As a bankruptcy attorney practicing in a state hit hard by the economic downturn, I understand just how difficult it may be for you to call me about filing a bankruptcy case. Many of my clients say things like "I never thought I would be in this position" or "this is the most embarrassing and difficult decision I have ever made."
Be assured that you that when you contact me, my staff and I will treat you with courtesy and respect and we will keep all information you provide to us in strict confidence. I know that bankruptcy is not a preferred course of action, and if we can find a more suitable resolution for your financial difficulties, I will advise you not to file.
The cost of filing bankruptcy is often one of the primary concerns clients have. My fee for a simple chapter case is a flat $1,000.00. As my client you will always meet with me personally, an attorney with over 15 years experience. I will personally draft your documents, receive your phone calls (I'll give you my cell number), advise you throughout the case and always attend court side by side with you. You will never be delegated to an attorney fresh out of law school, or find yourself in court with an attorney you've never met before or worse, alone.
My fees are reasonable, but I am not a discount bankruptcy mill. My focus is not on churning out vast quantities of cases as quickly as possible, but rather on giving personal and thorough attention to your case. I will communicate with you every step of the way, and explain all of my recommendations so you are able to make informed decisions about the course and outcome of your case. The bankruptcy court charges $299.00 in filing fees for a chapter 7 case. Additional attorney fees may apply for cases involving lawsuits, garnishments, high debt, heavy recent credit usage, possible fraud or non-dischargeability issues, difficult creditors, many or large assets or other reasons. You will also be required to pay for credit counseling classes before and after filing your case, the cost of which runs from $50 - $100 per class.
I urge you to call or e-mail my office before you try any desperate measures like raiding your retirement plan, transferring property, or transferring credit card balances. Please see the list of common pre-bankruptcy mistakes to avoid. Although I can deal with these actions, you are usually better off not taking these steps. I would rather hear from you sooner rather than later.
I also recommend that you contact me if you have been sued or if there is a pending judgment. When someone gets a judgment against you, the underlying debt can be satisfied by seizing bank accounts, garnishing wages or placing liens property. While we can often wipe out judgments in a bankruptcy, you are better off avoiding them whenever possible.
If you are considering filing for bankruptcy, contact me to arrange a free initial consultation to discuss your options and find out if bankruptcy is right for you.
Michigan Chapter 7 Bankruptcy BasicsChapter 7 bankruptcy is a liquidation case that typically ends when you receive an order of discharge, wiping out your personal liability to pay debts. Not all debts are wiped out and exceptions include student loans, family support obligations, most taxes, debts from fraud, and intentional injuries or damages for driving under the influence of drugs or alcohol.
Whether you are eligible for a chapter 7 bankruptcy will depend on your last 6 months' income. If your income is below the state median or if your debts are mostly from business, you are generally eligible for Chapter 7. Even if your income is higher than the median, you may still qualify for Chapter 7 if you can pass the new "means test". The means test is a statutory maze of income and expense calculations, composed of real and IRS created standards, used to determine if you have the ability to pay back some of your unsecured debt over 5 year repayment plan. If you fail the means test, you typically need to file Chapter 11 or 13 to get any bankruptcy relief.
In most Chapter 7 cases, the debtor will be able to exempt all of his/her assets under applicable Michigan or Federal Bankruptcy laws. However, if there are assets that do not qualify for an exemption, the Chapter 7 bankruptcy trustee has the power to liquidate or sell those non-exempt assets and distribute the proceeds from the sale to the Debtor's creditors. In practice, however, liquidation is rare. Chapter 7 Trustees do not sell properties that have no equity, such as a house that is worth less than the sum of the loan balances. Most assets are encumbered by liens or fall under the "exempt asset" category, preventing the trustee from liquidating.
Common "Pre-bankruptcy" Mistakes to Avoid When Considering Filing BankruptcyThe following are some common pre-bankruptcy mistakes to avoid. If you have made one or more of these mistakes, don't worry - we will simply consider altering our strategy and/or timing.
Taking out a 401(k) or pension loan to pay credit card debts - Falling behind on credit card payments can result in unrelenting and unpleasant phone calls from credit card bill collectors. Often, these calls can border on being abusive. You may be tempted to do anything you can to stop the calls, including taking money out of 401(k) or other retirement accounts to pay down the credit cards. This is not a good strategy because credit card debt is unsecured, which means that the credit card lender is at the bottom of the list when it comes to getting paid. They have no property to seize, and they cannot garnish your wages unless and until they obtain a judgment against you.
In most cases, pension funds are considered "exempt" or sheltered property, which you are allowed to keep while wiping out your unsecured debts. If you invade your 401(k) or other retirement plan to get money to pay unsecured debts and you do end up filing for bankruptcy, you will find you have used exempt assets to pay off debts that would have otherwise been wiped out in your bankruptcy case. You may also find you must pay early withdrawal tax penalties if you were otherwise ineligible to withdraw funds from your retirement account.
Transferring credit card debt from high interest cards to low interest cards. The bankruptcy code gives credit card lenders greater protection in the case of cash advances and purchases made within 60 days of filing. A balance transfer is viewed as a cash advance, and can be challenged by the creditor after you file. If you have made a balance transfer, I may advise you to wait several months prior to filing and I may advise you to make monthly payments while you are waiting to demonstrate good faith.
Filing when you are expecting a large tax return. Although bankruptcy exemptions allow you to shelter some cash assets like a tax refund, you are usually better off filing your case after receiving and using your tax refund money.
Repaying family loans prior to filing. In difficult financial situations, people often turn to family or friends for help. If you file for bankruptcy, however, you cannot treat family and friends differently from other creditors. The Bankruptcy Code prohibits "preferential transfers" or paying some creditors more than what they would have otherwise received in the bankruptcy case. Often, a debt payment to a family member or other "insider" made within one year prior to filing is considered a preference and can be reversed by the bankruptcy trustee.
Transferring assets prior to filing. If you own real estate, motor vehicles, money in bank accounts, or other assets, and you transfer ownership out of your name to defeat the claims of creditors, the bankruptcy trustee can file suit in bankruptcy court to avoid the transfer.
This situation sometimes arises when a person preparing to file for bankruptcy remembers that their elderly parent added their name to a bank account or deed to their house for estate planning or convenience reasons. Even if you have never considered it "yours," the bankruptcy court could consider the asset to be part of your bankruptcy estate and may try to seize it. This is why it is important for us to discuss your situation and talk about all property that has your name on it or that you expect to inherit.
Significant credit card usage prior to filing. The bankruptcy code states that if you incur $500 or more in credit card debt to any one creditor for non-essential items within 90 days prior to filing for bankruptcy, this debt is presumed non-dischargeable. Credit card debts of any amount, incurred at any time prior to filing may be deemed non-dischargeable if the creditor can prove that the debt was incurred under false pretenses (i.e., that you used the card when you knew or should have known that you would be unable to pay back the debt).
Keep in mind, however, that if a credit card lender files an objection in your case, you have to pay a lawyer to respond and defend it - which can get expensive. This is why I advise my clients to hold off on filing for as long as possible following their last use of credit cards. I also recommend they continue to make at least the minimum payment for several months while we are waiting to file to demonstrate their good faith.
Waiting until one or more judgments are obtained against you prior to filing. If you have been served with a summons and complaint, it is time to sit down with an attorney and discuss your options so you can make intelligent decisions. If you ignore the lawsuit, the plaintiff will obtain a default judgment against you. If the complaint contained allegations of fraud, intentional misconduct or other types of non-dischargeable debt, you will not be able to wipe this judgment out in bankruptcy and will have given up your chance to fight the case.
If a lawsuit is filed against you, it is time to seek legal advice to explore all of your options, including bankruptcy and non-bankruptcy alternatives.
Offering post-dated checks to creditors -Bouncing a check can be a criminal offense in Michigan. Although you may instruct a collection agency to hold a check for a certain length of time, experience has shown that you cannot trust aggressive collection agencies to hold your post dated checks for any length of time, nor can you trust them not to deposit all of your post dated checks at once. Your bank will similarly deny responsibility for negotiating post-dated checks. If your post-dated checks bounce, your creditors may now threaten criminal charges against you. Obviously, this is a situation to avoid by simply refusing to send creditors any checks unless you know they can be negotiated immediately.
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DISCLAIMER
The above information is general information only. It is not intended to be relied upon as legal advice in any particular case. Each case is specific to the individual and must be considered and evaluated on an individual basis. In order to retain my services, a written retainer agreement must be signed. Unless and until a written agreement is signed, there is no attorney-client relationship and you should not take anything on this site as advice in any case in which you may be involved. If you have any further questions about your legal rights and remedies, please feel free to contact me
We are a debt relief agency. We help people file for protection under the Bankruptcy Code.