Reisinger Law bankruptcy and debt negotiation services
Chapter 7 Bankruptcy
Qualifying for Chapter 7
Chapter 7 is not for everyone, and not everyone qualifies for Chapter 7. The first step in determining whether you qualify for Chapter 7 is the “means test”. The means test looks at the median income by family size to determine if the person(s) filing qualify for a Chapter 7 Bankruptcy. The “means test” is regional, so persons in Michigan have a different relevant income level than persons in California or Mississippi. The numbers change every six months. Over the past eight years, the single filer income in Michigan has fluctuated between $41,000 and $53,159, and $70,000 to $ 97,970 for households of four. The current numbers are available here. The means test income number is based on “Gross Wages”. If your gross income is less than the current means number for a household of your size, chances are you will qualify for a Chapter 7 Bankruptcy. If your gross income exceeds the amount on the means test, you may still qualify for a Chapter 7 Bankruptcy.
Factors that can influence your eligibility include but are not limited to: car payments, alimony or child support payment, health insurance, taxes, child care, or verifiable above-average household expenses, such as motor vehicle expenses related to long commutes for work. If you qualify for a Chapter 7 Bankruptcy it may not be the best option for you if there is debt that can be discharged in a Chapter 13 Bankruptcy but not in a Chapter 7, such as:
A second mortgage that is unsecured
Property settlement obligation through a divorce proceeding
Condominium fees
It may also be beneficial to file a Chapter 13 Bankruptcy if you are facing substantial non-dischargeable tax debt, have filed Chapter 7 within the last 8 years, are being garnished for non-dischargeable student loan debt, or have assets which cannot be protected in a Chapter 7 Bankruptcy.
Protecting Your Assets in a Chapter 7
One of the reasons it is a good idea to hire an experienced bankruptcy attorney is to protect your assets from being sold to pay your creditors.
Without going into too great of detail, the trustee appointed to oversee your Chapter 7 Bankruptcy is effectively the representative of the creditors. His or her job is to find assets that can be used to pay the creditors. As an added incentive, the trustees are paid 25% of the first $5,000 in assets, 10% of amounts between $10,000 and $50,000, and 5% of any amount between $50,000 and $1 million. Accordingly, you can imagine that some trustees will go to great lengths to “find” assets for the creditors. In Michigan, a debtor can use Michigan exemptions or federal exemptions when filing for bankruptcy. Most often, the federal exemptions are used.
The most commonly used exemptions allow for $ 25,150 of equity in your homestead (house), $13,400 in personal items, $1,700 in jewelry, a wild card of $1,325 that can be used for anything (along with 50% of any unused homestead exemption), $4,000 of equity in a car, and up to $1 million in any qualified retirement plan. These exemptions are doubled for married couples. If property is not properly exempted, it will belong to the trustee. If you have too much equity in your home, or have property that cannot be exempted, you may want to file a Chapter 13 Bankruptcy where you can keep all of your property, provided you pay any excess equity to the creditors.
Fees
We charge $995 in attorneys fees for all Chapter 7 Bankruptcies. This includes the required credit counseling and debtor education courses, and a multi-party credit report. The court filing fee of $338 is an additional expense which can be paid in four installments after filing. If you prefer, you can add that amount to your payment and we will pay it electronically on the day of filing. We will also respond to pending lawsuits and recover garnished funds, where possible, at no additional charge. We will accompany you at your 341 meeting and make sure you have all the information you need to complete the hearing well in advance of the meeting. Every case is different, so it is impossible to mention every service we provide to our clients, if needed. Suffice it to say, we provide you with full service at an affordable set fee. We also accept time payments, and require only a $200 retainer to start our representation.
Chapter 7 Vs. Chapter 13
Chapter 7 isn’t always the best option, even if you qualify. In many cases, Chapter 13 Bankruptcies will discharge debts that Chapter 7 will not. Some of these may include:
A second mortgage that is unsecured
Property settlement obligations through a divorce proceeding
If you are facing substantial non-dischargeable tax debt
If you have too much equity in your home
If you have property that cannot be exempted
Chapter 13 Bankruptcy
About Chapter 13
Chapter 13 Bankruptcies are limited to individuals and married couples with less than $383,175 in unsecured debt, or $1,149,525 in secured debt.
The amount of money that you will pay back depends upon your disposable income. Disposable income is determined by taking your net income, minus allowable expenses, such as: mortgage or rent payments, gas and electric, phone including cell phone, car operating expenses, food, insurance, car payments, etc. Not included in the allowable deductions are current debt payments such as credit cards, student loans, and payments on luxury items such as motorcycles and RVs.
Some of the benefits of Chapter 13 Bankruptcies include the ability to catch up on mortgage deficiencies to save your home, and to strip or treat totally unsecured second mortgages as unsecured debt. For instance, if your home is worth $100,000 and your first mortgage is $110,000, you can treat your second mortgage like unsecured debt, and it will be completely discharged once you finish your Chapter 13 plan.
In addition, non-support debt resulting from a divorce can be discharged in a Chapter 13 Bankruptcy. Furthermore, since priority debt such as tax liability, penalties and support obligations must be paid in full, Chapter 13 provides a way to pay those debts while getting your other debts discharged at the end of 3 or 5 years, depending on the length of your plan.
Fees
At Reisinger Law, we charge $3,500 for Chapter 13 filings. The fee covers all services through confirmation of the plan. However, unlike Chapter 7 fees which have to be paid prior to filing, you can pay some or all of your Chapter 13 fees through the plan. As with Chapter 7’s, a $200 retainer will begin the process, and you will be required to pay the $313 filing fee to the Court.
Debt Negotiation / Settlement
With debt negotiation/settlement, Reisinger Law negotiates with creditors and/or creditor’s attorneys to lower the total amount you will have to pay, and work out a reasonable payment schedule based on parameters set by you. The specific services Reisinger Law offers, in addition to what our office charges, depends on whether there is a pending lawsuit, and the total amount owed to the creditor.
Reisinger Law has been able to negotiate $4,000 debts down to a mere $800 settlement, and debts as high as $30,000 down to $12,000. Please note that all final negotiation/settlement amounts will vary based on 1) The creditor you owe money to, 2) The amount you owe, 3) If there is already a default judgment in place and 4) If applicable, the law firm that represents the creditor.
Reisinger Law offers free consultations, to address these problems for businesses and consumers. Our pricing for these services is a Graduated Set Fee based on the amount in controversy.