A Chapter 7 Bankruptcy is a straight debt elimination program in which all or most unsecured debts are discharged. Chapter 13 reorganization is a repayment plan that focuses on stopping creditor actions on secured debts, such as home foreclosures, and allowing you to consolidate other bills to create an affordable monthly budget. A Chapter 7 applies when your monthly income only meets your basic living expenses (i.e. mortgage payments, food, clothing, utilities, etc.). A Chapter 13 applies when you have some disposable income to pay your creditors, even if you cannot pay the debt in full. A Chapter 13 will stop a foreclosure sale or vehicle repossession. The plan will allow you to resume your regular monthly payments while paying the missed payments over time.
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A Chapter 11 bankruptcy is a reorganization for corporations and large businesses. You may however, use a Chapter 13 for small businesses that are not incorporated or that have debts below a certain amount. The attorney will be able to determine what program would be best for you at the time of your free initial consultation.
Yes. If you are current on your mortgage payments and your home is not worth considerably more than what you owe on your mortgage, you can normally file a Chapter 7 Bankruptcy and keep your home. If you have over the exemptible amount of equity in your home or are behind in your mortgage payments, filing a Chapter 7 may jeopardize your home ownership. If you are behind on your mortgage, you may be able keep your home by filing a Chapter 13 Bankruptcy, which allows you to resume monthly mortgage payments and pay the missed payments over time.
The law requires creditors to immediately stop trying to collect on debts once a bankruptcy case is filed. If they do call, simply give them your case number and filing date, and refer them to your attorney for additional information.
Yes, for example, you cannot receive a discharge on alimony or child support. Furthermore, government insured student loans are generally non-dischargeable – although in rare cases, you may qualify for a hardship discharge. Most recent tax liability is non-dischargeable unless the tax debt is over three years old and the tax returns for those years were filed more than two years ago (this is a confusing concept so please call our office for more information on this subject). Debts for state or federal fines and penalties, such as traffic infractions, are non-dischargeable. In addition, some debts may be non-dischargeable in a Chapter 7 Bankruptcy, but are dischargeable in a Chapter 13 Bankruptcy. Each must be evaluated on an individual basis by one of our experienced Michigan bankruptcy attorneys.
In terms of the Chapter 13, the plan will actually improve your chances for obtaining another mortgage. Reduction of overall debt and establishing a regular payment record make this possible. The plan is designed to improve your credit score during the program. People are eligible for conventional or FHA mortgages after two (2) years of successful payments under the plan.
For Chapter 7, most mortgage companies tell us that after two years (if not sooner) you would qualify for a conventional or an FHA mortgage, so long as you are otherwise qualified.
In terms of the Chapter 13, if you need to purchase a vehicle during the program, you will need to seek court authorization. This is not a difficult or complicated process and our lawyers will assist you. Your attorney will provide you with lists of dealerships that are familiar with the process.With the Chapter 7, you can pursue the purchase of a vehicle as soon as you get your discharge. You will need the necessary income. You may initially be charged a higher rate of interest but not an exorbitant rate.
No. The attorney will help you determine if it makes sense for both of you to file or if it is to your advantage to designate one filer.
No, only one person whom is on the mortgage would need to file a Chapter 13 in order to stop the foreclosure sale. The paperwork needs to be filed prior to the foreclosure sale date in order to legally stop the sale.
You can file Chapter 7 Bankruptcy once every eight years based on the date of your discharge. If you filed Chapter 7, you are eligible to file for protection under Chapter13 as soon as your receive your discharge. If you have filed a Chapter 13 Bankruptcy within the past year and it got dismissed, you are eligible to file again if there has been a change in your circumstances. To file a case again within the past year you will need to get court authorization to extend your court protection beyond the initial 30 days automatic stay.
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Yes, the laws changed on October 17, 2005. However, Chapter 7 and Chapter 13 are still available. Most people were unaffected by the change in legislation. To see if you would qualify under the new laws, our lawyers offer complimentary consultations. The attorney will discuss your options and develop a personal strategy to improve your financial situation.
One of our experienced attorneys will be able to evaluate your circumstances (current income, outstanding debt, monthly bills, etc.) and advise you on which program is right for you. At the initial consultation the attorney will discuss your financial goals and develop a personalized plan to get you back on track. If after careful evaluation we do not believe that one of our programs will be the most effective to address your financial situation, the attorney will suggest alternatives for you to pursue.
Chapter 13 is different from other debt management programs because our attorneys are able to use the law to provide you with legal protection from creditor actions (foreclosures, garnishments, harassing phone calls, etc.) and better, more uniform terms than other programs can offer. For instance, all of your unsecured debt (credit card bills, medical bills, etc.) is reduced to 0% interest for the duration of the Chapter 13 program. This avoids the snowball effect of late charges and high interest rates. The same goes for your mortgage arrearages, they are paid back at 0% interest throughout the plan with no additional late penalties. In addition, the plan prioritizes your secured debts over your unsecured debts – allowing you to concentrate all your efforts, up front, on bringing your secured debts – such as your home or vehicle – current before worrying about your other bills. Chapter 13 allows you to focus on reducing your overall debt. A Chapter 13 will also allow you to eliminate or reduce unsecured debt based on your income and your ability to pay.
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Yes, if the necessary Chapter 13 paperwork is filed PRIOR to the foreclosure sale date, the sale will be legally stopped.
Yes, with the court’s approval. When you are ready to re-finance, your attorney will help you through the process.
Your Chapter 13 will serve as its own credit source. This means that a new lender will look at your performance in the Chapter 13 to qualify you for a new loan. If you have been making your payments on time and in full, a lender will evaluate you on this basis versus perhaps a poor pay history prior to your Chapter 13 filing. Lenders typically like to see at least 12 to 24 months of a positive payment history in the Chapter 13 before qualifying you for a new loan. Of course, there are other factors for the lender to consider, including how much equity you have in your home, other debts that you may have, etc.
Yes. Your lawyer is simply required to file a motion with the court providing the terms of the sale. There are typically no issues with gaining court approval.
No, the Chapter 13 plan will not require all your income. The attorney will work with you to develop a budget based on your income, monthly expenses and outstanding debt. Our lawyers will reserve money to cover your ongoing monthly expenses (i.e. utilities, groceries, etc.) plus any items that you are not including in the plan (i.e. vehicle). Your plan payment is based on your available income, monthly living expense and outstanding debts. Since the Chapter 13 is a customized program, the payment is based on your individual circumstances. At the time of your initial complimentary consultation, the attorney can typically provide an estimate of your expected plan payment and terms.
The first payment is due within 30 days of the date of filing. We encourage our clients to mail it within 21 days of the filing to allow time for mailing and processing at the trustee’s office.
This varies based on individual circumstances. It usually coincides with your income stream. Your attorney will define the payment frequency in the plan (i.e. weekly, bi-weekly, semi-monthly, bi-monthly, monthly, etc.)
If the initial plan that we submit is not approved, your lawyer is allowed to amend the plan in order to comply with the necessary changes.
A Chapter 13 Trustee is appointed by the court and is responsible for administering your case. They are the party that receives your payments into the plan and they in turn make payments to your creditors according to the approved plan. Like your lawyer, they are with you through the entire process. They essentially serve as a neutral third party between you and your creditors.
The Trustee is appointed by the court to administer the case. They are required to liquidate any nonexempt property and provide dividends to the creditors.
A Chapter 13 plan is a customized repayment plan that the attorney will develop with you and submit to the court for approval. The plan outlines what debts you have, how we plan to pay your creditors and defines the timeline.
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If you complete the Chapter 13, you will receive a full discharge from all unsecured debt, even if the debt is not paid in full. All a Chapter 13 requires is that you pay your best efforts. Often a portion of your unsecured debts will be eliminated in the Chapter 13.
If you filed for Chapter 7 within four (4) years of the filing of a Chapter 13, you are not eligible to receive a discharge or eliminate debt, but are able to file to consolidate your bills, set-up optimal repayment terms and protection from your creditors.
No, you are not required to include all your debt obligations. You will however include all unsecured debts in the Chapter 13. This is to your advantage as unsecured debts drop to 0% interest in the plan and payments are deferred until you are caught up on all secured debts. You will be required to pay only the amount that you can reasonably afford to pay on these debts. The unpaid balance of these debts will be discharged upon the completion of the plan.
Any debt can be included into the plan.
A typical plan will be proposed between 36 to 60 months. Your plan length is determined based on your unique circumstances. Your attorney can lengthen the plan during the course of your case if necessary, but under no circumstances can a case extend beyond 60 months. You can also complete the plan early by refinancing out or pre-paying the case.
No. The court, not your creditors, approves your Chapter 13 plan. However, creditors have the opportunity to file written objections that must be dealt with in order for a case to be confirmed. As your attorneys, we will work to resolve objections and negotiate with your creditors to assure that you receive the best possible terms.
Our attorney will determine if you qualify to file based on your current circumstances. The lawyer will make this determination with you at the time of your initial complimentary consultation.
Yes, if you qualify and it makes sense based on your case status and circumstances.
Chapter 7 wipes your credit clean. After you receive your discharge, you have to build your credit again, just like you did when you first started out. Many clients are surprised to find that they can obtain financing, at a reasonable rate, to purchase a car or a home shortly after receiving a discharge in a Chapter 7 bankruptcy. Often times, after a filing, you will receive proposals from credit card companies indicating that they are aware of your filing and wish to help you re-establish your credit – although these offers may be nice they are not essential to helping you re-establish your credit.
For Chapter 7, the filing is reported for ten (10) years. For Chapter 13, it is reported for seven (7) years following your discharge. The fact that a Bankruptcy is reported on your credit for the 7 and 10 year period does not mean your credit is adversely impacted for that entire time. Our attorneys work closely with several mortgage companies that have indicated that in as little as 12 to 24 months after the filing of a bankruptcy they would be able to obtain Conventional and FHA mortgages (at good rates) for our clients.
The Chapter 13 is intended to help you get back on track with your financial obligations. It is not meant to make your credit worse, but instead the Chapter 13 repayment plan serves as its own credit source. Your performance in the Chapter 13 plan creates a new, positive pay history that will aid you in improving your credit score and obtaining new credit (i.e., re-financing your home and completing the plan early, etc.)
All your listed creditors receive a copy of your proposed repayment plan. They are each required to file a Proof of Claim verifying the amount that you owe and supporting documentation. Any unsecured creditor that does not file a claim will not be included in the approved repayment plan and that debt is discharged (eliminated) at the completion of the plan. Creditors are handled differently based on their status: secured, unsecured, priority, etc. The attorney will create a strategy for handling each of your creditors at the time of the initial complimentary consultation.
Yes, you have many options. You can re-finance out, sell your home, voluntarily dismiss your case, convert to Chapter 7, etc. Your lawyer will help you determine the best direction based on your circumstances and long-term financial goals.
A Chapter 13 is reorganization, repayment program through the court. It is a way of legally stopping creditor actions (i.e., harassing phone calls, garnishments, vehicle repossessions, foreclosure, etc.) and setting up repayment terms with your creditors. Through the Chapter 13 process, our lawyers will develop and submit to the court a customized repayment plan that fits your circumstances. The purpose of the plan is to get you back on track with your creditors and set up reasonable repayment terms to allow you to protect your property, such as a home that is in foreclosure. A temporary disruption in income (i.e., due to medical reason or layoff from work) or changes in circumstances (i.e., divorce, loss of overtime, etc.) are the primary reasons we see our clients filing for protection under Chapter 13.
Filing for Chapter 13 is nothing to be ashamed of. Good people often find themselves in tough circumstances that they did not anticipate and this program is designed to provide a personal strategy to pay back debts in a reasonable manner and timeframe.
Yes. The result of a creditor obtaining a judgment means that the amount you owe them has been fixed and determined. Once a judgment has been entered the creditor may take additional court action to collect the debt (i.e. wage and bank garnishments). You can get court protection from this debt under a Chapter 7 or a Chapter 13.
No. Federal Law prohibits employers from discriminating against you based on a bankruptcy filing.
There can be if you have not completely disclosed all of your assets and your financial situation. When our attorneys meet with clients initially, the following is the list of questions we typically ask. If you answer yes to any of the below, the lawyer would want to make sure we addressed that specific issue in the paperwork that we submit to the court. Or, your attorney may recommend that you delay filing for a period of time. Here is a sample of questions to ask yourself:Have you paid any funds to a relative within the past year?
Does anyone owe you any money for any reason?
Have you sold or transferred anything in the last six (6) years?
Have you sued anyone in the last five (5) years?
Are you receiving now or do you have the right to receive any payments from an inheritance, lawsuit, divorce judgment or any other award or settlement?
Have you been divorced in the last five (5) years?
Have you made any large payments to a specific creditor within the past 90 days?
Have you transferred any funds from one credit card to another or taken a cash advance within the past 90 days?
Have you paid off any creditor in the past 90 days?
Do you understand that Acclaim Legal Services has advised you NOT to use your credit cards or incur any other debt before you are considering filing for bankruptcy?You can discuss these answers with your Michigan bankruptcy attorney at the time of your free initial consultation.
This depends on the circumstances. In the event of a Chapter 7, we can simply exempt your actual refund or anticipated refund.In the case of a Chapter 13, this depends upon your plan length and the percentage that is being paid to unsecured creditors. Typically if your plan is over 36 months with less than a 100% dividend being paid to unsecured creditors, you are required to remit your refund. There are exceptions, such as if the refund is included as part of the monthly budget necessary to fund your plan. Furthermore, if one-time, unusual costs, such as home repairs, are necessary, your attorney can petition the court to allow you to keep your refunds to pay for such expenses. If you are married and your spouse has not filed bankruptcy with you, he or she is entitled to keep one-half of the refund if you filed your tax returns jointly.
Any source of income can be considered for qualification under the Chapter 13, such as regular wages, self-employment income, rental income, alimony, child support, pension income, social security, disability, government assistance, cash income etc. Overall, the goal is to prove that you have sufficient income to fund the proposed plan.
Exemptions are protections that the law provides for your real and personal property. If an asset is “exempt,” it is protected. For instance, if you file a Chapter 7 you may exempt equity in your home . This amount is protected from your creditors. If your home equity is under the allowable equity amount, you can keep your home, assuming the payments are current, while discharging your other debts. Different exemptions are available to protect your vehicle and personal property. The attorney will provide you with a full review of this at the time of your initial consultation.
Yes. Qualified retirement programs are fully protected under both Chapter 7 and Chapter 13.
No. A Chapter 13 will help you save your home or vehicle if you are behind on the payments and still help you eliminate the debts of unsecured creditors. A Chapter 13 will often times give you the best of both worlds. You are eligible to file a Chapter 13 immediately following a Chapter 7 discharge.
Yes. You may still file a Chapter 13 to save a home or reorganize debt even if you have filed a Chapter 7 within the past eight (8) years.
Lenders are now beginning to look at the possibility of lowering interest rates during the time you are in a Chapter 13 Reorganization. At the very least, you will be able to eliminate the late fees and penalties that are associated with being behind on a mortgage. At the time of the initial consultation the lawyer will evaluate your mortgage situation and determine if there are other ways to lower your payments, such as “Lien Stripping” or adjusting an Escrow Acceleration.
A Chapter 13 is flexible and can change with your circumstances. You may convert the case to a Chapter 7 or modify the plan if necessary depending on your circumstances.
You can stop a garnishment by filing a Chapter 7 or Chapter 13. The garnishment will stop immediately and any funds that are inadvertently taken from you after the filing will have to be returned to you. In addition, under a Chapter 7 if you have experienced a garnishment within 90 days of filing and if the total amount taken is more than $600, your lawyer can attempt to recover the funds and return the money to you.
To determine what program you qualify for, we ask that you bring in your recent paystubs and your bills, and the attorney will look over your circumstances to make sure we get you in the right program. This depends on many factors, such as your household income, family size, the types of debts that you have and your long-term financial goals.
A discharge is a court order that frees you from any further obligation for all dischargeable debts included in the case. Once a debt is discharged, it is no longer legally enforceable against you and the associated creditors are barred from trying to collect such debts.
A Chapter 13 discharge is provided at the completion of the terms of an approved plan. A full Chapter 13 discharge is broader and completes more debts than a discharge that is received at the completion of a Chapter 7 case. Both programs will release you from further obligations on unsecured debts.
Under the new bankruptcy code, debtors are required to complete pre-filing credit counseling with an approved agency before he or she can file for bankruptcy. This may be accomplished with a simple phone or internet consultation that lasts less than an hour and can be completed at our office. The cost is $30 – $50 and some debtors may qualify to have this fee waived based on their income. It is also required that debtors complete a personal financial management course with an approved credit counseling agency before being eligible to receive a discharge from a Chapter 7 or Chapter 13. Again, this is a straightforward process that can be completed easily for an additional cost of $30 – $50 for one person or $50 – $60 for two.
You are not required to have an attorney, although it is advisable. The laws are complicated and it can be costly and detrimental to your circumstances if mistakes are made or deadlines are not met. An experienced attorney will be able to help guide you through the process and relieve the stress you may be feeling from your financial situation. Our job is to make your life easier and that is why our firm specializes in this area of the law.
Our office will be with you from the beginning to the end. Initially, the lawyer will evaluate your circumstances to determine the best course of action based on your circumstances (i.e., which Chapter is right for you, should you file jointly, what debts you should include, what type of payments you could expect in the case of a Chapter 13, etc.). The attorneys will prepare and file all the necessary paperwork required by law. Your lawyer will develop a budget and proposed repayment plan in the case of a Chapter 13 filing. We will negotiate with your creditors and determine the steps necessary to protect your interests based on the law. Your attorney will attend and advocate for you at your court appearance(s). Our lawyers will review and analyze all paperwork from your creditors (i.e. proof of claims, objections, etc.) to ensure that your case stays on-track. Overall, our attorneys are there to help you overcome any hurdles or obstacles that may arise during the course of your case and get you to a discharge and a fresh financial future.
We expect you to be truthful and honest in describing and disclosing your circumstances, we are on your side! The lawyer will expect you to assist in providing paperwork or additional documents that might be required. Our attorneys expect you to communicate with us to let us know if you have a change in circumstances that may affect your case. Your attorney will expect you to attend the required court hearings and provide truthful testimony. In the case of a Chapter 13, we expect you to make the necessary plan payments that we mutually agree on, to the trustee, on time and in full. We expect you to help us help you through the process.
In the Chapter 13, a co-signer does not have to file the case with you in order to protect your property or set up repayment terms. If the debt is being paid in full through the plan, the co-debtor is released from further obligation once the debt has been fully satisfied. If the debt is not paid in full through the terms of the plan, the creditors can collect the unpaid balance of the debt from the co-signer. In the case of a Chapter 7, if you plan on eliminating the debt (such as surrendering a vehicle), the creditor could still pursue collections from the co-debtor for the balance of the contract. The filing of a Chapter 7 will eliminate the debt of the person who is filing, not the debt of the co-signor (unless the person whom is co-signing is your spouse and has filed the case with you).
Yes, you are able to file if you meet the requirements and have adequate income to support the necessary payments based on your circumstances.
The court-filing fee is $310. You are also required to complete credit counseling before filing, which typically requires a $30 – $50 fee (see above Q and A for further details). We typically include the majority, if not all, of our attorney fees in the repayment plan to make it easy to get started.
The court-filing fee is $335. You are also required to complete credit counseling before filing, which typically requires a $30 – $50 fee (see above Q and A for further details). We would assess your circumstances and quote you our attorney’s fees at the time of your initial free consultation. We do provide payment plans.
No, bankruptcy is a civil proceeding.
Yes, in both cases. For Chapter 13 there is at least one required hearing, the Section 341 First Meeting of Creditors (341 Hearing). The second hearing, the Confirmation Hearing where the plan is approved, can often be avoided if all requirements are met in advance of the hearing. If two people file, both are required to attend the 341 Hearing and must have their driver’s license(s) and social security card(s) in order to complete the hearing.In the case of Chapter 7, typically only one hearing is required, which is the Section 341 First Meeting of Creditors.In both cases the hearing will be conducted within a month or so of filing. As your counsel, we would be at the hearing(s) to advocate for you and advise you on the steps necessary to complete the hearings.
If you are filing a Chapter 7 bankruptcy, a re-affirmation is a guarantee to a secured creditor that you intend to pay the debt in full. The agreement is drafted by your creditor and presented to us as your attorney. We advise clients on a case-by-case basis if it makes sense to execute a re-affirmation agreement(s) based on their budget and the nature of the debt.
Absolutely. The Chapter 13 would set up new repayment terms with your lender. We have found that the terms through the Chapter 13 are often more favorable to the debtor, as we can spread the arrearage amount (the amount that you are behind on your mortgage) over a longer period of time and at 0% interest. In addition, when there is a tight budget, the Chapter 13 helps eliminate or reduce other debts such a credit cards and other bills so that you may focus your efforts on paying for your home.
If the mortgage company agrees to stop the sale and offer you repayment terms, you would not necessarily need to file for Chapter 13. Make sure you get the agreement in writing PRIOR to the sale date to protect your rights. It is important to understand your rights under Chapter 13 before you enter into an agreement with the mortgage company, as you may find that you are better off accepting the terms of the Chapter 13 than what the mortgage company is willing to accept outside of the court process. Often, the terms are more beneficial to the debtor under the Chapter 13 with a longer time to pay back the missed payments and with no additional late penalties or interest charges on the arrearage portion. Unlike a direct payment arrangement with the mortgage company, the Chapter 13 offers a full debt consolidation program to manage all your debts and provides optional repayment terms. Sometimes other debts, such a credit card bills, medical bills, etc., drain a budget of necessary money to stay current on the mortgage. The Chapter 13 program allows us to prioritize the mortgage and focus your efforts.
The Chapter 13 does NOT change your contractual relationship with your mortgage company. You still remain the homeowner and the plan does not buy or sell your mortgage unless you choose to re-finance out early. At the end of the plan, you would be caught up on the mortgage and would simply resume making payments directly to your mortgage company.
If you cannot afford or do not wish to keep the property any longer, you can surrender it to the creditor or let the foreclosure/repossession occur. In the case of a foreclosure, you often have a “redemption period” where you continue living in the house. You are able to sell the house before the expiration of the redemption period if you can pay off the lender in full. Remember that charges are still accruing even after the foreclosure sale, so make sure that you have an accurate pay-off before agreeing to terms of the sale.If you voluntarily surrender (or experience repossession on) a vehicle because you can no longer afford it, the lien holder will likely charge you with a deficiency balance of the loan. That is, the difference between what you owed on the loan and what they were able to sell it for at public auction.In the cases of high deficiency balance(s), second mortgages on your home that are not included in the foreclosure or a judicial foreclosure – you may want to file a Chapter 7 to discharge these debt obligations.
It depends on your circumstances. In the case of a foreclosure or repossession, you could try to negotiate directly with your creditors. If they agree to work with you and you can afford the terms they offer, then you may not need to file.If you have mainly unsecured debts (i.e. credit card bills, medical bills, etc.) then you could explore a debt management program as opposed to Chapter 7 “Fresh Start” or Chapter 13 “Reorganization.” The disadvantage of the debt management programs is they do not guarantee that your creditors will agree to accept proposed terms and/or stop collection efforts or creditor actions.We encourage all our clients to explore all their available options before determining the best course of action. We provide an honest assessment of your circumstances at the initial consultation and the attorney will advise you of all your available options and discuss what makes the best sense based on your personal circumstances. If bankruptcy is not right for you, we will tell you. The decision to file for bankruptcy is never a first choice, but sometimes it is the best choice.If you do need to file, we hope to earn your trust. Please call us for a free private, initial consultation.