Disclaimer: Laws change, so consult attorney for updates.
Bankruptcy is a way to regain control of your finances in a largely predictable manner. If you chose to file bankruptcy there are two different ways most people use: Chapter 7 and Chapter 13. They are more related than different. They both list property you can keep and debts you must repay. In both you list a budget and answer a slew of financial questions. After both are completed, you often receive a discharge from most unpaid debt, even if you don't pay anything to your unsecured creditors in most cases. You oftentimes will not lose any property in either chapter.
starts with a counseling course. Actually, usually most people start by talking to an attorney. Congress, in 2005, however, wanted everyone contemplating bankruptcy to finish a course examining their budget. These courses are as cheap as $8 and expensive as $100 and are pretty much the same no matter which one you choose. They examine your income and expenses and point out areas that you might be spending too much and give ideas on how to tighten your belt on these expenses. The courses can be done on the internet (cheapest), on the phone or in person (most expensive).
continues with preparation of documents with your attorney. Van Epps has you bring in the following to help prepare the documents:
- real estate documents (certain pages of the recorded mortgages and deed that are stamped by the register of deeds)
- titles for cars that are secured and licensed
- bank accounts for six months
- pay stubs for six months
- tax returns for three years
- information about your pension, IRA or retirement and life insurance
- your bills (including debts you still want to pay).
During your meeting you will answer questions about what you own, what you spend your income on, which creditors have been suing you or trying to garnishee your wages or bank accounts. There is a lot of advise given during this meeting as well, only some of which can be mentioned here. For instance:
- If you owe the bank or credit union money, take out your savings before your file and put them in a new bank or credit union otherwise it may be frozen or lost.
- Do not transfer any property out of your name to avoid losing it in bankruptcy, as oftentimes this will have the opposite result and your transferee will lose it to your bankruptcy case.
- You cannot pay money to relatives in the year before you file without risking that the court will come after your relative for a return of that money.
You will then sign your papers in numerous places, after you have thoroughly reviewed them. When you sign you are not only putting your reputation on the line, you are subjecting yourself to penalties if you are wrong.
To help ease the stress of considering your options, we offer a free 15 minute consultation. Call Van Epps & Van Epps today at (989) 723-6777, or complete the contact form provided on this site to arrange for your free consultation.