Bankruptcy Blog

If you are considering filing for Chapter 7 bankruptcy you may be wondering what assets you will be able to keep after the fact. Fortunately, our bankruptcy attorneys at Church and Korhonen, PC possess a comprehensive understanding of bankruptcy law in Michigan, and are ready to divulge all the details to you so that you can be informed and prepared for what’s to come.

According to Michigan’s Judicature Act of 1961, Act 236, Section 600.5451: “A debtor in bankruptcy under the bankruptcy code, 11 USC 101 to 1532, may exempt from property of the estate property that is exempt under federal law or, under 11 USC 522(b)(2), the following property:”

Housing

“Homestead” or actual property valued at up to $30,000 for individuals under the age of 65, and $45,000 for individuals who are either disabled or over the age of 65 – this exception can be claimed by spouses or children of deceased owners.

Personal Property

• Apparel (with the exception of furs), family photos, burial plots and all burial rights, necessary health aids prescribed by a medical professional, “provisions and fuel” for at least six months, and “arms and accouterments” required by law.
• Furniture, household appliances and goods, jewelry, books, and more valued at up to $3,000.
• A reliable motorized vehicle valued at no more than $2,775. Pets and computers valued individually at no more than $500.
• Any occupationally necessary tools, resources, or materials valued collectively at $2,000.
• Seats, pews, or slips used in a home or place of worship valued at no more than $500.
• Crops or farm animals and feed valued at up to $2,000.

Financial Assets

• All retirement accounts and annuities, including Roth IRAs, and the payments from said accounts and annuities.
• Money or benefits paid by a stock or mutual health, life, or casualty insurance company.

For more specific information on what assets you can keep in Chapter 7 bankruptcy, including what constitutes as a “homestead” or certain exceptions to the exemptions, you may review the list of official exemptions at the Michigan Legislature. It is worth noting that due to inflation, the Michigan Department of Treasury adjusts the amounts of these exceptions every three years. For the most accurate figures, you can view the annual Economic Reports on the Michigan Department of Treasury’s website at any time.

Chapter 13 bankruptcy is a good option for people with steady income and high debt. It is sometimes called a “personal reorganization” or a “wage-earner bankruptcy”. It will allow you to pay all your necessary and reasonable living expenses like housing, transportation, clothing, food, education, personal

health, insurances, etc while satisfying your debt by paying a portion of the total amount owed over a period of time.

As soon as you file the Chapter 13 case, your creditors must stop all collection efforts including phone calls, lawsuits, garnishments and property seizures. If your home is in foreclosure, the foreclosure must stop. If your car is being repossessed, the repossession must also stop.

Chapter 13 will allow you to catch up on your overdue house payments while continuing your current house payments. If you owe a second mortgage, you may be able to “strip” (cancel) that mortgage depending on the facts of your case. You will be permitted to catch up on overdue car payments as well, while you make your current car payments under the plan.

Under Chapter 13, you do not need to give up or surrender your personal property and you can own more than one piece of real estate. It is a great option for a wage earner to reorganize their debt, get caught up on their bills and activate a plan to repay a portion of their debt over a set amount of time all while stopping creditors from initiating the original debt owed or initiating legal proceedings intended to garnish or seize property.

If you earn a good wage but are falling behind on your bills, call and speak to an Upper Peninsula Bankruptcy Lawyer at Church and Korhonen, PC. (906) 226-0001. There is no charge for the consultation. You will discuss your case with a Michigan licensed attorney who will advise if Chapter 13 is right for you. Your peace of mind is a phone call away.

As a bankruptcy attorney, I frequently counsel people who have good wages but still cannot make the minimum payments on their credit cards and pay their living expenses.

Often, people have to choose between paying their mortgage or paying the minimum payments on their credit cards. By the time we speak, they feel as if they are running in quicksand; feeling like they are doing everything they can but still falling deeper and deeper into debt. After learning about their bankruptcy options, they often feel hopeful, realizing it is possible to consolidate their debts while keeping their home and other assets.

If an individual or couple makes a good living but can’t cover their reasonable living expenses and pay off their debt, filing a Chapter 13 bankruptcy petition may be their path to a fresh financial reality.

In a Chapter 13, the debtor is allowed to first pay all their necessary and reasonable living expenses, out of their take home pay. (Reasonable living expenses include mortgage or rent payments, car payments, food, clothing, prescription costs, utilities, cell phone, some recreational and charitable expenses, etc.)

Once these reasonable expenses are paid, any remaining money is called disposable income. It is this disposable income that goes towards paying down the person’s debt over a 3 to 5 year payment plan.

As soon as a Chapter 13 bankruptcy is filed, creditors cannot contact, sue or enforce a judgment against the debtor. Nor can they add additional interest, penalties or fines to the debt. In essence, the Chapter 13 caps the debt and allows the debtor a reasonable amount of time to pay down the debt while still being able to maintain a reasonable lifestyle. Chapter 13 is a true and effective debt consolidation plan.

I’ve been sued in a debt collection case. What do I do?

If you have been sued for debt, time is ticking by and you must respond to the lawsuit or the other side will win a judgment against you. Once a judgment is entered the court may issue a writ to garnish or seize your wages or bank account.

Clicking the link below will take you to a legal toolbox that will help you respond to the lawsuit. Do not delay.

Click here.

Filing for bankruptcy can be understandably unnerving, but knowing which type of bankruptcy you should file for can put your mind at ease. If you meet the required income limitations  and don’t mind potentially losing a little property, there are many reasons to file for Chapter 7 bankruptcy instead of Chapter 13.

Advantages of Choosing Chapter 7 Bankruptcy

1. Clean Slate.  The entire purpose of Chapter 7 bankruptcy is to give the debtor a fresh new start by eliminating dischargeable debt and making it easier to focus on other non-dischargeable debts, like student loans or child support. Once your dischargeable debt is gone, it’s gone. You get a clean slate to focus on your future.
2. Property Retention.  Any property that you attain after 180 days from filing will not be included in your bankruptcy estate unless the property in question was inherited, part of a divorce settlement or decree, part of death benefits, or earnings from an existing life insurance policy.
3. No Limits.  Chapter 7 bankruptcy guidelines do not enforce debt limits on potential filers, meaning you can file no matter how much debt you have.
4. No Repayments.   With Chapter 7 bankruptcy, once your debt has been discharged you are no longer responsible for it. You will not have to make payments as part of a court-approved repayment plan like you would if you filed a Chapter 13 bankruptcy.
5. Faster Discharges.  With Chapter 7 bankruptcy, you may see your debt discharged in as little as 90 days. Once you file, the court will issue the order. After your property has been appropriately distributed to the rightful unsecured creditors by your appointed trustee, your case will be closed.

Disadvantages of Choosing Chapter 13 Bankruptcy

• You must file as an individual.
• You must meet specified debt limitation requirements in order to file, meaning any unsecured debt you have must never exceed $336,900 and any secured debt you have must never exceed $1,010,650.
• You must repay creditors using a sanctioned 3-5 year repayment plan. You must also have sufficient income to make those payments every month. Secured creditors and priority debts must be paid in full while unsecured creditors should receive a total amount equal to that of what would have been received from the sale of property if a Chapter 7 bankruptcy has been filed.

If you are unsure of which type of bankruptcy you should file for or you would like more information on what it means to file for bankruptcy, we urge you to consider seeking professional bankruptcy advice from our trained bankruptcy attorneys at Church and Korhonen, PC. Call Church and Korhonen, PC, toll-free at 1.800.758.5611 or simply fill out the form in the sidebar to begin taking steps to a more sound financial future, greater peace of mind and a fresh start.

People facing bankruptcy are often confused about how they even got there in the first place, let alone what they need to do to get out. Fortunately, our kind bankruptcy lawyers at Church and Korhonen, PC have put together a trove of pertinent information regarding what you need to know before you file for bankruptcy to help guide you in the right direction. You may feel like there is no hope now, but there always is – all you need is a little help and support from someone who understands and cares.

Declare Everything

One of the biggest mistake consumers make when filing for bankruptcy is not declaring all of their debts to the bankruptcy court, attorney, or trustee, which makes sense since you can’t expect to be relieved of debt that you don’t formally claim. When filing for bankruptcy, you need to declare absolutely everything. Knowing how much of which types of debt you owe to who is the first step to finally realizing financial freedom.

File Correctly

Unlike trained bankruptcy lawyers, debtors are much more likely to make costly filing errors, including failing to file all the required documentation or meet federal bankruptcy criteria. These types of mistakes can significantly delay or even jeopardize your bankruptcy case, which is why if you are not 100% confident you can file correctly you need to reach out to qualified bankruptcy lawyers for legal assistance.

File Sooner

Note: filing sooner does not mean rushing through the process; it just means that you should not put off filing. Many people fear bankruptcy and will try to hold off as long as possible because they believe if they can just get that break they need, they can climb out of debt independently – but what they don’t understand is that bankruptcy is the break they need. Filing for bankruptcy sooner rather than later can ensure that you are able to start repairing your credit faster and can even result in the forbearance of certain monthly expenses associated with your debt, like medical bills or credit card payments. It can also protect you from collector harassment and wage garnishments with an automatic stay.

Final Thoughts?

The last thing you must know is before you file for bankruptcy, although it may fade from your credit history in 7 to 10 years, bankruptcy will remain on your record permanently – so filing without proper consultation is not advised. If, however, you’re struggling to feed your family and are tired of constantly dodging phone calls from debt collectors over bills you cannot pay, bankruptcy may be able to dramatically improve your life. To get advice on whether you should consider filing for bankruptcy or not, we encourage you to consult one of our insightful bankruptcy lawyers at Church and Korhonen, PC. Call Church and Korhonen, PC, toll-free at 1.800.758.5611 or simply fill out the form in the sidebar to begin taking steps to a more sound financial future, greater peace of mind and a fresh start.