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Ann Arbor Law Blog

The debt burden carried by different generations

The effect that the economy has on Michigan residents and others throughout the U.S. varies depending on the age group of the citizens. For instance, it should come as no surprise that the economic crisis of 2008 hit Millennials, who were just finishing college and getting prepared for their first job, differently than members of Generation X, who were stuck paying mortgages for a house that had devalued. Bearing that in mind, it follows that different generations will have different credit profiles with some struggling more than others.

A common misconception is that the generation struggling economically the most is Millennials, currently aged 21-34; however, the numbers would suggest otherwise. According to a State of Credit report by Experian, Generation X, which is comprised of people currently aged 35 to 49, seems to have the most trouble.

Divorce in January

Michigan couples who file for divorce in January are not alone. While researchers at the University of Washington have determined that March and August are the two most popular months for divorces, a significant increase in filings tend to happen immediately after the new year begins.

Many legal practitioners attribute the trend to the idea that couples would rather not get divorced over the holidays. For couples who have begun to entertain the idea of divorce ahead of the holidays, they tend to remain married for the rest of the year so that there can be a final holiday season with the family intact before the divorce. This is particularly true for couples who have children.

Ways to prepare for divorce

Family law attorneys in Michigan and around the country report a spike in calls about divorce following summer vacation and the holiday season. It seems that people who have been undecided about their marriage up to that point may have made a final effort to save it and failed if the holidays or vacation were unpleasant. People can make preparations for divorce even if they are still undecided about moving ahead with it.

Organizing finances is important. People may want to pull their own credit reports and gather information such as tax returns, bank statements, end-of-year pay stubs and credit card bills. They may also want to begin thinking about how they engage on social media. Information shared there could be brought up in the divorce. People who do not wish to disengage entirely from social media should still keep their updates light and unrelated to their marital situation.

“Swatting” prank leads to death, and is not a game

As a gamer, you understand how easy it can be to get caught up in the excitement of the game and sometimes forget that there are real people on the other end of your screen. If something goes wrong during your game, if someone makes a rude comment or if you and your team get ganged up on by rival gamers, you might want to get back at them. This is where the line between reality and gaming can sometimes get blurred. Many gamers in Michigan and elsewhere might not realize how much of an effect their words or actions can have in the online world.

It is not a new trend for people to make threats via social media, text message, gaming forums and other platforms. Some have escalated a conflict and harassed or personally sought out those who upset them online. When it comes to a specific type of prank called “swatting,” online harassment is taken to a higher level.

Chapter 13 bankruptcy and tax sales

Michigan debtors who are considering filing for Chapter 13 bankruptcy may be interested in a ruling made by a Georgia bankruptcy court. The decision marks the second time within a month that a bankruptcy court permitted a Chapter 13 debtor to include in her payment plan the payments for redeemed real property that had been sold in a tax sale.

The debtor possessed a property that was to be sold in a tax sale. The highest bidder, a limited liability company, obtained possession of the title. However, the debtor had a period of redemption during which she had the right to retake possession of the title.

Changes to bankruptcy rules give creditors new deadlines

The Federal Rules of Bankruptcy Procedure changed in a number of ways on December 1, 2017, impacting bankruptcy cases in Michigan and across the United States. The primary effects of the changes involve Chapter 13 cases where creditors have secured claims, unsecured claims or judgment liens. Broadly speaking, the changes require greater attention or action on the part of creditors in Chapter 13 cases and establish new deadlines for creditors.

The changes to the bankruptcy rules shorten the window during which creditors may file proofs of claim, for example. A creditor must now file a proof of claim within 70 days of the bankruptcy filing; prior to the rule changes, creditors had 90 days after the Section 341 meeting during which to make these filings. Creditors will not receive plan payments if they fail to file proofs of claim.

Divorce may be more difficult during the holidays

Individuals in Michigan who are approaching or going through divorce during the holiday season already know how difficult such a process can be, and how the difficulty can be exacerbated by the holiday festivities around us. Indeed, divorcing during the holidays can have a lasting impact on the individuals involved, including the children as well as the spouses. Children may have to endure bouncing between households for years going forward due to the terms of the Parenting Agreement that results after divorce.

There are steps that can be taken, though, to minimize the negative impact of divorce at this particularly sensitive time of the year. First, it is important for both spouses to remember that divorce is simply a part of life sometimes, and that the holidays are not a time to try to buy forgiveness or love from their children. Holiday spending should be kept within reasonable budgets despite the heavy emotions that may come with divorce.

Building a divorce support team

For Michigan residents and others, getting a divorce can be both emotionally and financially draining. To increase the odds of recovering both financially and emotionally from a divorce, it may be a good idea to lean on a support system. In most cases, this will include friends, family and an attorney. It also may include a trusted CPA or other financial professionals. Those who lack a team of professionals may be best served by assembling one before getting divorced.

Ideally, a person will interview multiple attorneys and conduct second interviews with his or her preferred choices prior to hiring someone. Friends, family or other social contacts may provide references. The person chosen to represent an individual should have experience with complex cases while having the ability to communicate. In addition to an attorney and financial advisor that are well versed in divorce matters, it may be worthwhile to seek out the services of a therapist.

Getting a home postbankruptcy

Bankruptcy is a legal process that can be used to resolve overwhelming debt, and every year, 800,000 people in the United States use it to get out of debt. Michigan residents that have gone through a bankruptcy may think that buying a new home may be impossible. Although it may be a complicated process, purchasing a home after a bankruptcy is possible.

The type of bankruptcy a person that wants to buy a new home files is an important factor. Chapter 7 releases debtors from the obligations for their unsecured debt. Chapter 13 filers are able to reorganize their debt and pay it back in affordable monthly payments. Mortgage lenders tend to be more accommodating to Chapter 13 filers than Chapter 7 ones because the former are paying back their debts.

Bankruptcy rates are rising for seniors

Bankruptcy laws help people reduce or eliminate their debts. Although this protection is available to all adults, Michigan seniors are a growing section of bankruptcy filers. There may be a few reasons why they're turning to the federal bankruptcy code to resolve their financial problems.

Possibly the most significant cause of senior personal bankruptcy was the recession that started in 2008. The recession hit older adults hardest because they didn't have time to recover their financial losses in the stock market before it was time for them to retire. With less money in their nest eggs, people in this age group may find it harder to pay the bills after an illness. To compound the issue, health care costs have risen dramatically in recent years. Some seniors who were able to pay their bills in the past are no longer able to do so.

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