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.


Can an attorney stop foreclosure in Michigan?

When you’re facing a foreclosure, it may be difficult to know how to proceed and what options are available.

Foreclosure is the process in which a lender forecloses on a property after someone fails to pay their loan.

How does foreclosure begin in Michigan?

In Michigan, most foreclosures are done without the need for court involvement, This is known as foreclosure by advertisement.
When your lender informs you that it will foreclose upon your property due to your delinquency in mortgage payments, a foreclosure process begins. The entity that oversees your mortgage is known as your lender or the mortgage servicer. The mortgage servicer is different than the company that owns the mortgage note.

Prevent foreclosure through timely mortgage payments

To prevent any foreclosure case, the first thing is to never be behind on your mortgage payments.

When you sign for a mortgage loan in Michigan, you agree to pay your monthly mortgage payments on time.

Nevertheless, many times in life there are situations where you may be facing foreclosure because we go through emergencies, we lose our jobs, or life circumstances change.

As expert foreclosure defense attorneys, we are ready to offer legal advice to stop foreclosure. In this article, we are discussing some options.

Nevertheless, the best thing you can do to stop a foreclosure is to review your case with an experienced attorney.

The Babi Legal Group has decades of experience in stopping the foreclosure process in its tracks and providing you with free foreclosure prevention analysis.

Use a strategic mortgage default to get mortgage relief


In an attorney-client relationship, sometimes a lawyer can propose a strategic default to propose to the mortgage company modified mortgage terms through a loan modification which can reduce the monthly payment, reduce the interest rate and make your mortgage current.

This is when a borrower decides to stop making payments on mortgage debt while still having the financial capacity to do so.

Before you stop paying…

It’s critical to speak with a qualified professional before missing any payments, which can harm your credit.

An experienced lawyer usually provides free consultations to discuss your finances and the best way to achieve your long-term objectives, including addressing other debts and financial problems.

How to get a loan modification in Michigan

A loan modification is an agreement between the mortgage servicer and the homeowner, where the mortgage company can through a new mortgage agreement reduce your monthly payment and the interest rate to make your mortgage payment more affordable based upon your current income analysis. 

The mortgage company will also in some cases reduce the principal mortgage balance. This makes it easier for the person to afford their monthly payments.

If you fall behind on your payments, you may be able to add the missed payments to the end of the loan, so you will not be required to repay it until your loan matures.

To apply for a mortgage loan modification to stop foreclosure, you need to contact your loan servicer at least 30 days before the foreclosure sale date. They will ask you for information about your income, expenses, and financial condition.

You will need to provide some documents to support your application. The process may seem difficult, but having a foreclosure defense lawyer on your side can make the difference between being approved or denied for a final modification.

Most law firms offer a free evaluation of your case and offer a realistic plan to assist you in obtaining a final loan modification.

A foreclosure attorney that helps you face a Michigan foreclosure

You may seek assistance from a housing counselor if you are facing foreclosure. A free housing counselor can assist you.

You should never pay a charge for lender assistance. Use a certified counselor from the Michigan State Housing Development Authority (MSHDA) or the United States Department of Housing and Urban Development (HUD).

Expert attorneys

You can also go to expert foreclosure lawyers. A law firm that is experienced in bankruptcy has a deep knowledge of the court process, the loan documents, and the mortgage litigation that has to be followed, all in a confidential relationship. They also can stop a foreclosure in its tracks by filing a bankruptcy petition before the foreclosure sale date.

In Michigan, how can I stop foreclosure? 

There are several ways to stop a foreclosure and each possibility depends on the specific details surrounding your reasons for why you are facing foreclosure.

Here’s a list of foreclosure prevention methods:

  • Bankruptcy, either chapter 7 or chapter 13.
  • Begin loss mitigation with your mortgage servicer at least 30 days before any foreclosure sale date. This would include a loan modification; short sale; or deed instead of foreclosure.
  • Filing of a wrongful foreclosure complaint in the County Circuit Court.
  • Paying off the delinquent mortgage payments that have caused the foreclosure. 
  • Refinancing the loan before the foreclosure sale.

Once a foreclosure begins…

When you miss a payment or are unable to modify your loan, your lender can initiate the foreclosure process.

It can accomplish a foreclosure in Michigan by either advertisement or through the court process.

A foreclosure by advertisement is the announcement of the foreclosure by publishing a notice of foreclosure in a local newspaper and affixing the notice of foreclosure to your property. 

This process allows the mortgage company to streamline the foreclosure process since they do not need to process the foreclosure through the court system.

Can a foreclosure attorney stop the Sheriff’s sale?

The Sheriff’s Sale Notice is published for at least four weeks. To avoid foreclosure, a law firm can assist you with a variety of things during this time.

After the Sheriff’s sale date has been established, you can find foreclosure lawyers that can help you avoid foreclosure by selling your home for fair market value before the foreclosure sale date.

You also have the option to refinance your house. Before the foreclosure sale ends, you can stop the foreclosure by seeking a loan modification. However, it is recommended that you request modification assistance at least 30 days before the foreclosure sale date.

If you decide to declare bankruptcy, then the bankruptcy automatic stay will stop and cancel the foreclosure if you file the bankruptcy case before the foreclosure sale date.  Even while you are in bankruptcy, with the right legal counsel you can also request a mortgage modification that the bankruptcy court will oversee.

How to find good Michigan foreclosure attorneys?

Be careful when choosing foreclosure attorneys. You do not want to go to a debt relief firm, which will have very limited options.

Make sure the law firm you retain is experienced in both pre and post-foreclosure assistance. Ask about their knowledge of the federal law, the United States Bankruptcy Code as well as the Michigan one, since some laws are state-specific.

With the right law firm, you may even be able to rescind a foreclosure or realize any post-foreclosure equity you have in the property during your redemption period.  In Michigan, you are entitled to a 6 month or 1 year redemption period, although in most cases, it’s a 6-month redemption.  The redemption period is valuable time you have to seek last-minute options that could save your property or put cash in your pocket.

Do not trust all websites

Try to avoid websites and other automated technology that offer paid attorney advertising.

Do not share any sensitive or confidential information as well as your case details, contact info, or email with third parties.


What You Need to Know About Credit Counseling in Michigan

Many people, depending on their financial situation, believe that credit counseling in Michigan will harm their credit report, but this isn’t the case.

This won’t show up on your credit report if you go to a Michigan credit counselor to get debt advice or assistance to manage your money.

Michigan credit counselors will guide you on several matters, such as credit card debt, consumer credit, student loans, budgeting, and debt and money management.

What is credit counceling?


Michigan credit counseling is a counseling session that helps people with financial difficulties or those who are unable to pay their debts.

You will establish new financial goals through counseling services, that will give you excellent financial tools.

When do I need credit counseling?

If you are being pressed by many debt collectors, Michigan credit counseling may be the best choice for you. It’s also an excellent option if you have a large number of student loans.

How good are you at financial literacy?

If your financial situation and your credit score are keeping you awake at night, it is time to begin to think seriously about how to get out of debt.

Credit counseling can help you to manage debt by getting better in your personal finance. Forget about credit card bills and unsecured debts.

Debt counseling will give you debt repayment strategies that will bring back your peace of mind.

Things to know before your initial counseling session

There are several frauds on the market that claim to provide debt relief, such as credit counseling, credit repair, and debt settlement.

When an organization claims something is too good to be true, it’s almost certainly a scam.

So, if you’re seeking a way to reduce your debt and not sell yourself short on money, consider shopping around before settling with a debt settlement business or a credit repair firm.

Only deal with a Michigan credit counseling business that has been approved.

A debt management plan in Michigan

If you’ve been paying only the minimum amount on your credit cards, or if you’ve missed a few payments, seeing an expert Michigan credit counselor can truly help you get rid of most of your financial problems.

A debt management plan combines all of your debts into a single monthly payment, making it easier to handle.

If a debt management plan is appropriate for you, your Michigan credit counselor may suggest one for your debt repayment.

What to look for in a credit counseling agency in Michigan

A free or nonprofit credit counseling agency can help you prepare a budget, avoid bankruptcy and handle student loans. They will also advise on money management to keep your debts under control.

The state of Michigan offers free credit counseling, a service that can help you avoid the need for debt settlement services.

Although bankruptcy is available in this state, it isn’t always the most effective or efficient way to deal with your financial challenges.

Certified credit counselors

Look for credit counseling agencies that have been approved by the National Foundation for Credit Counseling (NFCC).

You should also ask the Better Business Bureau (BBB) for the counseling organization you have chosen. Look for reputable credit counseling organizations that have high ratings.

The Consumer Financial  Protection Bureau can also help you find a reputable financial counseling association in Michigan that includes a free credit counseling session.

What must I share with my Michigan credit counselor about my personal finance?

If you want to reach debt consolidation and be relieved about your monthly expenses, find a reputed credit counseling organization with whom you can share your entire financial situation (even if you think you have too much debt, which can be not as much compared with other individuals).

What services does a nonprofit credit counselor offer?

A credit counselor from a reputed credit counseling organization may offer a variety of services.

After you’ve shared all of your financial information, a credit counseling session may include free educational resources such as basic money management advice as well as a plan to help you pay off debt.

In some situations, credit counselors may be able to negotiate reduced interest rates, decreased monthly payments, and other benefits with your lenders, which might help you save money.

You will also get better at your money management skills by making timely payments, paying off your credit card debt, and knowing the steps to get a better consumer credit score.

How to become a certified credit counselor in Michigan

If you wish to help people with a credit counseling service, you need to become a certified credit counselor.

The Michigan Debt Management Act of 1975 PA 148 requires a licensed counselor to be certified to help people in financial hardship with credit counseling services and debt management plans.

Individuals who have completed a training or certifying program, and who have been authorized by the director are considered certified credit counselors.

Look for facilities in Michigan that are authorized to verify the competence of people who give education and assistance to others in connection with debt counseling and financial counseling activities.

What’s The Timeline I Can Expect When I File for Bankruptcy?

A standard Chapter 7 bankruptcy timeline

Step #1 – Free consultation

At the first consultation, a legal representative from the Babi Legal Group will work with you to pick the finest option for assisting you towards the best financial management. If bankruptcy is not a good fit for you, then a settlement may be an option.

However, if a bankruptcy case is the only viable option, our law firm will evaluate whether you should file Chapter 7 bankruptcy or Chapter 13 bankruptcy. The choice of which one to pursue will be determined based on your unique circumstances and ultimate goals.

Step #2 – First credit counseling course

Before a person files bankruptcy, he or she must first take a credit counseling course from an authorized credit counselor. Every bankruptcy case is required to provide a credit counseling certificate with the bankruptcy case filing and Babi Legal Group will connect you with our partnered credit counselors to complete the course by phone or online.

Here you can find the list of approved debt management providers in Michigan.

Step #3 Filing your bankruptcy petition

The bankruptcy court also requires financial papers to verify that the bankruptcy documents accurately reflect your current financial situation. Because each customer’s situation is different, your attorney will provide you with a prioritized list of documents that our office and the court will need to achieve a bankruptcy discharge.

After your documentation has been evaluated and reviewed by our attorneys, we will submit all of the required paperwork to the bankruptcy court and bankruptcy trustee. The documentation you may have to include are as follows:

  • pay stubs or profit and loss statements if you are self-employed
  • vehicle statements
  • real property documents such as mortgage statements; recorded mortgages and deeds and property tax statements.
  • bank statements
  • an estimated value for real estate
  • tax returns
  • other certain debts

We scan all of the papers and return them at the end of your appointment if you bring only originals.

The client will come into the office once it is ready, and a lawyer will review the bankruptcy petition with him or her to ensure accuracy. After a thorough review of the petition, the client will sign it and we will submit it to the Court for electronic filing. This is done through their website and other automated technology.

Once the petition is filed, the bankruptcy automatic stay comes into action. The bankruptcy law then protects you from creditors and helps to prevent a sheriff’s sale, wage garnishment, vehicle repossession, creditor intimidation, and much more.

After your bankruptcy lawyer files your petition, you will receive a case number. Your case is assigned to a bankruptcy trustee at random.

Step #4 Second counseling course and 341 creditors meeting

A second credit counseling course must be completed once your case is filed and must be completed before you can receive a bankruptcy discharge. 

The Court will schedule a 341 meeting, also known as a meeting of creditors, within days of filing the bankruptcy petition. This is when the trustee may look over your situation and ask a few questions they may have.

The 341 hearing or meeting of creditors is usually held 30 days after filing your case. In the mail, you’ll get your notice of 341 hearing as well as a reminder from our office the day before the hearing.

You must bring your driver’s license, social security card, and any other document requested by your attorney to the 341 hearing.

Step #5 Discharge of debts

After 60 days from your 341 hearing being concluded, you can start checking your mail. The official order discharging you of all your debts will be sent to you by the United States Bankruptcy Court. The bankruptcy judge will officially enter your bankruptcy discharge and the bankruptcy court will send to both you and your attorney the official discharge order.

What does a bankruptcy attorney do?

Filing for bankruptcy is one of those moments in life when you appreciate any legal advice. Having a professional attorney by your side in any bankruptcy case, whether it is Chapter 13 or Chapter 7 bankruptcy, is worth it every step of the way.

Remember that as in any attorney-client relationship, even if these are only financial affairs, any sensitive or confidential information, as well as case details, contact info, or important dates, have to be necessarily secure and remain inside the confidential relationship.

What will I learn in credit counseling?

Trusted credit counseling organizations have professionals with training and certification. An approved agency will have the court’s permission to assist you in crafting a unique strategy for addressing your financial concerns.

A one-hour consultation is generally followed by multiple follow-up sessions. A legitimate organization should provide information about its services without requiring potential customers to disclose any information about their difficulties.

How to find a trusted attorney?


In your bankruptcy timeline, finding a bankruptcy attorney should be at the top of your list.

First, be aware of any lawyer referral service. Some websites try to provide that but bear in mind they are not thinking about the excellence of a bankruptcy attorney or their professionalism.

Other websites provide attorney listings and attorney advertising by zip code search. Be careful here when third parties are offering the contact information. Choose attorneys which are recommended by people you know that have been in the same situation or by reading client reviews about that attorney or their office.

In your bankruptcy timeline, finding a lawyer that provides a free evaluation of your case is an asset. This of course does not constitute acceptance of their terms. Having free consultations might guide you to the best attorney that will help you with your bankruptcy case.

Remember once you have chosen a law firm, you have to sign a written fee agreement disclosing the services that will be provided by the attorney. Then you can continue with the next steps in your bankruptcy timeline.


Three Bankruptcy Alternatives: How to Avoid Filing for Bankruptcy in Michigan

If your financial circumstances this year have been adverse to you and your family, here is an article that can guide you through several alternatives to bankruptcy.

If you want to discuss your case details contact info for Babi Legal Group is on this website. With our contact information choose attorneys that are on your side no matter what.

Thinking about bankruptcy alternatives?

Before filing for bankruptcy, take a good read at these three alternatives to bankruptcy we offer and other sound advice, from debt consolidation loans, finding a good financial advisor, doing a repayment plan, and having excellent debt management.

In the United State of AmericaIndividuals are not incarcerated for failing to pay bills, meaning there are no debtor prisons,(for example, not being able to pay settling your mortgage is not a crime). Filing for bankruptcy or having a negative credit score is not the end of the world. Read on for more advice.

Alternative #1 – Debt consolidation plans

If you are thinking about settling debts before you go to bankruptcy court let the Babi Legal Group help you to avoid court judgment.

A debt consolidation strategy is an excellent option for individuals who are struggling with unmanageable bills. 

Debt consolidation combines all of your creditors into one payment every month. To pay off all of your debts, you’ll need to take out one loan and use it to repay them all.

As one of the best bankruptcy alternatives, this is a process through which you combine several debts into one. The objective of debt consolidation is to obtain a lower rate on your existing loan than you currently have with your creditors.

You may frequently lower your monthly payment by lowering your interest rate. This should assist you in repaying the debt in full while having little influence on your credit history and rating.

How can I have one of these plans?

To know if this kind of debt relief is at hand for you (or if you have excessive debt or an unsecured debt), contact a bankruptcy attorney at Babi Legal Group. We are here to help you pay debts and get you back to a healthy personal financial situation.

A debt consolidation loan is a method for some consumers to get rid of the hassle of paying numerous creditors by taking out a loan that combines all of their obligations. This can be part of your debt management plan.

Alternative #2 – Loan Modification

If your financial issue is primarily due to the inability to pay your mortgage, then at Babi Legal Group we can help you save your home through a loan modification without having to file a bankruptcy petition. 

Some of the benefits a loan modification can achieve for a homeowner include the lowering of your interest rate, the reduction of your ongoing, monthly mortgage payment, the deferment or forgiveness of missed mortgage payments resulting in the cancellation of a foreclosure sale and even a reduction in the total balance owed on your mortgage!


You may qualify for a loan modification if you have experienced a financial hardship such as a loss of income, divorce or medical issues, for example. Most lenders can and want to work with homeowners, even if they have poor credit and have a foreclosure date scheduled since they do not want your home. Even if your home is not in foreclosure yet or you are current with your mortgage payments, a loan modification is an option that all homeowners should explore. It is, however, often difficult to determine what kinds of options are available to you, whether you will qualify for a loan modification and whether there is a good chance of successfully obtaining a loan modification.

Alternative # 3 – Do a debt settlement

There are several ways to avoid bankruptcy. Debt settlement or debt negotiation is a very good alternative to bankruptcy. When you have a few significant bills, debt negotiation and settlement are frequently used. 

With the Babi Legal Group on your side, we will be able to contact the creditor or the creditor’s attorney to negotiate a lump-sum payment or a discounted payment plan of your debt that you are delinquent or behind on. 

The objective is to get a settlement for as little money as possible. Babi Legal Group attorneys have created several unique strategies to obtain the finest bargain feasible.

One of the most essential aspects of a debt settlement is having adequate cash on hand.

Creditors typically demand a lump sum payment within 30 days of a debt agreement being reached. As a result, it’s critical to be able to access the money before settling your bill.

In this way, your personal financial situation might be reestablished soon, and you will be able to save money as well. You will still have financial obligations. Call our office today so our attorneys evaluate your case.

Careful with scams on your credit record

Debt settlement, or debt negotiation, is a method of negotiating your debt that allows you to pay a reduced amount as full payment. However, there are several issues linked with debt settlement programs, including fraud and credit score harm.

Several firms that provide debt settlements are frauds. The FTC’s website offers details about the issues linked to debt settlement programs.

Bankruptcy attorneys in Babi Legal Group are strictly regulated by the State of Michigan, unlike debt settlement businesses, where there are no rules. Make sure your debt management program is handled by the correct person.

Expanding the Receivership Act in Michigan

A recent change was made in Michigan, which broadens the scope of receivership procedures, a liquidation alternative to bankruptcy. Previously, the receivership statute in Michigan only applied to commercial real estate receiverships.

The Department of Treasury and the Office of Financial Management have provided a solution that covers all operating companies in Michigan, as well as commercial and industrial loans without regard to real estate collateral.

More creditors will have the option of requesting the appointment of a receiver under the Receivership Act. The UCRERA was previously confined to foreclosures and the enforcement of a mortgage on commercial real estate, although it has been expanded in recent years.

The new law changes the term “mortgage” to “security agreement or lien,” which vastly expands a creditor’s power to seek and a court’s authority to appoint, a receiver. More creditors will be able to request the appointment of a receiver under the Receivership Act, which went into effect in July 2021.

In conclusion, the amendment broadens the definition of “receiver” under the Receivership Act in Michigan to include non-commercial real estate circumstances and provides for a more organized procedure for receiver appointment.

Your debt management plan

Even before you think of bankruptcy, every time you ask for a loan, borrow money or pay taxes, you should have a personal backup savings plan. You can begin by putting away only a small fraction of your total monthly income.

Here are some tips that can help:

  • Find out about all interest rates before asking for a loan
  • Look for a nonprofit credit counseling agency that can be your companion when asking for credit lines
  • Never lend money
  • Always look at your remaining debt when you are paying a loan so you see the money is being discounted
  • Find ways to have a better credit score
  • Try to buy a used car instead of opening any car loans
  • Try a free evaluation that you find in any attorney listings to see how many secured and unsecured debts you have
  • Transfer debt to credit cards that offer the lowest interest rate
  •  If you have equity in your house, you can use a home equity loan to pay unsecured creditors

How important is your credit report?

The term “bankruptcy” has a negative connotation, and it is not always used to describe individuals who are legally unable to pay their debts. For those who do choose to declare bankruptcy, it can have devastating effects on both their mental health and credit history.

The major advantage of enrolling in a debt management program is that it will not damage your credit rating further. The seven-year reporting period (which is up to ten years) for negative items in your credit report linked with past obligations applies to all bankruptcy filings.

Bankruptcy will not appear on your credit reports, however, it will be noted in the report that you joined a debt management program. You will of course need some credit counseling as well.

Advantages of not having to file bankruptcy with legal advice by your side

Not everyone who is bankrupt has to proceed with a bankruptcy filing. There are public assistance benefits many people do not know of, as well as debt loans and debt management plans that can save a family.

Looking for a bankruptcy alternative in a confidential attorney-client relationship can bring you numerous benefits in this legal process. An attorney can also be a credit counselor that is extremely careful with sensitive or confidential information like how much money you owe.

What does the bankruptcy trustee investigate?

There are a lot of reasons why people file for bankruptcy, but they all have one thing in common: they want to get rid of their debt. To do that, the trustee will need to investigate your life and finances from top to bottom. The goal is not just to figure out if you’re eligible for bankruptcy relief, but also what caused you so much financial distress in the first place.

What is a bankruptcy process?

A person or firm that is unable to repay its outstanding liabilities goes through the bankruptcy procedure.  The bankruptcy process is made up of various steps. The first step in the procedure is filing, which can be done by either an individual or a business that owes money to its creditors and cannot repay it.

Who can file for bankruptcy?

The debtor who is either an individual or a business files a voluntary bankruptcy petition which will notify everyone on the debtor list in the bankruptcy to notify them of the filing, this, is the most frequent type of filing. The creditors can also file a bankruptcy petition on behalf of the debtor, which is known as an involuntary bankruptcy, though this is less common. The assets of the debtor, including real estate, are all weighed and assessed. They might be used to repay a part of the outstanding debt or even the total debt.

Advantages and disadvantages of filing bankruptcy

Depending on which sort of petition you submit, declaring bankruptcy can help you avoid having to repay your debts and preserve your house, vehicle, business, or other potential assets. However, declaring bankruptcy will negatively impact your credit, and lowering your credit score might make it hard to obtain car loans, house mortgages, or even a credit card.

What does the bankruptcy trustee investigate?

Whenever you file for bankruptcy, you will have a trustee assigned to your case. The bankruptcy trustee thoroughly examines your bankruptcy petition and supporting documents such as tax returns, pay stubs, property deeds, mortgages, and bank statements to look for hidden assets, avoidable transactions, and other irregularities before you are allowed your final discharge. This means that the bankruptcy trustee needs access to all your financial records, bank account information, monthly payments, total monthly income, and any other financial documents dating back to 6 months and in some cases 2 years.

Will a bankruptcy trustee always look for bankruptcy fraud?

The trustee will ask everything about your financial situation. If the bankruptcy trustee suspects fraud, he or she will take action if it appears that a fraudulent act might deprive creditors of the money they are owed. If necessary, it is the trustee’s job to also refer the case to the United States Trustee, which is a part of the department of justice while looking at your financial situation.

If a United States Trustee suspects fraud, it can bring federal criminal charges against the debtor seeking penalties and jail time.

What does the bankruptcy trustee investigate in a Chapter 7 bankruptcy?

The 341 meeting of creditors is required for everyone who files for Chapter 7 bankruptcy, whether it’s an individual or a business. The bankruptcy trustee—the individual in charge of your case—will verify your identity and ask you about your bankruptcy filing under oath at the hearing. Sometimes in Chapter 7 bankruptcy, the trustee may sell any nonexempt property for the benefit of the creditors, however, the debtor in most cases has the right to convert the case to Chapter 13 to avoid the assets from being sold.

What does the bankruptcy trustee investigate in Chapter 13?

If you file a Chapter 13, the trustee is required to do many of the same things a chapter 7 trustee would do, but the chapter 13 trustee does not sell your property.  Instead, the chapter 13 trustee will require you to repay your creditors through your chapter 13 repayment plan the same amount that the creditors would have received if your property was sold by the chapter 7 trustee. . The trustee also collects all the chapter 13 plan payments and sends money to creditors each month as provided for in the chapter 13 plan. While looking into your financial affairs and bank accounts, the trustee examines whether you could—or should—pay more to creditors than what you’ve said in the Chapter 13 plan.

Do I need a bankruptcy attorney to face the bankruptcy trustee?

Beginning an attorney-client relationship is very important when filing for bankruptcy. In this confidential relationship, attorneys evaluate your bank statements, tax returns, and any other document of the estimated value for your real and personal property to accurately evaluate your case. They help you fill in your bankruptcy forms with case details, contact info, as well as helping you get together all your bankruptcy documents.

A bankruptcy lawyer will give you sound legal advice. You will have their law firm behind you to help you with anything the trustee asks. Yes, having professional help can help you avoid losing your assets to a trustee sale as well as provide sufficient evidence which a trustee will accept to evaluate your case.

Your bank account and the bankruptcy trustee

The bankruptcy trustee will examine your bank account. The trustees are beginning to delve into bank records more thoroughly. They discover hints of belongings that debtors may have sold or money that vanished without a trace.

The trustee will want to see at least 3 months of bank statements from the month you filed the case. The more months, the better.

Your trustee can request bank statements from you for all of the years in question. Bank statements can also be used to verify your income and expenses as stated to file bankruptcy.

Going to bankruptcy court

Federal courts handle all bankruptcy cases according to the United States Bankruptcy Code’s regulations. There are several types of bankruptcies, which are identified by their chapter in the U.S. Code.

Because bankruptcy has long-term financial and legal repercussions, it is highly advised to seek the assistance of a competent attorney. Filing pro se is the term used to describe people who file bankruptcy without the aid of an attorney. 

How to find the best attorney listings?

The resources below can assist you in locating a bankruptcy lawyer if necessary. If you don’t have the cash to pay for an attorney, you may be eligible for free legal services. Many lawyers offer a free evaluation of your case, especially if it is a Chapter 7 bankruptcy.

  1. LSC – The Legal Services Corporation (LSC) is a private, non-profit organization that advances equal access to justice by offering financial assistance to more than 100 independent nonprofit legal aid organizations in each state, the District of Columbia, and U.S. Territories.
  2. American Bar Association – The mission of the American Bar Association’s Legal Services Division is to assist and expand access to justice for all people by providing legal assistance, counsel, and representation in the country’s civil, criminal, and military justice systems.

If you use Google, beware of any attorney advertising miracle legal advice. More than one bankruptcy attorney will do some paid attorney advertising to be at the top of website searches through automated technology.

There are also several websites where it will be considered a paid attorney advertising to access information about attorneys. In other states, a website’s content may be classified as a lawyer referral service.

If you are looking for professional help to fill bankruptcy forms, avoid lawyer referral services and third parties with any other automated technology. Look for direct contact information. Choose attorneys that have a recognizable law firm that can give you personal attorney-client attention. Sometimes a Google zip code search for lawyers gives the best result.

 341 Meeting of Creditors

In any of these cases, the meeting of creditors is a hearing for all debtors. It’s also known as a 341 meeting since it’s required by Section 341 of the Bankruptcy Code. Because they are not obligated to attend, creditors do not waive their rights if they do not attend these meetings. Your attorney can help you with the filing date and any supplemental terms you will need to necessarily secure your bankruptcy discharge.

Learn more about bankruptcy trustees

Bankruptcy is a legal process that allows debtors to get a fresh financial start while still protecting their property and assets. Babi Legal Group’s bankruptcy attorneys have several years of experience advising people on how to successfully navigate the bankruptcy process by addressing all of their concerns, from A to Z to successfully obtain your bankruptcy discharge.