life-in-a-financial-sweatbox

Debt is Outpacing Income in the Typical American Household

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.

Simply-Complex

5 Ways to Pay for Your Bankruptcy

No money to file bankruptcy? Many people who call at Church and Korhonen, PC know they need to file bankruptcy but think they are too broke to hire a bankruptcy attorney. In most cases, that is simply not true. Between our low fees and easy payments, most people are able to retain us and file their bankruptcy petition within 6 months.

5 Ways to Pay for Bankruptcy:

  1. Stop paying all debt you want to discharge in bankruptcy. This could include minimum monthly credit card payments, past utility bills, and/or payments for vehicles you no longer want to keep. You can use the money you save to hire a bankruptcy lawyer. If you choose this method, it is best to sign a retainer agreement with the bankruptcy lawyer as soon as you have enough money to make a down payment on the fee. Once the lawyer is retained, you can tell your creditors to stop calling you and start calling your bankruptcy lawyer. (It is important to note that if you simply quit paying your bills and fail to retain a  bankruptcy lawyer, you will be making your situation worse. You should retain a bankruptcy lawyer as soon as possible when not paying your bills.)
  2. Use your federal or state tax refund to pay for your bankruptcy. If your situation allows you to         wait until after the first of the year, file your income tax returns as soon as possible. Immediately     upon receiving your your tax refund, use the funds to pay for your bankruptcy lawyer. (Be advised that many people use their tax refund to pay for bankruptcy so most bankruptcy attorneys are really busy the first 4 months of the year. The sooner you retain them, the faster your case will be   filed with the court.)
  3. Sell possessions you no longer need or want. Many people have old computers, cell phones or other  electronic equipment gathering dust. Why not sell these items and use the proceeds to hire a            bankruptcy attorney. Whether you sell one item to a collector on Ebay or Craigslist, host a garage    sale or sell your clunker to the salvage yard, you will be on your way to a financial fresh start.
  4. Borrow the money from family, friends or employers. When people who care about you realize you    are drowning in debt, they may want to help you get a new financial start by helping you pay for      your bankruptcy lawyer. Perhaps they will gift the money to you for your birthday or Christmas.    Maybe they will write a check directly to the law firm. Either way, cash gifts from people who care  and want to see you improve your situation may be just the ticket to getting you back on your feet.
  5. Take a temporary or seasonal job. Participate in a paid study. Sell plasma. Reclaim any money you    may have loaned to family, friends or acquaintances. Think about it. The possibilities are endless.    Just don’t give up.

Anyway you look at it, there are numerous avenues for gathering the funds necessary to file bankruptcy. If you are drowning in debt and need a fresh, financial start, consider all your options when it comes to collecting enough money to hire a bankruptcy lawyer. The relief you experience will be well worth the energy and time you expended in rounding up the case needed to hire a bankruptcy attorney.

main-differences-chapter-7-chapter-13-bankruptcy

The Main Differences between Chapter 7 & Chapter 13 Bankruptcy

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.

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How to Improve Your Credit History and Pay Less for Loans

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).

chapter 7 chapter 13 bankruptcy

The Difference Between Chapter 7 Bankruptcy and Chapter 13

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.

the-truth-about-bankruptcy

The Truth About Bankruptcy

If you are struggling to the point where you don’t know what you’re going to do anymore, you may have a lot of questions about bankruptcy and how it will affect your family. To help you out, we have put together some important information that will hopefully clear things up.

What Actually Is Bankruptcy?

Bankruptcy is a legal process in which you tell a judge of the court that you can no longer afford to pay your debts. Steps will be taken to examine your finances, assets, and liabilities to determine if your debts can/should be discharged. Once a judge determines you were right and there is no feasible way for you to pay off your debt you will be able to officially declare bankruptcy.

What Does Bankruptcy Do?

Depending on the circumstances of your unique situation, bankruptcy may be able to halt the foreclosure of your home, the repossession of your property, or even the garnishment of your wages. At its core, bankruptcy will eliminate much, but often not all, of your debt. Bankruptcy will not eliminate:

  • Alimony
  • Child Support
  • Government Debts (taxes, fines, etc.)
  • High value items purchased before you filed for bankruptcy, including motor vehicles or jewelry.

Each bankruptcy case is different, meaning you may still have to pay back some of your debt even if a majority of it is discharged. To determine exactly what and how much you will need to pay back, you should always consult with experienced bankruptcy attorneys, like ours at Church and Korhonen, PC.

Types of Bankruptcy

There are two primary types of bankruptcy you can file.

  • Chapter 7 bankruptcy involves the court selling most of your assets to pay off your debt, with any remaining debt being erased. You may lose your vehicle, or your home, and it will stay on your credit report for up to 10 years. A person can only file for Chapter 7 bankruptcy if a court decides your income is insufficient to pay off your debt.
  • Chapter 13 bankruptcy is more of a payment plan. The court recognizes your willingness to pay off your debt and will agree to monitor your budget to make sure you’re making your payments over the course of an agreed upon time frame. This form of bankruptcy is often the preferred option considering it allows debtors to keep their assets and will fall off a credit report after only seven years.

Consequences Of Bankruptcy

Although bankruptcy can be very helpful if you have nowhere left to turn, there are admittedly some consequences you should be prepared for.

  • Bankruptcies are considered public knowledge. This means that once you file, any potential employers, financial institutions, or businesses you contact in the future can find out all about it.
  • It can make buying things a lot harder since getting a loan can be difficult once you’ve filed for bankruptcy. In fact, it has been known to take up to four years for most people to qualify for a mortgage loan after filing for bankruptcy.
  • Filing for bankruptcy can be really expensive. The mandatory filing fee’s alone can be several hundred dollars.

Final Thoughts?

Filing for bankruptcy is a big deal, and not a decision that should be taken lightly. If you are concerned that bankruptcy is the only option left for you, we urge you to get in touch with our seasoned bankruptcy attorneys at Church and Korhonen, PC. We can help you determine exactly what is best for you and your family! 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.

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Can I Keep My House and Car if I File Chapter 7?

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.

chapter 7 bankruptcy

What Assets Can I Keep in Chapter 7 Bankruptcy?

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.

chapter 7 chapter 13 bankruptcy

Reasons to File for Chapter 7 Bankruptcy Instead of Chapter 13

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.

who qualifies for bankruptcy

Who Qualifies for Chapter 7 Bankruptcy?

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.