Personal bankruptcy can mean many things. Our attempt is to bring out client’s goals, challenges, resources and opportunities all together so that the best possible result is attained.

LIFE AFTER BANKRUPTCY: Common Sense Advice for Post-Bankruptcy Clients

Most bankruptcy clients- well over 90%- are filed by normal people who’ve experienced severe life distress.  Such clients really have no choice but to file as their lives have spiraled out of control after job loss, health challenges and family issues.

Our hope -and a primary goal around our office- is that after filing bankruptcy we want to see our clients experience a true and meaningful fresh start.

Toward that end, at least some of our internet blogs should be about continued financial education, encouragement and instruction.  We also would like to assist our clients to understand and appreciate ways to avoid some of the more common financial mistakes many of us make.

  1. Rainy day saving (emergency fund).

A common reality is being boxed into a position where for years we live paycheck to paycheck.  By the end of a pay period, there’s nothing left.  Even the smallest additional need or crises then requires credit spending for even everyday needs.

Aggressive and predatory lenders- such as payday lenders, credit card lenders, and a whole new growing group of internet lenders- make enormous sums of money off those still within that paycheck to paycheck box.

Although no one really wants to file bankruptcy, we find that filing can often provide our client with the freedom to finally draw a line in the sand to begin anew with such saving practices.

At Kerry Hettinger PLC, we strongly encourage the practice of saving even a small portion of one’s income each payday for future needs.  Rather than saving for a new TV or even for a vacation, the rainy day fund is set aside for true emergencies.  When forced to use this fund, one then sets as a priority the goal of repaying the fund as soon as possible.  The goal is to never need to borrow money for basic living expenses again.

  1. Proper use of credit cards.

The focus then is on avoiding borrowing for basic living expenses.  It would be “pie-in-the-sky” thinking to say one never again needs to rely on credit.   “Life happens” and sometimes we all face situations where we have no choice but to put certain expenses on credit. Medical emergencies arise, car emergencies pop up, and we simply don’t have the money in the bank.

However, even in these reasonable uses of credit, maximum effort should then be expended after the emergency is resolved to pay off such expensive credit debt.

Again, the message we wish to get across is that using credit to cover everyday expenses or for unnecessary shopping, leaves us vulnerable to even the slightest bump in the road we call life.

  1. Living with a budget.

In assisting our small business clients, we often marvel that even sophisticated small business clients often don’t use or follow a budget.  If our small business owners often don’t use a budget, it’s then not so surprising that we don’t generally use or follow budgets in our own households.  However, when you think about it, our households are small businesses of a sort.  And just as it can be frivolous and dangerous for a small business to live without a budget, just so it is risky for us to living without basic budgeting in our households.

One of the most valuable things we do in the intake and signing meetings with our bankruptcy clients is to go over their budgets.  As many of you know, the financial education courses required in the process also require much attention to personal budgeting.

  1. Track all spending.

Together with budgeting it is then critical to observe and reflect on our actual spending habits. This can be accomplished as simply as examining the bank account on a regular basis. The goal is to take a long hard look at what we’re spending and how we’re spending.  Small, seemingly insignificant purchases can add up quickly. That “quick stop for coffee” may only be $5 per day, but if you’re stopping every day of the work week, that quickly adds up to an extra $100 per month. A $10-$15 lunch doesn’t hit your bank account hard when you do it once, but eating out 3 times per week could run as much as $180 per month. Looking at the numbers as a whole can give you a better understanding of where your money is going, and that can be the incentive you need to get back on track.

  1. Buy only what you need (distinguish between “wants” and “needs”).

Whether it is a house larger than what we actually need or an overly expensive car, buying “too big” is a common concern across America.  Most of us need to continually work on scaling back on our basic living expenses. Do we really need a high dollar data plan on the cell phone? What about cable, do we actually watch all 100+ channels?  Learning to live within our means and only make the big purchases that we actually need, and can afford, goes a long way toward retaining and restoring financial health.

We hope something in this simple and basic blog was thought provoking and helpful.

Please always feel free to contact our office with questions or concerns.  We are here to help guide you to the best solution for your financial situation.


Are My Retirement Funds Protected in Bankruptcy?

Numerous people take advantage of incentives offered by the federal government and employers that encourage people to save for retirement. This may be an IRA, 401(k), 403(b), or other similar retirement account.

When people experience financial hardships they often are tempted to use the funds they have saved for retirement to regain their financial footing. However, people should understand how bankruptcy law treats retirement accounts and why filing bankruptcy may be a better way to deal with debt rather than using retirement funds to pay down their debt.

Protected Assets

In order to encourage people to save for retirement and not depend solely on Social Security as their only source of income after retirement, Congress allows people to have some tax advantages for depositing money into certain types of retirement accounts. The law also protects funds in those accounts from creditors, including those trying to get money from a person who has filed bankruptcy.

401(k) accounts are fully protected from creditors during bankruptcy. An IRA is protected up to $1 million.

Borrowing from Retirement Accounts

Some people make the mistake of withdrawing money from their retirement accounts during financial difficulties, in order to pay off debts. However, by doing so they are creating more issues for themselves in the future. If people are not able to repay the loans they take from their retirement accounts, not only do they have to pay income taxes on the amounts they withdrew, they also have to pay early withdrawal penalties. Bottom line is, they may be spending their retirement savings on debts that could be eliminated in bankruptcy.

Additionally, people who do know that retirements funds are protected may not understand that the money loses protection once they withdraw it from their retirement accounts. If a person absolutely must take a loan from a retirement account, such as when a person unexpectedly loses a job and needs the funds to pay monthly expenses, the funds are automatically eligible for creditors to seize once the person transfers the money out of the retirement account and into another bank account.

Speak with Kerry Hettinger

Before exhausting a retirement account in order to pay off overwhelming debts, a person may want to consider filing bankruptcy. People can eliminate several unsecured debts, such as credit card bills and medical debts while protecting retirement funds.

If you are struggling financially and feel like you have no option other than using retirement funds as a means of getting out from underneath crushing debts, speak with an experienced bankruptcy attorney like Kerry Hettinger. Kerry will meet face to face with you to discuss your concerns, and educate you about your debt relief options.

Please accept our invitation to call our office for your free consultation. 269-344-0700.





Can chapter 13 save my home from foreclosure?

Can chapter 13 help me save my house from foreclosure?

The short answer in most cases is yes.  In most cases a client who comes in to see us can save their home from foreclosure by filing a chapter 13 petition.

Before we answer that question for you personally, we first need to meet together.  I am happy to offer a free in office consultation so we can sit down and discuss your concerns together.

We will spend the first five to ten minutes of that meeting reviewing your personal situation to evaluate if such an attempt makes sense.  If it does (and eight out of ten times it does), then I spend another half hour or so gathering basic information about debts, possessions, income and living expenses.  Either way the meeting is free.

At the end of that first meeting together I will go over carefully with you a list of documents to gather together so that we can prepare for the next meeting; which is the signing meeting.

In a chapter 13, the client generally need only pay the initial costs to get filed, which adds up to only $335.  My attorney fees can be paid by the chapter 13 trustee out of monies funding the chapter 13 plan.


Now how does it all work?  How can a chapter 13 save your home?

I find almost all of my clients fall behind their home payments during a time of severe life experiences.  Clients that come to see me have suffered family, health or job loss.  In many cases it is two or three types of loss at once.

As life then begins to come back together, the client realizes the debt burden grew so great that even though the issues may now be better, the resolution of their major life concerns are a dollar short and a day late.

That’s where the chapter 13 comes in.  The filing of the case stretches both the money you have to deal with the situation and the time you have to get it all done.  In a chapter 13, one simply begins to make the normal mortgage payment to the chapter 13 trustee and we then reshape the arrears (and all other debt) into the remainder of an affordable monthly chapter 13 payment.

For example, a $6,000 home arrears situation (requiring $6,000 to cure the home mortgage) can be dealt with by a low payment of only $100 a month over 60 months plus a little interest.  We can often find great relief on items like high interest car loans.  Such clients retain their cars even though we reduce interest and restructure payments into affordable payments within the plan.

Most chapter 13 payments then include the monthly mortgage payment, some amount to deal with all the other debt, and then a small amount to fund administrative costs of the chapter 13.  We discuss this together at the beginning of the first meeting and then continue working on it so that by the end of the second meeting a client has not only a good idea of what the chapter 13 payment will be, but they will also see how they can afford to make the payment.

Again, not every case succeeds.  However the majority of my clients are successful in keeping their homes and vehicles.  My goal and mission is to be as realistic as possible, as early as possible, so that my clients are armed with a real understanding of what can and cannot be done as soon as possible.

Chapter 13 is our favorite bankruptcy chapter.  It is a great way to deal with almost all forms of debt, stretch your payments out so they are affordable and keep the items most important (such as your house and car).  As such a blog can only cover the very basics, I invite you to meet with me to see how it may help in your personal situation.

Please accept our invitation to call for your free office consultation at your earliest convenience.

Protect yourself and your home by understanding the changed redemption law now in effect

The 2013 Changes to the Redemption Period in Michigan after a Foreclosure or Sheriff’s Sale are now in effect.

Michigan Gov. Rick Snyder signed a series of bills in 2013 that made significant changes to a homeowner’s redemption period rights after a foreclosure sale occurs.  Most homeowners have come to rely on the six month redemption period after a foreclosure sale (aka sheriff’s sale).

Although the new Michigan law appears to retain the six month redemption period, the matter is not so sure any longer.  After a residential property is foreclosed the mortgage company may now demand the right to come on site (into your home) and inspect.

If the inspection shows the property is damaged or faces a reasonable risk of damage, then the foreclosure sale purchaser may be able to begin eviction proceedings almost immediately.  This totally flies in the face of Michigan’s historic protection of homeowners.

The new law ignores the fact that in almost every case a homeowner losing their home is not intentionally malicious but rather faces some sort of horrible event (divorce, job loss, devastating disease or even some combination).  The new law is another form of “guilty until proven innocent” that our government seems to apply in every area of life.

Previously under Michigan law almost everyone was entitled to at least a 6-month “redemption period” following a foreclosure sheriff’s sale.  During this time one could continue to reside in their house as they always had.  It was a period of time that Michigan law granted foreclosed homeowners in order that they might be able to obtain financing necessary to “redeem” their home, or at least to set a little money aside in order to move on with some dignity left (“Redeem” means a time to buy back the property from the sheriff’s sale purchaser).

[Also note that although the normal redemption period is 6 months, if your home is on acreage of 3 acres or more, the redemption period is 12 months rather than 6. If your home is empty or abandoned, the redemption period is only 30 days.]

Even worse, up until this new law, foreclosed homeowners had no duty to allow entry to their home of any employee or contractor of the foreclosing party, or of anyone else. The home remained theirs until required to vacate at the end of the redemption period.  The new law is a major reversal of this important protection for homeowners.

Now, effective January 10, 2014, the law has changed.

As of January 2014, purchasers at sheriff’s sale will have the right to inspect not only the exterior of the foreclosed home—but also the interior of the home, and any additional structure on the property.

If the inspection is “unreasonably” refused or if it appears that the property has been damaged or that damage is “imminent,” the purchaser can begin an eviction proceeding immediately, without waiting any time at all.

If this happens, one needs to move quickly because a judgment for possession (the eviction judgment) will not be entered by the court if the homeowner repairs the damage in question.  However, note that such an eviction proceeding can triggered by something as incidental or small as accumulated rubbish or trash.

This opens a serious window for harassment of homeowners.  How much trash can accumulate before the purchaser throws a homeowner and his or her children onto the street? What is meant by “debris”?  Is “refusal” triggered if the homeowner is working two jobs and finds it difficult to meet with the buyer during the daytime?  Is it reasonable for a purchaser to demand entry, when you’re trying to put your kids to bed?

The statutory change guarantees only one thinghomeowners who have suffered a hardship can look forward to high pressure and harassment from the agents hired by foreclosure purchasers.

The bottom line regarding Michigan’s foreclosure redemption period continues to be that you can’t take the redemption period for granted any longer.

Our response is that now more than ever a Michigan homeowner facing foreclosure should come in and visit us for a free consultation to explore your rights as well as options to prevent such action.  Note, however, that a chapter 13 must be filed before the actual foreclosure or sheriff’s sale if one hopes to retain the home.

If you would like to explore your options to save your home (chapter 13) or at least hold off such behavior for some additional period of time (chapter 7) then contact Kerry Hettinger at 269-344-0700 for a free consultation as soon as possible.


Qualification for a Chapter 13 Bankruptcy

Many of our clients find a Chapter 13 bankruptcy filing is by far the most powerful and effective strategy for a person struggling with non-cooperative creditors.

Chapter 13 isn’t even really “bankruptcy” in the traditional sense of the word but is more of a “Wage Earner’s Repayment Plan.”

In order to qualify a client for chapter 13 we only need to show the client has minimal income after the payment of secured debts (mortgages, car payments, etc.) and basic lifestyle needs ( food, utilities, etc.).  The payment to unsecured creditors can be as little as $20 a month and still qualify.

Further good news is that you don’t have to figure this all out on your own.  Kerry Hettinger, PLC works with you to create a repayment plan that saves you the most money possible.

Among the most common reasons for filing a Chapter 13 rather than a Chapter 7 (full bankruptcy) are the following:

1. Ch 7 would result in loss of something one really needs to keep (house, car, business, farm, etc.).

2. Client makes too much money to file a Ch 7 but not enough to pay off their debt.

3. Client filed a Ch 7 less than 8 years ago (only 4 years for a Ch 13).

4. Certain debt not dischargeable in a Ch 7 can be discharged or managed much better in a Ch 13 (tax, student loan, fraud, etc.).

Because of the many advantages of a Chapter 13 over other ways to deal with debt, Congress created additional qualification tests.  The two primary tests have to do with who can file a Chapter 13 and how much debt they can have.  First, only a person can file a chapter 13 (no Corps or LLCs).  Second, because it is inexpensive to file and very convenient, a Chapter 13 Debtor can only have so much debt ($360,475 unsecured, $1,081,400 secured).

Call today to have any questions answered and see if you qualify for this powerful form of debt management.