If you are considering filing personal bankruptcy, you may have many questions.
- How do know if it’s the right thing for you?
- Can you prevent it?
- When should you contact a bankruptcy attorney?
- What are your options?
- How does one type of bankruptcy differ from another?
This is when you need the services of a skilled bankruptcy lawyer. Andersen, Ellis & Shephard has Board Certified Specialists in Consumer Bankruptcy Law by the American Board of Certification on staff.
Bankruptcy is a federal court procedure that helps individuals and businesses repay their debts under the protection of the bankruptcy court (Chapter 13 Bankruptcy) or wipe them out altogether (Chapter 7 Bankruptcy). When you file for bankruptcy, an automatic stay goes into effect that prohibits your creditors from taking action to collect the debt without the approval of the court.
The protection is immediate and automatic. That is, creditor collection action must stop immediately. Lawsuits, garnishments, repossessions, foreclosures must stop. Harassment must also stop. Any action to collect on debts is stayed by court order.
The kind of relief you get depends on the plan you select. Chapter 7 cancels most debts and is for people that do not make enough money to pay on their debts. Under chapter 7 you can usually keep your home and car if you can afford to maintain the payments. Under chapter 13, a payment plan is proposed to reduce the burden of the debts by combining them all into a single affordable payment. The payment amount depends on a number of factors including how much money you make and what assets or property you want to keep.
Getting Ready to Meet with the Attorney
It’s important to get your financial information together so that your attorney can give your case a thorough review. For this purpose we have a checklist of documents we need to review and a list of financial questions. We want to make a thorough review of your situation. You can download a document checklist and questionnaire from our website or we can email or send it to you. We will go over all your debts, assets, income and living expenses. We will review what your situation is and advise the best course of action based on your specific situation.
When to Make the Appointment
Many people put off meeting with a professional until they have already borrowed more money on their homes, from their retirement plans or made other unwise decisions. It’s best to make the appointment right away when your debts begin to get out of control. The sooner the better. If one waits too long it may be much more difficult or impossible to help. Each case depends on the specific situation so the best thing to do is get a consultation as quickly as possible.
What Happens at your Consultation?
A good professional will take the time with you to gather the necessary information to find out exactly what needs to be done to help you. You will meet with an attorney who is qualified to deal with debt problems and bankruptcy. We find out how much you can afford to pay on your debts, and how your living needs impact your finances. After the interview is completed you can decide what is right for you based on our advice and we will explain to you how your case will help you.
How Can I get a Case Started Quickly?
We can start your case on a rush basis if needed. We actually file your case online so there is no delay in carrying documents to the Court. We get an immediate court order that protects you as soon as the case is uploaded. By being prepared for your appointment, you can make sure we will have all the information needed to get your case filed immediately. In order to file for Bankruptcy, you must first obtain a credit counseling “certificate.” We can help you comply with this “certificate” requirement and find an approved non-profit credit counseling agency.
What Happens After the Case is Started?
Each client will need to attend a meeting between a month to two months after the case is started. The meeting is with an official, called a trustee, appointed by the Bankruptcy Court to review your case file. The trustee will want to review the documents that pertain to your finances and which are listed on our document check-list. We will represent you at this meeting. We handle thousands of these cases so most cases are routine for us, even if it is a new and scary experience for you. If your case is a Chapter 13 payment plan, you would commence making payments (usually on a pay roll deduction) and continue to pay until the plan is completed. If your case is a chapter 7, your debts could be discharged in several months. In either case, most debts are cancelled or discharged when the case is completed. You must also attend a “Personal Financial Management” course by an approved provider. We can help with this process.
- Some debts can’t be discharged or “forgiven,” including:
- Debts you forget to list in your bankruptcy papers
- Child support and alimony (maintenance)
- Debts for personal injury or death caused by driving while intoxicated
- Most student loans
- Fines and penalties imposed for breaking the law, such as traffic tickets and criminal restitution
- Most tax debts (although some taxes might be cancelled, others can be paid under a chapter 13 plan)
- Debts incurred by fraud or misconduct
What Happens to my Home and Car?
Many people fear they will lose their home or vehicle if they file for bankruptcy. In a Chapter 13 payment plan, you won’t lose your home if you immediately start making your regular payments and the catch-up payments as stipulated in your repayment plan if necessary. If you are current on your home mortgage, this payment is normally “outside the plan” and is paid directly by you even while other debts are included in the payment plan. If you are behind on the house payment, the house is brought into the plan and extra payments are made to catch up the amount you are behind. It’s important to file your case right away to avoid foreclosure. Also the farther behind you are, the tougher it is to catch up over time.
In a Chapter 7 bankruptcy,
most people do not lose their home if they can make the house payments. Chapter 7 debtors are entitled to keep “exempt” assets. The amount a person is allowed to keep varies from case to case but if the case is handled properly, and depending on the value of the home and the amount of equity you have, you may have an excellent chance of keeping your home and other belongings. There are exemptions for home equity, vehicles, and household contents which our qualified Michigan attorneys can go over with you to make sure you get the help you need without losing what is important to you. Only a qualified attorney is capable of advising you specifically how a bankruptcy case will work for you.
Many bankruptcies can be avoided by practicing good money management and avoiding debt when possible. For example, avoid impulse spending, don’t use a credit card unless you have the cash to pay it off, and tear up credit card offers you receive in the mail. Be sure to stick to a realistic budget, don’t buy more house than you can comfortably afford, make sure you’re adequately covered by insurance (medical, homeowners, auto), don’t make speculative or high-risk investments, and don’t incur joint debt with others who have questionable financial habits. If you do find yourself behind on your bills, you can call your creditors before you get in too deep, but sometimes they will not work with you. Some people successfully use credit counseling services to help negotiate with creditors, but make sure the business is legitimate and reputable. We usually do not suggest you go to out of town agencies to help you with debt problems. Credit counseling can be of value for some circumstances but many times they will not be able to help in the way that chapter 13 or chapter 7 can. Bankruptcy oftentimes offers a quicker and more cost effective solution over credit counseling agencies.
If you would like to learn more about how bankruptcy works, contact the experienced bankruptcy attorneys at Andersen, Ellis & Shephard.