Bankruptcy Blog

Whether or not you know it, you may be living your life in a financial sweatbox right this very moment. “Financial sweatbox” is a phrase that refers to the stressful time people are often forced to endure preceding bankruptcy. Life in a financial sweatbox may include non-stop harassing phone calls from debt collectors and angry financial institutions, loss of utilities, sleepless nights filled with anxiety over simple things like grocery shopping, the loss of a home or other assets, and living without basic necessities that most people would take for granted. Living this way can cause even the most resilient person to lose hope, but fortunately, there is a way out so long as you’re brave enough to go for it.

Bankruptcy is the fresh start that so many are looking for; however, now more than ever before people are choosing to live in this perpetual state of misery rather than filing for bankruptcy simply out of fear. Filing for bankruptcy can indeed be a very scary thing filled with uncertainty, especially when you don’t even fully understand what it is or how it will affect your future. You might even believe that you can get ahead of your own financial problems if only you had a little more time, but often enough that is exactly how you end up in the financial sweatbox. Soon missed payments incur fees and other penalties and before you know it your debt has multiplied exponentially and you truly are stuck.

With as many as two-thirds of people living life in a financial sweatbox for more than two years and one-third exceeding five years, it is essential now more than ever to stand up and take back control of your life. Bankruptcy should be no less scary than facing years of turmoil and heartache waiting for your situation to improve all on its own, so what are you waiting for? Anyone living life in a financial sweatbox should investigate their bankruptcy options sooner rather than later to ensure an ideal outcome. If you are suffering relentless harassment, fear, and financial loss with no end in sight, it may be time to do what is right for you and your family and reach out to bankruptcy lawyers, like Cathy C. Church and Cara Korhonen at Church and Korhonen, PC, for help as soon as possible. No one ever wants to file for bankruptcy, but living life in a financial sweatbox is no way to live either. 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.

As education, transportation, food, energy, water, fuel, property, and entertainment become increasingly more expensive, those leading this country seem to have forgotten to increase one very important thing: the income and wages of the American people who are expected to buy all this stuff.

Debt and poverty are quickly becoming less of a horror story from the news, and more of a reality for hundreds of millions of people in this country. Many people don’t fully understand why this happens since they look back and see that things used to be so much cheaper decades ago, gas for $0.25 right? But they forget to account for the fluctuations in the value of our currency over the years. In as little as 60 years, our currency has depreciated in value at an alarming rate. In 1959, one US dollar was worth ten in today’s standards. Our money loses its value, and everything around us rises in cost to accommodate those fluctuations, except income. Thus we see a populous of people incapable of keeping up with the dramatic inflation.

Unfortunately, until we see some major changes, the problem only seems to be getting worse. Any adult knows that money and financial stress can be a consuming issue, affecting even your relationships. With constant fights about money being one of the leading causes of divorce, and the frustration of never being able to keep up with your expenses causing loss of sleep, lack of focus, and more. It isn’t hard to see why adults today are so stressed. Finding a place to thrive in this country has become a full-time job in and of itself, with college graduates working multiple minimum wage jobs just to keep up.

Our economy is a very delicate and complex house of cards with so many unique, yet equally essential components that hold everything together. Currency value, cost of living, income, education level, employment availability, taxes, and even environment can impact our economy. Regardless, there has to be a better way. If we truly want to make our country a better place, changes need to be made. Until then, Church and Korhonen, PC, will do everything in our power to help the people who are currently suffering. Debt can be incredibly scary, but luckily we are here to help.

If you are experiencing insufferable debt or are in need of legal advice, 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.

For those who are not familiar with bankruptcy and how it works, it might surprise you that there are  different kinds. Different situations require specific filing, but the most common two are Chapter 7 and Chapter 13. Which type you need to file may depend on things like overall income, existing assets, current debt, future financial goals, and more. Here are a few of the differences between the two that might help you figure out what your best course of action is.

Types

Chapter 7 is a type of bankruptcy known as liquidation. This process is designed to help eliminate unsecured debts. Chapter 13 is a type of reorganization in which debtors are eligible for a repayment plan based off a portion of the existing debt. This type of bankruptcy is for people with at least some form of income, and may be the only filing option depending on what your income is.

Who

Unlike Chapter 7, which allows business to file for bankruptcy, only a sole proprietor or individual can file for a Chapter 13 bankruptcy.

Restrictions

Because a Chapter 7 erases all debt, only those who have little to no income can qualify. Anyone who makes “too much” money will be required to file a Chapter 13.

Time

Typically with a Chapter 7 bankruptcy, it will take approximately three to five months to receive a discharge. For Chapter 13, you will not receive a discharge until all your agreed payments have been made, which may take up to five years depending on your payment plan.

Property and Assets

It might seem nice to see all your debt erased, but with a Chapter 7 you are giving up any non-exempt property to a trustee who will sell it to pay off your debt. With a Chapter 13 you are able to retain the rights to your property, but may be required to pay an amount equal to its value. If you don’t have any non-exempt assets a Chapter 7 will work perfectly for you, but for those who would prefer to hang onto their belongings, a Chapter 13 is the way to go.

Overall Benefits

Chapter 7 is perfect for low-income people, families, and businesses with no assets, and can allow them to make a fresh start and move forward with their lives. A Chapter 13 is perfect for anyone with a lot to lose. The ability to retain assets and property, as well as the accomplishment of paying off your debt can make Chapter 13 a worthy consideration.

Overall Downsides

Chapter 7 may be your only option, but it can mean saying goodbye to a lifetime of memories if your home is put into foreclosure or your assets are repossessed. It can be a traumatic and embarrassing situation for anyone. For Chapter 13, the obvious downside is that you still have to pay off your debt, which can be no fun at all. For years you will have that extra bill every month which can make getting back on your feet more difficult.

Filing for bankruptcy for anyone can be a terrible experience. There may be plenty of ups and downs for both types of filing, but it will be your personal situation that determines which type of bankruptcy you will be required to file. If you are experiencing financial hardships or are in need of legal advice, all 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.

FDIC Consumer News:

A credit report provides a record of your history of paying loans and bills, including any late payments. These reports are important because they can affect your ability to qualify for a low-cost loan or insurance policy, rent an apartment or find a job. However, a recent Federal Trade Commission (FTC) study found that a number of consumers had errors on their credit reports that could lead to them paying more for loans. What can you do to improve your credit reports?

Pay your bills on time. “If you’re late 30 days or more, the lender may report your account as delinquent to a credit reporting agency, and that will damage your credit history,” said Kirk Daniels, Acting Section Chief in the FDIC’s Consumer Protection Branch. “But your credit history will improve over time if you can avoid another late payment on your record.”

Reduce the amount that you owe on credit cards and other lines of credit. That will help improve your credit score, a numerical summary of your credit record as prepared by one of many companies. If you close an account you have paid in full and haven’t used in a while, your debt-to-credit ratio (the amount you owe on credit cards compared to your credit limit) will increase. That could be interpreted as a sign that you have taken on more debt that you can handle. One option is to avoid closing unused accounts until you have paid down any large balances on another credit card.

Review your credit reports regularly for errors or signs of identity theft. You are entitled to receive at least one free credit report every 12 months from each of the nation’s three main credit bureaus (Equifax, Experian and TransUnion). Start at www.annualcreditreport.com or call 1-877-322-8228. If you find errors, contact the credit bureau directly. Also be cautious of other Web sites and services advertising “free” credit reports because these may be attempts to sell you something else or even scams to collect personal information.

“If possible, request your credit report well before you apply for a loan to give you time to correct any inaccurate information,” said Evelyn Manley, an FDIC Senior Consumer Affairs Specialist.

There also are “specialty” credit bureaus that, for example, track a person’s history of handling a checking account. For information on your right to see and correct these companies’ reports, visit the federal Consumer Financial Protection Bureau (CFPB) Web site at www.consumerfinance.gov/blog/you-have-a-right-to-see-specialty-consumer-reports-too.

For more tips, visit the FTC’s “Credit and Loans” page at www.consumer.ftc.gov/topics/credit-and-loans, plus the Fall 2011 issue of FDIC Consumer News(www.fdic.gov/consumers/consumer/news/cnfall11/credit.html).

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.

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.

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.

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.