Category: <span>News</span>

If you’re struggling so much financially that you’re starting to consider filing for Chapter 7 bankruptcy as a permanent solution, you might be most concerned about whether or not you will get to keep your house and car. The answer to your question is a little more complex than you might have hoped. While it may seem just for a person to automatically be allowed to keep such basic privileges, whether or not you actually get to keep your home and/or car will depend on a few key factors.

Keeping Your House

Aside from the fact that in order to keep your home you must be current on our mortgage payments, you also must either prove that you currently don’t have any home equity, or take advantage of federal or state homestead exemptions (never both) to protect said equity from your trustee. To do this, you first must identify the property in question as your primary residence, and determine the amount of your exemption; this total will be what is subtracted from the fair market value of your home to determine equity. Other subtractions made to that total may include trustee commissions, costs related to the property’s sale, the total amount owed, and/or any non-mortgage liens. Once the final home equity total has been determined, you will be left with two possible scenarios. Scenario one is that you ended with a negative number, meaning you’ve proven you have no equity and even if a trustee did sell your home there would be nothing left over to pay creditors – thus you get to keep your home under the provision that you continue to keep up with your mortgage payments and evade traditional foreclosure proceedings. Scenario two is that you find out you do have equity that can be used to pay off your debts and your trustee begins the sale process – at which point you will be given the total value of your homestead exemption instead.

Keeping Your Car

Similar to keeping your house, keeping your car depends on whether you’re caught up on your payments and your equity is exempt. The same process is used to determine equity, resulting in the same two potential scenarios. If you’re all caught up with your car payments, and your equity is at or lower than the acceptable motor vehicle exemption value, you will get to keep your car. If your equity is more than the exemption value, your trustee will likely sell your car to satisfy your debts. Unlike trying to keep your home, however, you may be able to use a “wildcard,” or other comparable exemption to help you keep your car. This type of exemption basically allows you to either pay the total nonexempt equity directly to your trustee, or make a trade and relinquish another nonexempt property in your cars place. Also unlike trying to keep your home, if you do happen to be behind on your car payments you may be able to keep your car if you’re able to either redeem your property by paying your lender a fair replacement value based on the current market value of your car, or reaffirm your debt by convincing your lender to agree to a revised payment plan that works in your favor.

To learn more about specific exemption amounts, or to find out how Chapter 7 bankruptcy can uniquely affect your current financial situation, take this opportunity to reach our to our esteemed bankruptcy lawyers at Church & Korhonen, PC for more information today. 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.

Being deep in debt to the point of even considering bankruptcy can be stressful, but before you go ahead and call your bankruptcy lawyer to start assembling paperwork for your case, you need to first determine if you qualify to file. There are five primary things you can do to see if you qualify for a Chapter 7 bankruptcy, they are:

1. Analyze Your Debt-to-Income Ratio

If you sit down and look over your finances only to realize that your total debt exceeds half your total annual income, you should consider sitting down again with a bankruptcy attorney to discuss your options.

2. Create a Recovery Strategy

If after looking realistically and strategically at every aspect of your finances, including how much debt you have, versus how much income you’re earning, you discover that even after taking extraordinary measures it would still take you longer than five years to pay everything off, you definitely need to find a reputable bankruptcy attorney to help you find a more acceptable path of recovery.

3. Consider Your Life Outside of Money

If you feel trapped every single day because of your debt, like you will never get out from under it, or your personal life has been significantly affected, you may need to consider bankruptcy as a form of relief. However, this is not to say that all monetary stress is cause for bankruptcy. A person should only ever seek legal intervention for debt in extreme circumstances, such as cases in which families are harassed non-stop by debt collectors, food is a rationed substance, and/or basic utilities are considered non-essential expenses.

4. Attempt to Save a Little Each Month

If after trying as hard as you can to save and moving things around you still have no disposable income whatsoever, you may need to come to terms with the fact that you have more money going out than coming in – and if you don’t get help soon you’re headed for trouble. Missing one payment or incurring one late fee can be bad enough, but if that’s all it takes to set you permanently behind you need to get help.

5. Compare Your Finances to the State

If you are living significantly below the median income level for your state, which in Michigan is $52,492 as of 2016, you may qualify to file for Chapter 7 bankruptcy.

If after taking these steps you’ve realized that you do not qualify to file for bankruptcy, we urge you to continue monitoring your debt-to-income ratio to stay informed of your ever-changing financial status, follow through with your recovery strategy to reduce your stress, try to enjoy your life without letting your fiscal troubles get in the way, keep saving as much as you can each month so you can avoid ever facing debt again, and consider how fortunate you are to have the means to climb out of your debt independently.

If, however, after taking all of these steps to get informed and recover from your debt you’ve discovered that you do indeed qualify to file for Chapter 7 bankruptcy, we encourage you to reach out to our reputable bankruptcy attorneys at Church and Korhonen, PC today. 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.

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. For assistance filing for Chapter 7 bankruptcy or determining which of your individual assets you can keep, reach out to one of our 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.

The differences between Chapter 7 bankruptcy and Chapter 13 may not be all that apparent to those who don’t have a firm understanding of what bankruptcy is, but they are significant. Knowing the distinctions between the two can mean the difference between your fresh start and a truly complicated mess.

Chapter 7 Bankruptcy

If you’ve always believed there was only one type of bankruptcy, and it offered a totally clean slate, you we’re likely thinking of Chapter 7 bankruptcy. To file for Chapter 7 bankruptcy , a judge has to swoop in and determine if your income is not suitable enough to support a repayment plan. Your assets, including your home and vehicles, are surrendered and sold to help pay off your unsecured debts, and any amount leftover is then wiped away with the exception of student loans, child support, and other government debts. In order to qualify for Chapter 7 bankruptcy, a filer must earn less in income than the median income of their state. However, the entire process can typically be completed in only a few months. Though a Chapter 7 bankruptcy will persist as a blemish on your credit report for up to 10 years, it is the best way to wipe your hands clean of almost all financial obligations with minimal inconvenience.

Chapter 13 Bankruptcy

Depending on your income, this may be the only type of bankruptcy you’re able to file, but the good new is Chapter 13 is almost everyone’s preferred type of bankruptcy. It allows debtors to maintain possession of their assets by agreeing to a reasonable 3 to 5 year repayment plan based on their current income and quantity of debt, and will even forgive your remaining debt once the agreed upon time frame is met. In addition to avoiding the liquidation of all your assets, Chapter 13 bankruptcy will only stay on your credit report for up to seven years! Sure you’re agreeing to keep paying off your debts versus just tossing them aside like you would with a Chapter 7, but the long-term rewards are much greater.

Which Should You File?

There are benefits and consequences on both sides, and you may not have as much of a choice as you think when it comes to choosing which way you’d like to file. The only way to know for sure you’re making the right decision for your family is to put your trust in knowledgeable, caring bankruptcy attorneys who want to help you succeed, like ours at Church and Korhonen, PC. Reach out to one of our exceptional bankruptcy lawyers, today, to learn more. 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.