Below you find a section of Frequently Asked Questions. I have to be honest here; I think that FAQ are generally lame. If you navigate the internet a lot, and I do, about the only FAQ that ever really comes close to posing or answering a question I have is something like “How much do you charge for shipping?”

Anyway, I tried not to be lame, but the truth is that most good questions are unique to someone’s particular situation, so I urge you to call my office, and to remember that we DO NOT try and pressure you into an appointment. If you call, it really, truly is an opportunity to just ask your questions.

Does Bankruptcy ruin my credit, or will it hurt me in the future?

First, remember that credit is made up of more things than just paying your bills on time. I frequently get calls from people who are having a hard time keeping up, but haven’t yet missed a bill payment. They mistakenly believe that their credit rating is still "good" merely because they haven’t been late or missed a payment yet.

Another very important factor in your credit rating is what is called your debt to income ratio. This is a function of how much money you owe all the way around, compared to how much money you have coming in. The smaller the overall debt, compared with a larger income, the better. The larger the overall debt, compared with a smaller income, the worse it looks. So, if Donald Trump, who makes millions each year, has no mortgage, and owes $20,000.00 on his cars, and has $1500.00 in credit card debt, his debt to income ratio is great. If John Doe makes $42,000.00 per year, owes about $120,000.00 on his house, $6,000.00 on his car, and another $12,000.00 on his credit cards, his debt to income ratio isn’t very good, no matter how timely he pays. One thing Bankruptcy does is improve your debt to income ration dramatically, and almost instantly.

For lots of other people, if payments have already been missed, the credit issue shouldn’t even enter into the picture. In cases where the home has gone or is going into Foreclosure, where there has been a Lawsuit and/or a Judgment against someone, or where there has been a Repossession, getting rid of the debt is the single best thing one can do. The credit has already been hammered; the only way to go is up.

Can I keep my house? Can I get rid of my house? What should I do about my house – I owe way more than it’s worth?

If you are current on your home, and you can continue to pay for it, then you can keep it. In certain cases, Bankruptcy can allow you to catch up on your home if you’re behind but have the means to catch up.

Conversely, you can give your house up, whether or not your payments are current, or the house is going into foreclosure, already in foreclosure, or you have a debt or judgment from a foreclosure or Sheriff’s sale. The point is, no matter where you are in the house situation, Bankruptcy allows you to walk away and owe nothing.

A new thing, in the current economy, is the question of what to do with a house. Some people find themselves current, or only a little behind, but wondering if it’s a good idea to remain tied to a mortgage for far more than the home is now worth. There is no easy answer, and this is one of those things where the time we spend in my office with a client can help them make the right decision. If a person owes $120,000.00 on a house that used to be worth the same amount, or more, then they find themselves owing the same $120,000.00 on the same house that’s now worth only $90,000.00, getting out of that upside down situation seems like a smart financial move.

Can I keep my car?

If you can pay for it, you can keep it. Likewise, if you own it, and assuming it’s not worth a ton of money, it can be “protected” by what in Bankruptcy is called an exemption.

What about my retirement account?

Will I lose any of my possessions?

In almost every case, the answer is “no.” Now, if you own an original Michaelangelo painting worth a few hundred thousand dollars, there is no exemption or “protection” for something like that. These “exemptions” generally protect almost everything that a regular person ordinarily owns. Things that rich people own, like a big fat collection of antique Rolex watches are not protected, but even a single Rolex will probably be protected. Again, we go over everything in my office to make sure you know what you have, and that is protected.

Will anyone – my landlord, my employer, my friends, my family or my neighbors find out that I filed for Bankruptcy?

Not unless you tell them, or you authorize them to run your credit report.

Will I ever be able to get credit, a credit card, or a mortgage again?

Yes. Usually, you can and should have a new credit card within a few weeks of the time your case is over – usually about 4 months from start to finish. Your credit should be good enough to do most things within about of the year from the time of your Bankruptcy discharge, and the general rule for mortgages, as noted above, is that at the point where three years have gone by since your discharge, the Bankruptcy does not count against you any more.

What is the difference between Chapter 7 and Chapter 13?

The short answer is that Chapter 13 involves up to a 5 year plan to repay a certain percentage of your debt, while Chapter 7 wipes all the debt away. It helps to realize the intention of the Bankruptcy Law in helping people overwhelmed with debt: If a person (or married couple) has too much debt, but with a little help and time can pay at least 25% of that debt back out of money left over after their allowable and regular living expenses, then the Law requires them to do just that. That re-payment plan is called a Chapter 13 Bankruptcy.

If, however, after allowable and regular living expenses, a person (or married couple) does not have enough money left over to repay at least 25% of their debt over 5 years, or otherwise only has around $120 or less, after paying those expenses each month, then the Law essentially says “you’re drowning in debt, and you’ll never get out of it, better to wipe the slate clean and give you a fresh, new start.” That wiping out of all the debt is called a Chapter 7 Bankruptcy.

For most people in Michigan, just having enough money left over to meet their living expenses is a huge problem right now. The number of people who actually have enough money coming in to formulate a re-payment plan after living expenses has been declining steadily with the recession that has plagued the national economy, overall, and Michigan’s economy in particular. The goal is to get out of debt as quickly as possible, so a Chapter 7 is always the preferred course of action. Thus, we try to qualify you for Chapter 7 Bankruptcy, but if your income is too high, or you have too much money left over at the end of the month, then you cannot qualify for the Chapter 7, and a Chapter 13 Bankruptcy will be your only Bankruptcy option.

For what it’s worth, my office is not currently handling Chapter 13 cases, but if we cannot qualify you for Chapter 7, we’re glad to make a referral to an honest, competent Chapter 13 specialist who can help you. That being said, you can bet my office will try every way possible to see if you can qualify for Chapter 7 relief!

So why would anyone want to file for Chapter 13?

If you think about what I just outlined in the previous question, it seems apparent that no one would “want” to file for Chapter 13, rather than Chapter 7. Indeed, which Chapter a person files under is not a matter of choice, but of necessity based upon their income and expenses. I guess you could say that this is one time when it really helps to be really broke. Remember, a Chapter 13 can take 5 years to complete. Only after it’s over can a person (or married couple) start to rebuild their credit.

A chapter 7, with it’s Discharge, or “fresh start” being granted approximately 4 months after someone first files, allows a person to have cleared the 3 year mark after a Bankruptcy hits their credit report for purposes of getting a new mortgage before someone in Chapter 13 is even close to being done with their case. The bottom line is, you hope to and try to qualify for a Chapter 7 “fresh start,” but if your income is too high, or you have too much money left over at the end of the month, then the only Bankruptcy help available is a long, multi-year repayment plan under Chapter 13.

What about married people filing alone?

Married people can always file individually. The real question here is whether or not it affects the non-filing spouse. If there is no joint debt, then the Bankruptcy will not affect the spouse who does not file. If, however, there is joint debt, which means debt that both parties signed for, then the one who does not file will be stuck with the whole thing. And this means that a spouse (or anyone, for that matter) who was only an authorized user on a credit card, and did not apply or otherwise sign to be responsible for it, will not be affected when the credit card holder files bankruptcy.

How does the Bankruptcy process work?

For an overview of how my office does it, see the “Bankruptcy Quick Start Guide” section of this site. In general, the process for Chapter 7 goes like this:

1. You provide the information necessary for us to create a “Bankruptcy Petition” which is filed with the Bankruptcy Court. Once filed, you are legally protected from any further creditor action against you, including phone calls.

2. About 1 month later you go to Bankruptcy Court with me for a very quick, simple and not scary hearing called a Meeting of Creditors. It usually lasts less than 5 minutes, and very few creditors, if any, show up.

3. About two to three months after that (or about three to four months from the time your Bankruptcy Petition was filed), you receive the Bankruptcy Court’s final order, discharging your debts. This is called the “Discharge.” It means that all the debt you listed and wanted to get rid of has been wiped out.

What about all the questions that I have which aren’t listed here?

See, I told you that I think FAQ are lame. Honestly, there is no way to know what questions a real person will have, or what is important (or not) to them. Every person’s situation is unique. My office will always answer all of your questions, over the phone, during regular business hours, with no pressure to “sign up” or make an appointment. Help is just a phone call away.