Bankruptcy, Chapter 7 or 13?
Bankruptcy is a Federal Law provided to you designed to get you a fresh start free from harassing creditor phone calls, collection lawsuits, car or property repossessions, home foreclosures and wage or bank garnishments. It is a privilege granted to you under the United States Constitution. It is a very powerful law because it forces your creditors to permanently wipe out your debts (Chapter 7) or to accept a repayment plan which you have proposed (Chapter 13).
Should I file for Bankruptcy?
Financial problems often lead to great stress and can disrupt one’s personal and family relationships, yet many people are scared at the thought of having to file for bankruptcy relief. This is exactly what your creditors want you to think. They do not want you to use your right under the law. They would much rather you pay the minimum monthly payment on your credit cards for the rest of your life at 20 to 25% interest!
Will I lose my Property?
No, as long as you tell the court what you own and what you think it’s worth, the law will allow you to keep your property as the basis for your “fresh start” subject to certain limitations. The law is very generous in allowing you to exempt your home equity, automobiles, household goods and furnishings, clothing, jewelry, bank accounts, stocks and bonds, pension and 401k plans, even cash on hand or in the bank. The most important thing to do is make an accurate list of what you own and what you think it is worth (at a garage sale or auction) so it can accurately be listed in your bankruptcy papers.
Can I keep my house and car?
Yes, you can file a bankruptcy and keep your house and car provided you continue to make payments to the finance or mortgage company.
Where are you located?
I have two offices. One on Woodward in Royal Oak and the other in Detroit just one-block from the bankruptcy court that serves all of Southeastern Michigan. My main office is located indowntown Detroit, at the corner of Griswold and Fort street in the historic Penobscot Building, Suite 3156. (Click here.)
I’m married, can I file alone or must my spouse file jointly?
If you’re married the law recognizes you as one entity and you can file either together as a couple (jointly) or either spouse (husband or wife) can file on their own individually. The law does not require that both of you file.
Will filing Bankruptcy mean I can’t get credit for 7 years?
I have heard this wives’ tale so many times and cannot figure out where it came from. Straight bankruptcy is called Chapter 7 bankruptcy, so maybe that is where the seven years came from, but the truth is that many people have a better chance of getting credit after they file Bankruptcy. In fact, my office will pull you credit report and analyze your existing credit score and what it is likely to be one year after your bankruptcy is filed. In the vast majority of the cases I’ve filed over the past 20 years, the credit score actually goes up. Bankruptcy is definitely a negative mark on a credit report and can be reported for up to 10 years after filing after which it must be removed, but most people who are considering filing bankruptcy already have a negative credit score due to non or late payments, repossessions, charge offs or judgments. A bankruptcy which wipes the slate clean will be an improvement. Keep in mind that credit is not your friend, its what got you here in the first place. Credit is the reason people end up filing for bankruptcy. Credit equals Debt.
I can’t live without my Visa or MasterCard, what will I do?
Believe it or not, most retail establishments still accept cash! (Yes, even hotel rooms and car rental agencies). For most people, credit cards cause more harm than good. They lead to impulse buying and mask the real pain of paying with cold hard cash or even writing a check. It’s easier to simply swipe a card than to hand over cash. Most of my past clients report to me that they continue to be bombarded with new credit card offers after filing bankruptcy. This is because the credit card companies want to get you back into the game. RESIST at all cost! Consider getting a debit card or a secured credit card.
I’m current on all my payments. I’ve never been late. Can I still file Bankruptcy?
I have many clients who look good on paper and appear to be “making it” but realize that their house of cards is about to come crashing down because they have depleted their savings and the ability to transfer balances or “Robbing Peter to pay Paul” just doesn’t work anymore. If after you pay your normal monthly living expenses like rent or house payment, utilities, food, clothing, transportation, recreation, insurance and medical care, you don’t have enough income left over to make even the minimum monthly payment on your credit card or loan debt, then you are already bankrupt! If you have used one credit card to obtain a cash advance to pay another, the writing is on the wall. Seek relief before you drown in debt.
I’m an honest person and want to pay my debts, I don’t want to cheat my creditors?
First understand that bankruptcy is not about cheating your creditors. Bankruptcy laws are designed to provide a person facing financial difficulty with relief from the stress and burden of debt to allow that person (or family) a “fresh start” while at the same time being fair to the creditors. Chapter 7 Bankruptcy will discharge your “legal” obligation to pay your debts, it will wipe them out. This means that the creditor can’t call you at home or at work to try to collect the debt, they can’t garnish your wages or seize money out of your bank account. They must leave you alone permanently. After the bankruptcy, if you win the lottery or come into some money and wish to repay those creditors, you may do so of your own free will. If you can afford to pay some amount to your creditors right now, but just not as much as they want, the law encourages you to file a Chapter 13 Bankruptcy in which you make payments to your creditors through the Court for 3 to 5 years.