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Bankruptcy Mythbusters to the Rescue!

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If you are thinking about a possible bankruptcy filing, then call to take us up on our offer for a free telephone or office consultation.  The only way to be sure regarding your own situation is to discuss with a caring and experienced bankruptcy attorney.

Meanwhile, there is a lot of bankruptcy misinformation out there.  Following are a few of the more common myths that exist.

Bankruptcy Myth #1: If I file bankruptcy, I will lose everything.

This is a common misconception that keeps people who really should file bankruptcy, from doing so.  Federal and Michigan laws provide exemptions that can protect most assets (up to a certain value).  This protection often extends to valuable assets, such as your house, car, money in qualified retirement plans, household goods and clothing.  In fact, most people retain all their assets during the bankruptcy process.

BANKRUPTCY MYTH #2: If I file bankruptcy, can I no longer buy a car or house?

Many of our clients obtain new cars after completing bankruptcy and sometimes even during the process.  However, each lender varies in their business practices so you may need to shop around.  We even have car salesmen that specifically work with our bankruptcy clients.  Lenders take many factors into account- such as current employment, current income, and other factors in one’s credit history.

Purchasing a new home can take longer but is not out of the question.  It of course depends on current standards at the time. However, we have had clients purchase new homes in as little as two years from their bankruptcy discharge.

BANKRUPTCY MYTH #3: If you are married, both spouses must file.

If one spouse has a significant amount of debt in their name only, it may make sense for that spouse to file alone.  However, if there are joint debts, it may be wise for both spouses to file.   If there are joint debts and only one spouse files, then the creditor may still attempt to collect the debt from the non-filing spouse.

BANKRUPTCY MYTH #4: If I file bankruptcy, I will never again have a credit card account.

Many of our clients are surprised by how quickly they start getting credit card offers in the mail. By opening a new credit card and routinely making on-time payments, your credit score can quickly improve beyond pre-filing levels.  It is of course very important to monitor your credit score and to be diligent in making on time payments.

BANKRUPTCY MYTH #5: People who file bankruptcy are financially irresponsible.

There are a variety of reasons why people need to file bankruptcy, many of which are out of our client’s control.  Most often our clients need to file because of a serious personal problem such as a job loss, medical issues, or a divorce.  Unemployment, the cost of running two households following divorce, or the cost of medical care have all driven well-intentioned Americans into bankruptcy.  Once behind in such situations it can take years to catch up, if ever.  Millions of good people have filed for bankruptcy and come out stronger and more successful by doing so.

BANKRUPTCY MYTH #6: Back taxes cannot be discharged through bankruptcy.

In fact, many older federal, state and local income taxes can be discharged under the bankruptcy laws.  Our experienced attorneys will explain the qualifications that must be met; but once these are met, income taxes that were filed and have been due over three years may likely be discharged by a bankruptcy filing.

BANKRUPTCY MYTH #7: It is difficult to file bankruptcy.

Our attorneys and staff have filed several thousand cases and will walk you through the entire process. We are always accessible during business hours by both phone and email. We understand the process is new for most and are happy to answer questions and concerns throughout the bankruptcy process.

BANKRUPTCY MYTH #8: Will everyone know I filed bankruptcy?

It is unlikely anyone will know that you filed bankruptcy unless you tell them.  While bankruptcy is a matter of public record, someone would have to specifically track down the information using your personal information to find out if you filed for bankruptcy.

BANKRUPTCY MYTH #9: I cannot afford a bankruptcy attorney.

At Kerry Hettinger, PLC consultations are free. Furthermore, when filing chapter 13, we can put most of the attorney fee into the repayment plan and therefore only need to $300 plus a $25 certification fee up front ($325 to file).  

Our chapter 7 rates depend on circumstances but are most often among the lowest quotes our clients receive.  Furthermore, the full chapter 7 fee does not need to be paid until the case is actually ready to be filed.  Again, no money is needed at the first attorney meeting.

BANKRUPTCY MYTH #10: There is a minimum amount of debt to file bankruptcy.

There is no minimum amount of debt required to file for bankruptcy.  Our bankruptcy attorneys (Kerry Hettinger and Elizabeth Robinson) understand every situation is unique and will help guide you in making the best decision for you and your family.:

2014 Tax Refunds – Possibly the Best Use

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As the days begin to lengthen, and despite the piles of snow, we know Spring is finally headed our way.  We also once again find ourselves in the midst of tax season and possible refunds.

This all raises an important question for many of our friends who may be expecting substantial tax refund checks.  “What is the best use of such money?”  Purchase a car, TV, pay off credit card debt?  Well if you’re practically drowning in debt- like many of our clients when they first come in to see us- using your tax refund to file a full bankruptcy or a repayment plan may absolutely be the best use of such monies:

A mistake often made is to use limited tax refund monies to only pay down the credit cards and other bills.  Unless your tax refund can pay off all of your debts you may be better off using a portion of your tax refund to fund the costs of filing bankruptcy, which will likely completely discharge those debts and put you on the road to financial recovery as well as a fresh start.

For most of our clients, the tax refund represents the one time of the year where they have options. Please call for a free consultation to discuss those options.

At Kerry Hettinger, PLC we will work as hard as possible to limit attorney fees in our debt solution practice.  Yet even at our office the most difficult issue for our clients is the costs of filing a bankruptcy and attorney fees.  If you find yourself buried or drowning in debt, then please be careful to use the opportunity presented by your 2014 tax refunds carefully and wisely.

Call our office today, (269) 344-0700, for a free consultation and to see what your tax refund can do for you.

 

New Michigan Redemption Laws

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Last month, Michigan law experienced a major change threatening a Debtor’s redemption period rights after a foreclosure sale.  The new laws were signed by the Governor on July 3, 2013.  While there is still some legislation coming that should help clarify the new rules, homeowners need to be aware these new laws become effective January 10, 2014. Read more

Save Your Home in a Chapter 13 Bankruptcy Case

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Chapter 13 Bankruptcy Saves a Lot of Homes- It could Save Yours

HERE IS HOW IT WORKS:

When you file a Chapter 13 bankruptcy petition, all foreclosure proceedings must stop regardless of what stage of foreclosure you home or real property may face.   This is my hands down my favorite type of bankruptcy to file.

This rule is true right up to the date and time of the Sheriff’s Sale (which is the foreclosure event).  The case must be filed before the Sheriff’s Sale as you lose title to the home after that event.

The halting of the foreclosure and any collection activity is a result of what’s known as the “automatic stay,” which arises from section 362 of the bankruptcy code.

In Chapter 13, we will prepare a “repayment plan” for your unique situation.  The plan is sort of like a trust agreement.  It lays out what you intend to do in the case.

The foreclosure is halted at the filing of your case (the petition) and that “stay of proceedings” becomes permanent if  the repayment plan we prepare for you promises that you will now begin making regular payments as well as for pay off the mortgage arrears within 36 to 60 months.   There are generally a few tweaks we need to make with that, but most of our cases confirm (are signed by the judge) if you can meet these few basic requirements.

A SIMPLE EXAMPLE:

As an example, if your mortgage payment is $800 and you are $5000 behind in your payments, the plan will offer to pay $800 a month plus about $100 extra so that it can pay those arrears over 60 months with a little interest (60 x $100 = $6,000).  So that’s about $900 a month.  Attorney fees and trustee fees will take that payment to about $1000 a month.  You will need to pay at least a little to your other creditors as well (this depends on whether your budget is tight).

PRIOR BANKRUPTCY CASES:

About the only exception to the rules stated above is when you’ve filed prior bankruptcies in recent years.  If so, then be sure to discuss with us so we can take the appropriate steps so that you also get to enjoy the automatic stay.

JUNIOR MORTGAGES AND LIENS:

In many cases, we find a huge benefit in Chapter 13 for those homeowners whose homes are now worth less than owed on the primary mortgage.  Any second or third mortgages and liens can be crammed down and treated the same as credit cards or medical bills (meaning it may be possible to pay them very little).

NON-RESIDENTIAL REAL PROPERTY:

The options may be even better with non-residential real property (vacant land, business property, rental property).  If you own such property we may even be able to modify the primary mortgage.

HOW MUCH DOES IT COST TO FILE:

The good news is that the Court sets the basic attorney fee in a chapter 13 case.  In most situations that fee simply lowers what your various unsecured creditors would otherwise receive (so they in effect pay your attorney fee).  Because of this we can file your case for very little money down.

WHAT TO DO NEXT:

Don’t wait any longer, call us today at (269) 344-0700 for a free consultation.   We assist people with all forms of debt concerns.

Although based in Kalamazoo, the local bankruptcy court operates on the federal system and we serve clients living throughout Southwestern Michigan, including Van Buren, Berrien, Cass, Allegan, Kalamazoo, St. Joseph, Calhoun, Branch, and Hillsdale counties.