and financial reputation over time.

Slowly but surely, you can build back your credit score to a reasonable range by making smart financial decisions, such as setting and sticking to a budget and not spending above your means.

Communicating with Employers

While there’s nothing that requires you to tell your employer that you have filed bankruptcy — and little that will automatically notify your employer — doing so is a good idea, as it can foster trust. Having an open line of communication with your employer is always important, but especially so if you have a security clearance or need to obtain one.

It’s always better to be upfront about your situation than to have your employer discover your bankruptcy down the line. 

Consult with an Experienced Attorney if You’re Considering Bankruptcy

Bankruptcy can provide a financial lifeline to many people, but there are some implications of filing. It could hamper your ability to obtain a security clearance, or keep one that you currently have.

That’s why it’s always important to  consult with an experienced local bankruptcy attorney if you’re considering filing.

At Babi Legal Group, our experts have a combined 15 years of experience in bankruptcy, debt collection and debt settlement. For more information, please contact us today.

Can Bankruptcy Affect Your Job: Employer Restrictions in Michigan

Can Bankruptcy Affect Your Job: Employer Restrictions in Michigan

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When people get themselves in challenging economic situations, filing bankruptcy might be the best option to provide debt relief and peace of mind. However, at the same time, doing so could impact your future job prospects in the state of Michigan.

Bankruptcy laws do have protections in place for debtors who have filed bankruptcy, shielding them from discrimination from their current employer. For instance, employers are barred from firing an employee based solely on a bankruptcy filing.

At the same time, it could affect your future job prospects, especially in the private sector. While all local, state and federal government agencies are prohibited from using bankruptcies as a hiring criteria, the same protections are not in place for private employers.

Some private employers conduct credit checks on prospective employees and may decide not to hire someone if they have a bankruptcy in their history. And individuals who refuse to permit a credit check may also be removed from consideration for certain jobs.

While most employers will only consider a credit check in relation to the job that you’re applying for, there aren’t specific protections in place in the private sector.

Employer Restrictions on Bankruptcy

People who have filed for bankruptcy do enjoy some federal protections against discrimination in the workplace. It’s laid out in the U.S. Bankruptcy Code that employers cannot discriminate against an employee who has filed bankruptcy.

This employment discrimination clause protects debtors from losing their job solely based on the fact that they filed bankruptcy. This applies to employers in both the public and private sector.

In other words, if you are already employed, you cannot be fired simply due to your bankruptcy filing. 

How Bankruptcy Can Affect Job Prospects

Where a bankruptcy may come into play is with future job prospects, especially if you’re applying to a company in the private sector. 

While there’s nothing that forces you to disclose to prospective employers that you filed for bankruptcy, there are some ways that they might discover it.

For instance, some employers perform credit checks, which could reveal that you filed for bankruptcy. Bankruptcy filings are matters of public record, so employers wouldn’t be doing anything illegal if they discovered you filed for bankruptcy.

Private companies are allowed to consider bankruptcy cases when they are making their hiring decisions, which provides you no protections from future job prospects in the sector. 

If you’re applying to a public-sector job, you will enjoy some protections. That’s because no government agency is allowed to consider previous bankruptcy filings in their hiring decisions.

Security Clearances and Bankruptcy

There are obviously many financial benefits of filing for bankruptcy if you find yourself in over your head with debt. From an employment perspective, it could provide significant benefits for you as well, depending on your job status.

For instance, bankruptcy can actually substantially lower your risk of losing a security clearance. Credit counselors who work for the CIA and the military have said that people who have a lot of debt can become easy targets of blackmail, which could compromise their position with access to sensitive government information.

As such, when you file for bankruptcy and rid yourself of mounds of debt, you could actually be improving your career position at the same time. Not only can bankruptcy help to improve your personal financial concerns, it can also alleviate potential concerns your employer might have if you have certain security clearances — or need them to perform your duties.

Discrimination Laws and Bankruptcy

There are many protections in place for people who file for bankruptcy. As it relates to discrimination at the workplace, federal law bans all private-sector employers and government agencies from discriminating against individuals solely based on the fact that they have filed for bankruptcy.

These protections are provided under Section 525 of the U.S. Bankruptcy Code.

It states that all government agencies — whether on the local, state or federal level — from firing, refusing to hire or discriminating against individuals who file for bankruptcy.

It also prohibits all employers in the private sector from firing individuals because they have filed for bankruptcy. However, the employment protections for individuals in the private sector basically end there.

Keep in mind that your current employer may never find out about your bankruptcy filing, and you are not required to notify them.

If you file Chapter 7 bankruptcy, employers are not required to be notified by the courts. Only direct stakeholders such as creditors and co-signors are automatically notified.

If you file Chapter 13 bankruptcy, though, your employer might eventually receive notice. This is because the bankruptcy court requires a wage garnishment as a method of repayment for your restructuring plan.  However, if you can foresee this being an issue that can negatively impact your employment, then there are options to avoid the wage garnishment to repay your Chapter 13 bankruptcy. 

It’s also important to note that the Bankruptcy Code does not prevent private-sector employers from taking your credit history into consideration for hiring decisions, and this includes previous bankruptcy filings. 

While employers need your permission to run a credit check, if you refuse to give that consent, you can also be denied employment based on that. That’s why it’s typically best to be upfront and honest about your situation.

What to Do if You Experience Discrimination

Despite the protections that are in place thanks to the U.S. Bankruptcy Code, there are still instances in which some people experience employment discrimination.

If you believe that your current employer, or a prospective employer, discriminated against you because of your bankruptcy filing, you need to first make sure that they didn’t have another reason why they terminated you or didn’t hire you.

This can be extremely challenging for you to prove, unfortunately. Many employers don’t need a real reason for terminating an employee, and even if they do, they could build a case against you in other ways.

That’s why it’s important to consult with an employment law attorney if you believe you have been wrongfully discriminated against. They will be able to help determine whether there is sufficient evidence of wrongdoing, and what options you might be able to explore for filing a wrongful termination claim.

At Babi Legal Group, we have more than 15 years of experience in bankruptcy, debt collection and debt settlement law that we can put to work for you if you believe you’ve been discriminated against by a current or prospective employer.

To learn more, please contact us today.

Navigating Michigan’s Homestead Exemption and Out-of-State Property Bankruptcy Filings

Navigating Michigan’s Homestead Exemption and Out-of-State Property Bankruptcy Filings

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Filing bankruptcy can be a scary proposition, especially if you own certain assets that you wish to protect. One of the main assets that comes into question in bankruptcy cases is a primary residence.

Luckily, there are federal bankruptcy exemptions that are in place that can help to shield your home from the bankruptcy process and from creditors. There are also state-specific bankruptcy exemptions that Michigan offers in lieu of the ones offered at the federal level.

As long as you have resided in Michigan for at least two years, you can choose between either the state or federal exemptions that are offered to you. This is good news, as Michigan’s homestead exemption is currently higher than the federal one — $46,125 compared to only $27,900 and even greater if you or your dependent are disabled or a senior citizen.

If you’re not a homeowner, it might behoove you to choose the federal exemptions, as they include greater protection for personal property and cash by providing a wild card exemption that can be used on anything you list as an asset in the bankruptcy.

Regardless of whether you are a homeowner or not, it’s important to understand what your rights are in bankruptcy cases. Consulting with an experienced bankruptcy attorney such as the ones at Babi Legal Group is always a good idea in this regard.

Michigan Bankruptcy Exemptions vs. Federal Bankruptcy Exemptions

No matter what your situation, it’s always good to know what your rights are and what exemptions are available to you. This is especially important in bankruptcy cases, since you can only use exemptions that either the federal government or your state government offers; you cannot use both.

As mentioned above, it may behoove you to choose the Michigan bankruptcy exemptions if you’re a homeowner, since the limit is higher than what the federal government provides. 

In addition, doing so will allow you to take advantage of the federal nonbankruptcy exemptions, if you’re able to qualify for them. Some examples include retirement benefits if you receive Social Security benefits, survivor’s benefits, and death and disability benefits.

If you want to make an informed choice, you need to understand the differences between what exemptions Michigan offers and what exemptions are offered through the federal government. Only then can you make the choice that’s best for you.

The Michigan Homestead Exemption

The Michigan Homestead Exemption allows people who have resided in Michigan for at least two years to protect the equity that they have built in their home, up to as much as $46,125. If you or a dependent is at least 65 years old or disabled, the exemption amount increases to $69,200.  These amounts may even be greater as Michigan is considering to possibly increase these amounts through new legislation in 2025.

What the state’s Homestead Exemption allows you to do is protect the ownership interest you have in your home. To determine the specifics of the program, you’ll need to fully read the homestead statute to see how you can take advantage.

To understand how valuable this can be for you, it’s important to know how much equity you have in your home. To calculate this, simply subtract how much you owe on your outstanding mortgage from the current fair market value of your home.

Claiming Exemptions in a Michigan Bankruptcy

During a bankruptcy proceeding, you’ll be required to file a list of all your assets as well as their values with the United States Bankruptcy Court. You’ll also need to provide proof of ownership of these items, which prevents people from claiming they own something that they actually don’t.

While this may seem like a simple process, it can actually be quite complicated. Even one minor mistake in filling out the paperwork can be catastrophic to your financial future.

In Michigan, you’ll have to file a form known as “Schedule C: The Property You Claim as Exempt” with the bankruptcy court. In addition, you’ll have to file a Statement of Intention form in chapter 7 cases, which will indicate whether you wish to keep the asset or surrender the property as part of your bankruptcy filing.

If you want to ensure that your assets are protected properly, and that the exemption process is handled correctly, it’s important to hire an experienced bankruptcy attorney who is well-versed in Michigan law.

Protecting Out-of-State Property

Many people own property in one state that they don’t call their primary residence. If you are a Michigan resident but own property outside of the state, you may actually be able to protect that property in bankruptcy using the exemptions that Michigan provides its residents.

This isn’t an across-the-board rule, though, as a lot will be determined by where that other property is located and what laws that state has in place. 

If you find yourself in this situation, you’ll want to consult with a qualified bankruptcy attorney so you can understand how the property you own out of state will be treated during a Michigan bankruptcy proceeding.

The Role of the Bankruptcy Trustee

Once you file for bankruptcy, the court will assign a bankruptcy trustee to your case. This person is responsible for viewing your petition to ensure that you’re complying with all applicable bankruptcy laws.

In addition, the trustee in a chapter 7 case also could be responsible for selling off your non-exempt assets as a way to pay your creditors. Again, this depends on the type of bankruptcy that you are filing as well as the assets you have and the debt that you owe.

Regardless of those details, the bankruptcy trustee’s role is to ensure that the process is fair and that you and your creditors are all treated equally.

Working with the Bankruptcy Trustee

As the bankruptcy trustee plays such an important role in your case, it’s essential to cooperate with them and provide whatever documentation is required. If you fail to cooperate with the trustee, it can result in your bankruptcy case being dismissed outright — which will leave you and your assets susceptible to your creditors.

While the bankruptcy trustee may seem like an intimidating person who is asking for intrusive information, there are some simple tips that will make working with the trustee a smooth process.

First, be very honest and transparent about your financial situation with your bankruptcy attorney upon your initial meeting. Remember that they are here to help you, since their work will ultimately ensure that you are able to get rid of certain debts while keeping certain assets.

Provide all required and requested documentation to them in a timely manner. Whenever the trustee requests information from you, respond to them in a prompt manner. 

All of this will engender trust with the trustee and ensure a good working relationship.

Filing for Bankruptcy in Michigan

To file for bankruptcy in Michigan, you must complete a credit counseling course in addition to filing a bankruptcy petition with the bankruptcy court. The course is meant to help educate people who are filing bankruptcy on the financial pitfalls that lie ahead so that they can hopefully avoid repeating this situation in the future.

The bankruptcy court will require you to provide financial documentation as proof that you need relief. This includes pay stubs, tax returns and any other income paperwork as it applies to you.

To file for bankruptcy in Michigan, you must be a resident of the state and meet the eligibility requirements for Chapter 7 or Chapter 13 bankruptcy, depending on which one you are filing for.

Bankruptcy Process and Timeline

From start to finish, the bankruptcy process usually takes several months. How long your case will take depends on how complex it is and the workload of the bankruptcy court at the time you file.

In addition to filing the forms listed above, you’ll be required to attend a creditors’ meeting as part of your bankruptcy case. At this meeting, the bankruptcy trustee and your creditors will have a chance to attend and ask you questions related to your petition.

You might also have to attend a confirmation hearing, which is where the bankruptcy court will review your bankruptcy plan.

Special Considerations

If you have property that you are financing through a loan, such as a home or a vehicle, you might be able to keep it if you continue making payments. If you fall behind on these payments, though, you could be at risk of losing that property.

This is yet another reason why it’s so important to consult with a qualified local bankruptcy attorney so you can fully understand your options when it comes to financed property.

How to Navigate Michigan Bankruptcy

There are many state-specific bankruptcy exemptions offered in Michigan, and they can be used in addition to some of the federal bankruptcy exemptions. One of the key ones for property owners is the homestead exemption, which can protect the home in which you live.

If you want to ensure that your assets are protected and that the exemption process is handled properly, it’s essential to work with a qualified bankruptcy attorney.

The experts at Babi Legal Group have more than 20 years of real estate experience and more than 15 years of experience in bankruptcy, debt collection and debt settlement. For more information and to learn your rights, please contact us today.