You can have your weed or you can have your discharge — But you can’t have both.

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Medical marijuana caregivers may face a tough choice – your pot or your house

The Bankruptcy Court for the Western District of Michigan issued a decision today that may leave Michigan Medical Marijuana caregivers in a tough position – having to choose between obtaining relief under the bankruptcy code, or continuing to grow and distribute marijuana in compliance with state law.

In a recently-filed Chapter 13 case, the debtor operated a business growing and distributing medical marijuana from his home in Michigan.  Unfortunately, his honesty about his activities drew some attention from the Department of Justice, which filed a motion to dismiss his case.  The bankruptcy judge found that, because his business is illegal under federal law, he could not continue both his bankruptcy and his business.

The debtor even offered to keep his business earnings separate from the bankruptcy, and use only his social security benefits to make payments under his repayment plan.  But the court was of the opinion that allowing the debtor to continue his business would make the Court a party to violations of federal criminal law.  Ultimately, the court put a hard choice before the debtor: forego bankruptcy relief and continue to operate his medical marijuana business, or immediately cease operations and destroy all of his plants, inventory, and equipment.

People usually don’t consider filing bankruptcy unless they are caught between a rock and a hard place.  Today, the Court has made the decision to file especially difficult for medical marijuana growers.  Filing bankruptcy requires total honesty with the Court, but telling the truth might get you in legal trouble far beyond the financial difficulties already faced by many Michigan residents.

 

Whether you are registered under the Michigan Medical Marihuana Act or not, if you are considering filing bankruptcy it is vital that you are honest with your bankruptcy attorney about everything.  The debtor in today’s decision was only afforded the opportunity to continue with his bankruptcy because he had been completely honest with his attorney, the Trustee, and the Court, regarding his activities.

The Court ordered that if the Debtor chose to continue to pursue a bankruptcy discharge, he must stop growing marijuana and must destroy the plants he currently has. However the Court did not specify how it must be destroyed, perhaps he could just burn it all…a little bit at a time…

If you’re a medical marijuana user who needs bankruptcy relief, wipe the cheetos dust off your fingers, take a shower, and then come see us to explore your options.

The Meeting of Creditors — What will happen?

The meeting of creditors is likely the only time you will have to set foot in any sort of court room during the bankruptcy process. It is generally a chance for a court appointed trustee to examine the bankruptcy petition, ask a few questions, and determine if there are any assets available in your case to distribute to creditors. While it is called the meeting of creditors, there are very rarely any creditors who show up.

At a meeting of creditors, if we have done our job right to that point, it will be the most boring thing you do that day. On the other hand, if you have an incompetent attorney, it can be a nightmare. Clients often get frustrated at how many documents we request from them before filing, but after the meeting of creditors they will often be amazed at how quickly and smoothly their meeting went compared to everyone else’s. The reason why our meetings go so smoothly is because we are thorough, we take our time, and we make sure we get things right before we file your case.

I took the liberty to go ahead and make a short informational video showing what a typical meeting of creditors may look like. I hope you enjoy it!

A Fond Farewell to a Wonderful Bankruptcy Attorney

Attorney Elizabeth Lamphier, J.D.

It is with mixed emotions that Mapes Law Offices says farewell to Elizabeth Lamphier, our staff attorney. Elizabeth has been handpicked by the new bankruptcy judge John Gregg to be his law clerk. This is quite a prestigious position and is a wonderful opportunity for her and we wish her nothing but the best. In her time as a consumer bankruptcy attorney Elizabeth has represented hundreds of debtors in both chapters seven and thirteen, and has done a phenomenal job protecting their interests. It is rare to find an attorney with as much skill, intelligence, compassion, and friendliness and our office was lucky to have her for the time we did.

It is rare that a Judge selects someone who has represented consumer debtors to be on their staff, normally clerks come from large corporate law firms and have never actually represented a debtor. In Elizabeth, Judge Gregg will have the input of someone who has gotten their hands dirty in bankruptcy, someone who knows how painful it can be for the debtors, and how scared people can be going through a strange and unfamiliar process. All Bankruptcy Attorneys in West Michigan, from Kalamazoo to Grand Rapids, all the way to Marquette, should be happy to know that they will have a friend in the courtroom.

On a personal note, I have to say that Elizabeth was a wonderful employee but an even better person. From the first time I interviewed her, Elizabeth impressed me as an unusually smart and nice woman. I am sad to see her leave our office, but absolutely thrilled at the adventure that she will be starting. I am going to be the first one to cal it, I guarantee that within the next twenty years, Elizabeth will become United States Bankruptcy Judge Elizabeth Lamphier. She has the temperament, compassion, and intelligence for the job and being a clerk will be wonderful training.

So please, feel free to share your favorite memories of Elizabeth in the Comment section below, or leave her well wishes.

Congress to Shuffle Deck Chairs on the Titanic!

Student Loans

News came out recently that Senator Elizabeth Warren has proposed new legislation called the Bank on Students Emergency Loan Refinancing Act. Under this legislation students who borrowed prior to 2013 to fund an undergraduate degree to refinance both public and private student loans into a new loan bearing a 3.86 percent rate. Loans taken out for graduate school could be refinanced at a 5.41 percent rate, while parent loans could be refinanced at 6.41 percent.

The good part of this program is that it would apply not only to federal student loans, but to private loans as well. However, the devil is in the details. In order for private student loans to be included, the borrower must be in good standing with the lender and must meet certain debt to income ratios that have yet to be determined by the Department of Education. The problem is really two-fold.

First, private student loan borrowers who are in default need this the most but will be unable to get it. Those in default on private student loans often face interest rates of 29%, and they won’t be able to do a thing about it. Second, the debt to income ratio will probably keep most people out of this. It is very common for a borrower with private student loans to have over $100,000 in student loans and due to the economy they only have a job that pays $45,000 or less. Ironically, it seems that the people with the most student loan debt often have the least amount of income.

So what is the real solution? Simple. Restore Bankruptcy Protection to Student Loans. Lowering interest rates is great, but that still leaves us in a situation where students have exorbitant amounts of debt that they will never be able to pay off. This debt keeps them from fully participating in the economy by doing things such as buying houses and cars. While allowing bankruptcy protection on student loans may mean less student loans are granted, that may end up being the best thing. It used to be that someone could get a decent job without a college degree, but now that everyone has bought into the idea that they need a degree, it is almost impossible to get a decent job without one.

Ultimately, I tend to think this won’t pass anyways. Why not? Well, it would be harmful to the banks that lent the money, and the banks have a much better lobbyists than borrowers. Secondly, the government makes too much money off of student loan interest. the government will make $66 billion off of federal student loans disbursed between 2007 and 2012. Yes, Billion, with a B. If loan rates are reduced, so is the amount the government will take in. While i try not to be too cynical, I have yet to see the government do things that reduce revenues.

So, this is a step in the right direction, and it could help a lot of people, but let’s not pretend it is actually going to solve anything.

Mr. Monopoly has Fallen on Hard Times

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The economic collapse of the last few years has hit this country rather hard, and no one has been spared. Even poor old Mr. Monopoly, once riding high in a hotel on Boardwalk, now he is living on Baltic Ave. I found this video today and found it amusing. Warning, it does have a poop joke in it, so if you are offended by such things, you might want to skip this post, otherwise you can check out the link here: Mr. Monopoly Goes Broke

I know some people wonder why I try and post funny things when the topic of my blog is bankruptcy, and there is a very good reason for that: When things are going poorly, sometimes laughter is the thing you need. Money problems are very serious, and I am by no means making light of people in such a situation, but as I tell my clients, it is only money, we can fix this so you can get back to living your life.

If you think you might need to talk to a bankruptcy attorney give us a call, getting information is always valuable, and with bankruptcy attorneys in Grand Rapids, Lansing, and Kalamazoo, we are always nearby.