File Bankruptcy And Keep Your Car

Do you even want to keep your car?

Before we figure out if you can keep your car, you need to determine if you even want to keep it. Bankruptcy gives you a fresh start and you can get out of bad decisions like that high interest car payment in to which you rolled negative equity. If you car is worth far less than what you owe, maybe it’s time to give it back to the creditor and walk away from. Bankruptcy is a great way to get out of a car loan and you not owe the lender a dime.

You can file for bankruptcy and keep your car. 

When you file for bankruptcy, you must list all of the property you own. This includes your car. But just because you own a car, that doesn’t make it an asset. An asset has value. If your car is worth less than what you owe, then your car is not an asset. You can value your car at the NADA website. A Chapter 7 Trustee is not going to seize your car and sell it to give all the money to the secured lender. If your car is worth less than what you owe, you can keep it if you want.

If you car is worth more than what you owe, it is an asset. Assets are protected by using bankruptcy exemptions. Federal bankruptcy exemptions currently allow you to have up to $3,775 in equity in your car. If your equity exceeds that, you can use up to $1,250 of the wildcard exemption plus $11,850 of any unused homestead. Don’t worry, it’s not as complicated as it appears at first. The bottom line is virtually all of my clients that want to keep their cars can. We will let you know if you don’t have enough exemptions to cover all of your property before you file your Chapter 7.

Reaffirming your loan.

If you have a loan, most lenders will require that you reaffirm the debt. A reaffirmation agreement reinstates the original loan contract. By signing a reaffirmation agreement, you agree to assume the personal liability that your bankruptcy would otherwise discharge. If you fail to make your payments after your Chapter 7 is final, your car will be repossessed and you will likely be sued for the deficiency. Once the reaffirmation agreement is signed, you are back on the hook for the loan.

Have more questions? Give us a call at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.

Chapter 7 Bankruptcy Eligibility

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Chapter 7 Bankruptcy

Most people I speak with want to file a Chapter 7 Bankruptcy which discharges debt without a payment plan. It’s a fairly fast and inexpensive way to shed debt and get a fresh start. In most cases, it takes about three or four months from filing to finish and a lot of this time is spent waiting for the discharge order to come in the mail. 

Eligibility for consumer bankruptcy filers is initially determined by how much money is earned in the household. For a single filer (as of November 2016), if you are under $46,501 annually, you are eligible. For a house hold size of two, it is $56,651. Add a kid and its $67,342. If you have twins, the median income for a household size of four is $81,951. Add $8,400 for each additional person. To figure out your income, we will need your last six months of pay stubs and proof of all other income. If your income is less than the median income for your household size you can file a Chapter 7. 

Chapter 7 Means Test

If your income for your household size is greater than your median income level, it does not automatically mean that you have to file a Chapter 13. Instead,  you will do what is called the “means test.” This allows you to deduct certain expenses from your gross wages to get you under the median income. If you have enough deductions, you  can file a Chapter 7. If not, then you will need to file a Chapter 13.

I would like to stress that not every bankruptcy lawyer knows how to do the means test properly. If you are over income and would like to file a Chapter 7, it is critical that your lawyer knows exactly how to deduct every allowable expense. 

Any questions? Give us a call at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.

Top Three Michigan Probate Myths

Three Michigan Probate Myths Explained

There are a lot of myths and misunderstandings about probate in Michigan. I have heard them all and, while there is a grain in truth in some, they are rarely correct. These are the top three myths about probate that I hear all the time.

1. Wills avoid probate.

Nope. It’s the opposite. Wills guarantee probate. Consider a Last Will and Testament as an instruction letter to the Probate Court as to whom inherits your stuff. A Will also allows you to name who will be in charge of carrying out your final wishes (Personal Representative) and also allow you to name someone to care for your minor children (Guardian nomination). Every adult should have one.

2. Probate takes most of the assets

This isn’t true at all but there is a grain of truth. Probate Court charges a fee to open an Estate which is currently $150.00. At some point, the Personal Representative will file an Inventory listing all the property in the estate that needs to be administered. The Court charges a percentage of the value based on the inventory but it’s not very much at all. There are inventory calculators to quickly figure out the inventory filing fee. For example, an Estate valued at $500,000 will have a inventory fee of $863. That’s less than 1%.  It’s actually .00173 which is much less than the dreaded, and incorrect, belief the Probate Court takes everything.

3. If you die without a Will, the State of Michigan takes everything.

This is also not true. If you die without a Will, then the State of Michigan has a default inheritance distribution plan that does not put Michigan at the top of the list. Basically, everything goes, in order of survivors, to your spouse, children, parents, siblings, etc. The State of Michigan will only receive property if there are no living family members which is quite rare.

Any questions? Give us a call at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.

Picking The Personal Representative In Michigan

 

Pick Personal Representative

What is a Personal Representative?

The personal representative in Michigan, also known as an executor, is the person qualified by the probate court to administer the estate of a decedent. The personal representative hires the probate lawyer, signs all probate court documents, gathers assets, pays final bills, files final tax returns, and distributes any inheritance or property to the heirs and devisees. Think of the personal representative as the CEO of a business.

Who gets to be the Personal Representative?

Michigan’s probate code has a batting order for picking the Personal Representative. From first to last it starts with:

  • The person named in the decedent’s Will as the executor
  • The decedent’s surviving spouse if also receiving property in the Will
  • Any person who is to inherit property
  • The decedent’s surviving spouse
  • Any other heir
  • Someone nominated by a creditor of the decedent
  • A public administrator appointed by the court if there is no one else to do it

Do you have to serve as a Personal Representative?

Nope. You can decline and the person with the next highest priority will serve.

What if I don’t have priority?

You can serve as Personal Representative only if every single person with greater or equal priority agrees in writing. Please note, probate is driven by court approved court forms. I am not suggesting they can write a letter. It has to be on the right form and filed properly with the court.

Have more questions? Call us at 313-291-0240.

Chris McAvoy is a  Michigan attorney who helps people with bankruptcy, family law, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor,  Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City,  Canton and the Downriver, Michigan area.