PO Box 355, Hartland, MI 48353, US
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Understanding Chapter 7 Bankruptcy
Chapter 7
Chapter 7 Bankruptcy is a liquidation bankruptcy. As people like to ask, "is that the one where you don't have to pay it back?" The short answer is, yes. You don't pay anything back if you qualify for a chapter 7 bankruptcy. A Chapter 13 is the reorganization of course a good bankruptcy attorney can help you sort out the details.
A chapter 7 bankruptcy will eliminate credit card debt, medicals bills, and other personal consumer debts. In most cases, you can keep your car and your house. Generally, if you have less then $22,000 in equity in your house, double that if you are married. There are also Michigan exemptions for real estate if you have more. Car loans and house loans can be reaffirmed. That means on secured debt you sign a reaffirmation agreement with the creditor saying you are keeping your car. You agree in writing not to discharge it. You are not required to do that. You can surrender secured creditors.
Income requirements for Chapter 7 can be tricky. There is what is called a means test. If you have been doing internet research on Chapter 7 bankruptcy you have no doubt come across the means test. There are means test calculators all over the internet. I think most of these are full of crap. The best thing to do is get your numbers together and come in to the office and let a professional run them for you. What the actual law says is"
1)After notice and a hearing, the court, on its own motion or on a motion by the United States trustee,trustee (or bankruptcy administrator, if any), or any party in interest, may dismiss a case filed by an individual debtor under this chapter whose debts are primarily consumer debts, or, with the debtor’s consent, convert such a case to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would be an abuse of the provisions of this chapter. In making a determination whether to dismiss a case under this section, the court may not take into consideration whether a debtor has made, or continues to make, charitable contributions (that meet the definition of “charitable contribution” under section 548(d)(3)) to any qualified religious or charitable entity or organization (as that term is defined in section 548(d)(4)).
(2)(A)(i)In considering under paragraph (1) whether the granting of relief would be an abuse of the provisions of this chapter, the court shall presume abuse exists if the debtor’s current monthly income reduced by the amounts determined under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser of—(I)25 percent of the debtor’s nonpriority unsecured claims in the case, or $6,000,[1] whichever is greater; or
(II)$10,000.1
(ii)(I)The debtor’s monthly expenses shall be the debtor’s applicable monthly expense amounts specified under the National Standards and Local Standards, and the debtor’s actual monthly expenses for the categories specified as Other Necessary Expenses issued by the Internal Revenue Service for the area in which the debtor resides, as in effect on the date of the order for relief, for the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case, if the spouse is not otherwise a dependent. Such expenses shall include reasonably necessary health insurance, disability insurance, and health savings account expenses for the debtor, the spouse of the debtor, or the dependents of the debtor. Notwithstanding any other provision of this clause, the monthly expenses of the debtor shall not include any payments for debts. In addition, the debtor’s monthly expenses shall include the debtor’s reasonably necessary expenses incurred to maintain the safety of the debtor and the family of the debtor from family violence as identified under section 302 of the Family Violence Prevention and Services Act, or other applicable Federal law. The expenses included in the debtor’s monthly expenses described in the preceding sentence shall be kept confidential by the court. In addition, if it is demonstrated that it is reasonable and necessary, the debtor’s monthly expenses may also include an additional allowance for food and clothing of up to 5 percent of the food and clothing categories as specified by the National Standards issued by the Internal Revenue Service.
(II)In addition, the debtor’s monthly expenses may include, if applicable, the continuation of actual expenses paid by the debtor that are reasonable and necessary for care and support of an elderly, chronically ill, or disabled household member or member of the debtor’s immediate family (including parents, grandparents, siblings, children, and grandchildren of the debtor, the dependents of the debtor, and the spouse of the debtor in a joint case who is not a dependent) and who is unable to pay for such reasonable and necessary expenses. Such monthly expenses may include, if applicable, contributions to an account of a qualified ABLE program to the extent such contributions are not excess contributions (as described in section 4973(h) of the Internal Revenue Code of 1986) and if the designated beneficiary of such account is a child, stepchild, grandchild, or stepgrandchild of the debtor.
(III)In addition, for a debtor eligible for chapter 13, the debtor’s monthly expenses may include the actual administrative expenses of administering a chapter 13 plan for the district in which the debtor resides, up to an amount of 10 percent of the projected plan payments, as determined under schedules issued by the Executive Office for United States Trustees.
(IV)In addition, the debtor’s monthly expenses may include the actual expenses for each dependent child less than 18 years of age, not to exceed $1,500 1 per year per child, to attend a private or public elementary or secondary school if the debtor provides documentation of such expenses and a detailed explanation of why such expenses are reasonable and necessary, and why such expenses are not already accounted for in the National Standards, Local Standards, or Other Necessary Expenses referred to in subclause (I).
(V)In addition, the debtor’s monthly expenses may include an allowance for housing and utilities, in excess of the allowance specified by the Local Standards for housing and utilities issued by the Internal Revenue Service, based on the actual expenses for home energy costs if the debtor provides documentation of such actual expenses and demonstrates that such actual expenses are reasonable and necessary." So you can see how this can get confusing.
In Michigan a good rule of thumb in Michigan that I use for determine is $48,000 a year for a single person and add $6,000.00 per person. Of course, it is far more complicated then that the Federal Government wrote the bankruptcy code.
As far as what you can keep in assets general there is a wild card and most personal property is exempt. In general, the exemption are:
Homestead Exemption: $23,675 in equity.
You can protect the equity in your homestead, but not necessarily in an investment property or a second home. You can apply this exemption to unimproved land on which you intend to live in the future, You can also apply it to a mobile home that you own that sits on rented property. Ordinarily, you can only apply it to one property because you can have only one homestead. However, if you and your spouse file jointly, do not live together, maintain separate homesteads and (according to at least one court) do not otherwise have a direct financial connection with one another, each spouse can claim a separate homestead up to the amount allowed an individual.
Motor vehicle: $3,775 in equity (one vehicle per spouse)
Jewelry: $1,600
Household goods: $12,625 ($600 maximum for each individual item)
This applies to household goods, furnishings, appliances, clothing, books, animals, crops, and musical instruments.
Tools of the trade: $2,375
Health aids: exempt without regard to value
Unmatured life insurance: exempt without regard to value
Life insurance payments: amount needed for support under a policy taken out by someone of whom you were a dependent
Loan value in life insurance: $12,625
Domestic maintenance: amount reasonably necessary for support
Social security, unemployment, veterans benefits, public assistance, disability: exempt without regard to value
Personal injury awards:
$23,675, except for pain and suffering or actual pecuniary loss
Loss of future earnings needed for support
Award for wrongful death of person of whom you were a dependent
Compensation as a crime victim
Retirement Accounts: Tax exempt retirement accounts are exempt without regard to value, except that IRAs and Roth IRAs are capped at $1,283,025.
Education IRA and pre-purchased tuition credits: exempt without regard to value
Spendthrift trust: exempt without regard to value
Wildcard exemption: $1,250, plus $11,850 of any of the homestead exemption you did not use.
I like to answer your questions in generalization because every case is different but I want to give some ideas so when you pick up that phone and call me at 248-882-0838 you have a general idea of what to expect. I am a bankruptcy lawyer that personally answers my phone. Then when you come to my office for a free consultation I can explain in detail to you to your personal situation. If you are looking to file a chapter 7 or a Chapter 13 in Brighton Howell White Lake charter Township or any area in Southeast Michigan.
The Process
How to get started
The first thing you need to do to file a chapter 7 bankruptcy is to pick up the phone and call 248-882-0838 or test it. Or email me personally dddern@aol.com. Set up an appointment. I will tell you what you need to bring. Once you come I will teach you everything you need to know. I will give you a check list and go over everything.
Court
We call it court but it is really a meeting of creditors that is held before a bankruptcy trustee. In Michigan Chapter 7 court is held around the state in Flint, Detroit, Bay City, Ann Arbor, Lansing, Grand Rapids, and Marquette.
If you are in the Counties of Genesee, Livingston, Lapeer, Shiawassi, including Howell, Brighton you will got to Flint Michigan. If you are in Wayne, Oakland,, including White Lake , MaComb you will got to Detroit. If you are in Washtenaw or Jackson or Monroe you will go to Ann Arbor.
You must have your PHOTO ID and SOCIAL SECURITY CARD when you go to court. There are documents that must be sent to the Trustee prior to your hearing. Tax returns, pay stubs, car titles, mortgages and a few other things.
In most cases the 341 meeting of creditors goes pretty smooth. If there is an issue those would be heard before an actual bankruptcy judge in a proper courtroom.
Credit Counseling
You are required to do an online credit counseling class prior to filing. The company that I recommend is www.summitfe.org there is also a post filing debtor education course you must take after you file. Same website. It cost between $10 and $30.
Bankruptcy Protection
The Automatic stay 11 U.S.C. 362 prohibits creditors from contacting you directly after you file Chapter 7 bankruptcy. Law suits must cease. Garnishments must cease. Foreclosure must cease. Repo must cease. If a creditor bothers you after you file a bankruptcy you can sue them. Your bankruptcy attorney can file a motion for sanction.
Affordable Fees
I believe in offering great service at affordable rates. The cost of a chapter 7 bankruptcy is all over the board. a bankruptcy lawyer can give you basic service really cheap and throw in some hidden costs. I usually charge a flat fee and do everything under that flat fee. Sometimes the cost is dependent on the area.With me I charge the same rather you are in White Lake charter Township, or Brighton, or Howell, or Detroit or Burton. So if you are searching for a bankruptcy attorney that is affordable and offers full service I believe for what I do and the service I add my price is the best.
FAQs
Is it expensive?
No. For the service provided and the benefits received it is very affordable.
Can I keep my car?
in a chapter 7 bankruptcy As long as you make the payments.
Can I keep my 401 K?
Yes. it is exempt.
Can I get my garnishment back?
You can get the last 90 days back if it totals more then $600.
Is it the same price if my spouse files?
Yes
Are all bankruptcy lawyers the same?
No. Its like anything else some are good and some are bad. I am a bankruptcy attorney that is quick and affordable. I am located in Hartland Michigan and serve the surrounding areas Brighton White Lake , Howell and Wateford. White Lake charter Township