The most common form of bankruptcy in America is known as Chapter 7, also called a “Fresh Start” case. It is the most popular because it is quick, relatively easy to navigate, and often costs less than other forms of bankruptcy. In 2013, there were approximately 730,000 Chapter 7 bankruptcy cases filed all over the United States, and almost 26,000 of these were filed in the Metro Detroit area alone!!
Like all other forms of bankruptcy, just the FILING of a Chapter 7 case gets a person IMMEDIATE protection from every sort of debt collection. Some things are stopped permanently, like harassing phone calls, utility shutoffs (for old bills), most garnishments, and lawsuits of all kinds. Other collection activities, like home foreclosures and vehicle repossessions, are only stopped for a short period of time by a Chapter 7 case. IMPORTANT: For people facing home foreclosure or vehicle repossession, however, there are other very good options available to protect those items, instead of a Chapter 7 bankruptcy.
Most people who file a Chapter 7 bankruptcy keep EVERYTHING they have. The law allows people to keep clothing, furniture, jewelry, pets, retirement savings like a 401(k) or pension, and even things like homes, vehicles and cash in the bank. The key is the value of those items, and an experienced bankruptcy lawyer will guide their clients through these often-confusing rules and regulations. Our job is to know the laws and apply them as best as possible to your situation, to MAXIMIZE your protection—and to have alternatives available for you when those laws cannot protect all of your assets in a Chapter 7 bankruptcy case.
How does it work and what can we expect?
When you come into our office for the first time, an attorney will always meet with you to discuss your options. We review the income and expense situation, check out who and how much is owed, answer any questions you might have, and make some general recommendations. At Frego & Associates, that visit is FREE. All we ask of you is your time. At the end of the visit, one of our attorneys will give you a written “Plan of Action” to take home, outlining some of the issues and topics we covered that day. The costs (and our E-Z payment plan options) are included in the Plan of Action, so you can make an informed decision. After we are hired for a bankruptcy case (usually for only $100 up front), we begin preparing the case for filing.
On the final visit before filing, you pay the costs/fees that the bankruptcy court itself requires, we help you through all the requirements of the signing process, and your case is filed while you are in the office. You leave our office that day already protected from your creditors! If there is a garnishment or utility shutoff, we will fax over proof of the bankruptcy filing to STOP these collection activities ASAP, so you can keep your paycheck and get your utilities turned back on.
Most Chapter 7 cases only have one court hearing, approximately 1 month into the case. YOU ARE NEVER THERE ALONE!! Most of our clients go quickly through the Chapter 7 process, because we put so much time into them and their individual cases BEFORE they go to court. The average Chapter 7 case goes 3-4 months before you receive a “Discharge of Debts” from the Bankruptcy Court, and we allow clients to pay almost all of their attorney fees during and after the case. BEWARE OF BANKRUPTCY LAWYERS THAT REQUIRE YOU TO PAY MOST OR ALL OF YOUR ATTORNEY FEES BEFORE THE CASE IS EVEN FILED!! Many of them, once paid, have very little incentive to really help you through this challenging process.
When should I consider a Chapter 7 bankruptcy?
There is no magic formula or amount of money owed that says who should file a bankruptcy case. For instance, if a person on a fixed income of $1,400 per month has just $8,000 in medical and credit card bills, they might never be able to pay that off! When your expenses every month are almost as much as your income, it is time to start seriously considering your options. You’ve got to ask yourself…how long can I live like this? When am I going to look for a permanent financial solution? How aggressive will these creditors have to get before I finally look for someone to stop them and to protect ME and MY FAMILY?
People file Chapter 7 for help with credit card debts, medical bills, co-signed loans, debts from an old vehicle repo or home foreclosure, and even for stopping wage garnishments, stopping the “payday advance” loans, and stopping utility shutoffs.
What does Chapter 7 NOT help me with… and what can I do then?
Chapter 7 will give you little or no help in the following situations: If you are behind on house or car payments and want to keep them, if you owe income taxes or student loans, if you are behind on property taxes or State obligations of all kinds, or if your assets are just worth too much to risk in a Chapter 7 case. If this is you, do not be discouraged!! There is hope!! There are other very good options that will give you ALL of the protections of a Chapter 7 case, and deal with these tough issues as well! We’ll discuss one of these options, a Chapter 13 bankruptcy, next time!!
James Frego is the owner and managing member of Frego & Associates—The Bankruptcy Law Office, which is Michigan’s largest consumer bankruptcy law firm. It has offices in Warren, Dearborn Heights, Flint and Ann Arbor, with its practice focused primarily on helping people get the protection they need from creditors, especially through the filing of bankruptcy. To schedule a no-obligation visit with an attorney at any of our offices, please call (800) 978-4788 or visit FregoLaw.com for more information. The law is there to help you… and so are we!
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