How Much Does a Bankruptcy Cost in Michigan?

If you’re facing bankruptcy, you’re likely feeling the financial stress like a ton of bricks. Bills have piled up so high you can’t see, your wages may be getting garnished, and you feel more than stuck. In these situations, paying for a bankruptcy lawyer may seem like something you can’t afford. However, there are affordable options that offer better protection than “discount bankruptcy” companies do. In this article, we’ll break down the real costs of filing for bankruptcy, how to protect yourself throughout the process, and what you need to know about this important financial decision.

Understanding Chapter 7 vs. Chapter 13 Bankruptcies

Upon researching bankruptcy, two terms you’ve probably seen come up a lot are Chapter 7 and Chapter 13 Bankruptcy. We’ll explain both terms in this article, but we recommend scheduling a free consultation with Reinert & Reinert to understand which route may be right for your situation.

Chapter 7 Bankruptcy

Chapter 7 is frequently referred to as the “fresh start” route. It takes less time to complete than Chapter 13, and it can entirely get rid of debts like credit card bills, payday loans, medical expenses, and other unsecured debts. Not only will it rid you of this debt in just a few months, but it also ignites an automatic stay, which is a court order that blocks creditors and other debt collectors from all of the calls and collection attempts. As you can likely imagine, this provides many people a huge relief.

Chapter 13 Bankruptcy

On the contrary, Chapter 13 typically takes more time to complete, and you will still have to pay your obligations through a court-structured repayment plan. This alternative is typically used for more complex financial situations. Chapter 13 allows you to catch up over time while stopping the stress-inducing collection attempts (Chapter 13 employs an automatic stay prohibiting collection attempts, too). This bankruptcy route will come with a three to five-year repayment plan. Depending on your specific situation, you may be able to have your debt discharged or decreased. A large benefit of Chapter 13 is that it allows you to keep certain assets that Chapter 7 may not.

It’s essential to understand that some debts will not be eliminated under either bankruptcy option. These debts may include:

  • Tax and other government obligations
  • Child support
  • Alimony
  • Mortgages
  • Auto loans
  • Student loans

The Hidden Costs of Filing for Bankruptcy

Unfortunately, filing for bankruptcy does cost money. The amount you pay is often correlated with the protection and competency you receive amid the process and thereafter. This is why you should be wary of those advertising “$500 Bankruptcy Filing” offers and the likes. If it sounds too good to be true, it very likely is. A lawyer will analyze your specific situation and direct you on the best steps to take to ensure you are protected and have the means to recover after the bankruptcy has been filed. Making even one small mistake can cost you a lot more money than paying lawyer fees to ensure you get the proper outcome. Keep these things in mind as you proceed with your bankruptcy lawyer cost research:

  1. Hiring a lawyer means you have a coach on your side to ensure you make the right decisions, collect and submit the proper documentation, answer your questions along the way, and keep other important factors in check.
  2. In those low-cost bankruptcy options, often filing fees aren’t included. This means that the “$500 bankruptcy” offer isn’t the full picture. Chapter 7 petition filings cost $335 and Chapter 13 petition filing fees cost $310.
  3. In those “extremely low-cost bankruptcy filing” offers, you won’t have anyone by your side during mandatory meetings, such as the 341 meeting. Imagine showing up alone in front of all of your creditors with just a folder of documentation. Having a bankruptcy attorney with you will ensure you’re more prepared, which will lead to a much better outcome.
  4. Don’t forget about other costs you may be required to pay, including mandatory debt counseling. Not completing this course will derail your efforts, causing your bankruptcy to be dismissed, which means you’ll still owe all of your debts.
  5. You won’t miss any important steps with a lawyer. The process can be complicated, and there are quite a few steps that are crucial for your bankruptcy judgment that you do not want to miss.

If you think you can’t afford a bankruptcy attorney, remember that bankruptcy is meant to reset your financial situation. Your debts will be taken care of so that you can start fresh. If this isn’t done correctly, it could do the opposite for you and leave you potentially worse off in the long run.

How Much Can I Expect to Pay to File for Bankruptcy?

Your bankruptcy fees will, in large, depend on the size of your debt, whether you decide to file Chapter 7 or 13, the specific lawyer you choose, and other facts. The Chapter 7 bankruptcy filing cost range will be anywhere from $1,000 to $3,500, depending on the factors previously listed. Chapter 13 filings will cost anywhere from $1,800 to $6,000. Note that these are the average costs to file for bankruptcy, and you should speak with an attorney to understand his or her specific cost structure, fees, and recommendations.

Commonly, you will have to pay Chapter 7 fees upfront. At Reinert & Reinert, we offer convenient payment plans to help you navigate this cost. We also offer a $0-down payment with Chapter 13 filings.

Frequently Asked Questions about Bankruptcy Costs

In this section, we’ll cover some quick FAQs to help you navigate this stressful financial situation. If you have other questions, call us for your Free Consultation 734-722-2999

Is It Better to File a Chapter 7 or 13 Bankruptcy?

People often want a quick answer to this question, however, it really depends on your situation. Chapter 7 can erase a lot of debt for you in less time, but you may have to sacrifice some assets or property. Additionally, not everyone is eligible to file for Chapter 7. Chapter 13 allows you to retain certain assets and get on a court-structured repayment plan. However, some people don’t make enough money to justify Chapter 13. Note that both options come with an automatic stay.

Will Filing for Bankruptcy Stop the Collection Calls?

Yes, both Chapter 7 and 13 grant automatic stays, which is a court order prohibiting collectors from contacting you about your debts.

How Long Does Bankruptcy Take?

It takes an average of three to five months to go through the bankruptcy process. This may be shorter or longer depending on your circumstances, but here’s a general timeline:

  1. Initial consultation with your bankruptcy attorney
  2. File your case – You can choose when to file your bankruptcy case.
  3. Hearing – This typically happens in about 30 to 45 days following the filing of your petition.
  4. Discharge – In about two to three months following the hearing, creditors will release you from personal liability of certain, specified debts.

Consult an Experienced Michigan Bankruptcy Attorney

Call Firebaugh & Andrews  for your Free Consultation 734-722-2999

Will chapter 13 be better for my credit score then filing for chapter 11 bankruptcy?

Chapter 7 and Chapter 13 bankruptcy will stay on your credit report for the same amount of time; about ten years. Although they both have the same effect on your credit score, a particular creditor reviewing your report to decide whether to lend you money might view one chapter more favorably than the other. In particular, a creditor might be more willing to lend to you if you filed for Chapter 13 rather than Chapter 7.

Checklist: Documents To Show To Your Bankruptcy Attorney

Bankruptcy is not a simple matter with minor consequences. Rather, it may involve complex dealings with bankruptcy court and creditors. It could also have a major impact on your daily life. Filing for bankruptcy can affect your credit and property. Naturally, this is a stressful situation that you never envision yourself being in. The situation can be made easier by making the proper choices such as hiring a competent bankruptcy attorney and collecting and organizing your financial data.

When faced with credit problems and potential bankruptcy, hiring an attorney might be the answer to getting your financial life back on track. If you’re planning to contact an attorney, use the checklist below to gather the documents that the attorney will need to see to provide you with the best advice and representation. Oftentimes, people do not know where to start and what to do. This checklist will be a useful proactive tool so you can begin collecting and organizing the proper paperwork.

Financial Records

Your financial records are some of the first documents you should collect. These records will help determine which type of bankruptcy is best suited for you. For example, your financial documents can show you have regular income, meaning your best fit may be Chapter 13 bankruptcy. This may have huge implications because Chapter 13 will allow you to keep possession of your property and pay your debts over time.

  • Most recent bank statements
  • Most recent bills from every creditor
  • Most recent payment coupons for vehicles (lease or purchase), real estate, and student loans
  • Bills or invoices for purchases in the last year
  • Receipts

Legal Records

Any legal history or pending litigation involving you is information you’ll want to disclose to your attorney. Previous judgments against you show debts that will factor in to determining which bankruptcy is right according to your financial situation. In addition, any pending litigation or current court order will determine how much you can afford to pay your creditors at this time.

  • Files from previous litigation, including especially any judgments that have been entered against you
  • Files from previous attorneys
  • Any divorce decree or other court order that requires you to pay child support or maintenance

Additional Documents

The following list below is a combination of assets you own and verification of your income. A proper, thorough organization of your assets is extremely important to show you have a set income level. This income determination can be essential in proving you can repay your debts over a period of time or in proving a lack of income.

  • Canceled Checks for any expense you cannot otherwise document
  • ALL your correspondence with or regarding creditors, especially threat letter
  • ALL insurance policies
  • Tax returns for the last three years
  • Vehicle titles
  • Your lease or mortgage
  • Any promissory notes you have signed
  • Other documents relating to debts you owe other people
  • Any proof that anyone owes you money
  • Any lawsuits with which you have been served

Firebaugh & Andrews will make sure all your questions are answered, call today for a free consultation 734-722-2999

 

Chapter 7 Or Chapter 13 Bankruptcy

A New Beginning With Bankruptcy – Chapter 7 Bankruptcy

No one ever expects it to happen but everything gets out of control and you are in debt far over your income. No one wants to think about filing bankruptcy but sometimes you just don’t have a choice. Chapter 7 bankruptcy allows you to emerge from a difficult experience and start all over. Chapter 7 bankruptcy is when a debtor’s non-exempt assets are sold and the money is distributed to his creditors. If a debtor has few assets, he or she can exempt the property and obtain a fresh start and keep his or her assets.

Chapter 7 is the most common type of bankruptcy. This type of filing is most common, claiming about 65% of all bankruptcy filings. As long as the creditors have no objections, the debtor can be free of most debt within a few months.

A debtor will not lose their house or car with loans if they agree to continue to pay for these items and there is little equity. Many people are unfamiliar with this information and won’t even check into Chapter 7 bankruptcy. The only drawback to Chapter 7 is that you are unable to file bankruptcy within eight years after a previous bankruptcy discharge.

How do you file a Chapter 7 bankruptcy claim? The easiest answer to this is to contact Firebaugh & Andrews PLLC at 734-722-2999. You will speak directly with either attorney Sam Firebaugh or Roberta Andrews. They will ask you questions to make sure sure qualify. It is very important to answer all questions truthfully.

No one ever thinks they could possibly have to file bankruptcy. It is comforting to know that if things get bad enough you do have an option. It is also reassuring to know that you don’t have to lose your house or car when trying to make a new beginning.

A Way To Ease The Pain – Chapter 13 Bankruptcy

The debts have been mounting up and you are getting farther and farther behind in paying them. You want to pay them but you are not sure exactly how to get that done. Chapter 13 of the bankruptcy code allows you to do exactly that. You can pay your bills back at a lower interest rate or no interest rate at all. A Chapter 13 bankruptcy allows you to keep all of your assets. This type of bankruptcy is for those who have a regular income and can afford to pay something but not as much as they are paying out now. Chapter 13 bankruptcy gives you three to five years to finish your payment plan and discharge most of your debts even if they only receive a fraction of what you owed. During these five years, Firebaugh & Andrews, PLLC will oversee the process for both you.

A Chapter 13 bankruptcy allows the debtor to keep their property. The Court allows you to will set up a Plan of repayment based upon what you can afford to pay. There will be a written plan drawn up to protect you from collection while you are in the payment Plan. Once this plan has been written and approved the repayment process must begin in about a month of filing. The payments are normally paid to a Trustee who oversees distributing the money fairly to creditors. The creditors are bound by law to adhere to this plan and are unable to collect any other claims from the debtor. You will work with your attorney to set up a reasonable repayment plan for you.

Chapter 13 bankruptcy has a full discharge option when the debtor has completed all the required payments. This type of bankruptcy plan also allows for a repayment plan even if the creditors disagree with it. They do have the option to file an objection, but if it has been approved by the court these circumstances don’t allow them a lot of options. If you want to repay your debts but at a slower rate this is probably the way you want to go. You get out of debt and get to keep all your property.

Top 10 Bankruptcy Myths in Michigan

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

This is a common misconception that keeps people who really should file for bankruptcy from doing it.  Federal and Michigan laws provide exemptions that can protect (up to a certain value) assets, such as your house, your car, money in qualified retirement plans, household goods and clothing.  For most people, they’ll lose nothing in the bankruptcy process!

Bankruptcy Myths #2: If I file for bankruptcy, I will never again be able to buy a house or a car.

Many of our clients are able to obtain new cars after completing the bankruptcy process.  However, each lender varies in their business practices so you may need to shop around.  Lenders take other factors into account as well, such as current employment, current income, and credit history.

To purchase a new home it usually takes a bit longer.  It typically takes about two years to get a house after you file for bankruptcy.

Bankruptcy Myths #3: If you’re married, both spouses have to file for bankruptcy. 

If one spouse has a significant amount of debt in their name only, it may make sense for only one spouse to file.  However, if there are joint debts then it may be prudent 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 Myths #4: I won’t ever be able to get credit after my bankruptcy.

Many of our clients are shocked by how quickly they’ll start getting credit card offers in the mail again.  By opening a new credit card and habitually making on-time payments your credit score will quickly improve beyond pre-filing levels.  Please see our credit repair kit to view other ways to increase your credit score. We help our clients increase their credit scores through bankruptcy. It’s also important to monitor your credit score.

Bankruptcy Myths #5: People who file bankruptcy are financially irresponsible.

There are a multitude of reasons that people need to file for bankruptcy, many of which are out of their control.  Often it is because people run into very serious personal problems such as a job loss, serious 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.  It’s financially irresponsible to avoid your creditors, ignore your bills and drive yourself further into debt.  Millions of well-intentioned Americans have filed for bankruptcy and come out stronger and more successful!

Bankruptcy Myths #6: You can’t get rid of back taxes in Bankruptcy.

Certain federal, state and local taxes can be discharged under the bankruptcy laws.  There are several qualifications that must be met, but once these are met, the taxes may be discharged.

Bankruptcy Myths #7: It’s really hard to file for bankruptcy

Although there were new laws enacted in 2005, the new laws were drafted to prevent fraud and bankruptcy abuse.

Bankruptcy Myths #8: Everyone will know you have filed for bankruptcy.

It is unlikely anyone will know that you have filed for 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 in order to find out if you filed for bankruptcy.

Bankruptcy Myths #9:  You can’t afford to hire an attorney.

At Firebaugh & Andrews , initial consultations are FREE!  Money is never a reason we turn clients away.  We pride ourselves on our flexible payment plan options which can be customized to your unique circumstances.  In our experience, the worst thing a client can do is obtain legal advice from the internet, co-workers, family or friends.

Bankruptcy Myths #10: There is a minimum amount of debt required to file for bankruptcy. 

There is no minimum amount of debt required to file for bankruptcy.  Every situation is unique.

Call Firebaugh & Andrews today for your free consultation 734-722-2999