Bankruptcy Information From Our Michigan Attorney
1) Chapter 7 Bankruptcy is no longer available.
The great majority of people that would have qualified for a "straight" Chapter 7 bankruptcy before the changes to the Bankruptcy Code in 2005 still do so today. While the process has become a little more complicated, the major provisions have stayed the same. A consultation with an experienced bankruptcy attorney will quickly result in determining bankruptcy qualification.
2) Filing Bankruptcy will ruin my credit?
Most people mistakenly believe that their credit and their credit report are the same thing. This is wrong. Your credit is your ability to borrow money, while your credit report is a summary of your payment and credit history. Although you may have perfect payment history, if you currently have more bills than you can afford, you have no credit because no one will loan you any more money. Many people discover this when they apply for a consolidation loan. After the bankruptcy, you will have little, if any, debt and you will be a better credit risk to creditors because you will be able to afford the payments on new debt.
3) I'll lose my house and vehicles if I file bankruptcy.
While the bankruptcy laws vary from state to state, every state has exemptions that protect certain kinds of assets, such as your house, your car (up to a certain value), money in qualified retirement plans, household goods and clothing. Most people pass through a bankruptcy case and keep everything they have. If you have a mortgage or a car loan, you can keep those as long as you keep making the payments.
4) I'll never be able to buy a home if I file bankruptcy.
Wrong. Can you buy one now? Probably not. Bankruptcy will give you the ability to save for a down payment. Also, you will have the income to qualify for a mortgage, something you probably can't do now because your debts take up all of your disposable income. Most people can qualify for a mortgage within about 2 years after their bankruptcy, and I can put you in contact with lenders that will work with you after the bankruptcy. To qualify for a mortgage, your debt cannot exceed a certain percentage of income per month. If your debt is too high, you will NEVER qualify, EVEN IF YOU HAVE PERFECT PAYMENT HISTORY! That is why "robbing Peter to pay Paul" will never solve your problems. Many people continue to borrow on one card to make payments on another thinking that on-time payments are all that matters. That is totally wrong! You can consult any mortgage lender to verify this!
My bankruptcy is simple – any Bankruptcy Attorney can file it.
There are simple bankruptcies. But even a "simple" bankruptcy can be complex without adequate preparation and advice. You might think your have a slam dunk case, only to find out that the property you transferred to a relative has been disqualified because it was transferred too recently, that the payment you made to a creditor could be considered a "preferential payment" by the bankruptcy trustee, that the retirement plan assets you expected to keep are not from a qualified plan, or that your recent credit card purchases could be considered fraud. If you file bankruptcy without thoroughly reviewing your assets with an experienced bankruptcy attorney who follows bankruptcy case law closely, you could lose thousands of dollars of assets to the bankruptcy trustee. You could even end up filing the wrong form of bankruptcy protection if your bankruptcy lawyer does not properly analyze exemptions. Bankruptcy case law is mind-boggling complex and there are many gray areas with exemptions.
5) I don't need to file bankruptcy because I'm unemployed and my debts are uncollectible.
For some people this statement is true. If you have no assets and no income, your debts are uncollectible. However, you may want to file bankruptcy anyway to improve your credit. And while you may be unemployed now, when you go back to work your creditors could garnish your wages. You should still seek an attorney's advice concerning if – and when – you should file bankruptcy.
6) All of my debts can be discharged in Bankruptcy
Although most types of debts can be wiped out in Bankruptcy, the process does not eliminate debts for child support, alimony, student loans, criminal restitution, and some kinds of taxes. If you always filed your taxes on time, any taxes you have owed for more than 3 years could be wiped out in Bankruptcy. Debts that were run up just before the Bankruptcy was filed or when you had little likelihood of every repaying the debt also cannot be eliminated through Bankruptcy. In addition, if property is financed with credit, you must pay the debt or you will lose the property. Some people believe that they can file Bankruptcy and keep their home and car without ever paying for it, but this is a fantasy.
Contact me to schedule an appointment and discuss the details of your case. My office is open weekdays from 8:00 a.m. to 5:00 p.m. Evening and weekend appointments are available upon request. Credit cards accepted.