Hi, I’m Mike Greiner. I’m a bankruptcy attorney with The Financial Law Group here in Warren, Michigan. And I’m here to talk to you today about your IRAs and 401Ks as you go through bankruptcy.
One of the biggest concerns that my clients have is the fact that they might have accumulated some retirement funds in a IRA or 401K and their concerned about losing those funds, and rightfully so. That is most people’s retirement, these days so, protecting that is a very, very important part of the process. The good news is, is that IRAs and 401Ks, generally speaking, are totally protected as you go through the bankruptcy process. So, even if you have $1,000,000.00, sitting in 401K accounts, those funds are totally protected. They’re there for your retirement and your creditors cannot touch them.
The sad thing that I sometimes see is where people have taken a bunch of money out of a 401K account to pay back their creditors. Because what happens then it that you’ve essentially given your creditors access to funds that otherwise they would have no access to otherwise. I strongly urge people to think of 401K accounts as savings for retirement. It is a savings account. It is not something that you can dip into when an emergency comes up or when you need to pay a certain bill or when you need to take care of one issue. What it is, is it’s a savings for retirement. I will say that there’s one exception to my rule there and it is where people have sometimes been able to take money out of a 401K and actually buy a house.
There are some opportunities for buying houses that are very inexpensively in the current economy and I’ve had some clients that have been able to take money out of a 401K, buy a house and own it free and clear or darn near free and clear and that’s been a really good option for a lot of people. Point being, don’t take money out of your 401K to pay credit card debt. That’s a complete waste. And don’t worry about as you’re going through a bankruptcy case losing your 401K. If you want to find out more about bankruptcy or your 401K for that matter, please feel free to give me a call. My phone number is 586-693-2000. We offer free consultations and I’d be happy to meet with you personally.
Hi. I’m Mike Greiner. I’m a bankruptcy attorney here with The Financial Law Group in Warren, Michigan. Our website is financiallawgroup.com and our phone number is 586-693-2000. And I’m here to talk to you today about seizures of assets by creditors. One thing that a lot of people don’t understand is that you, if you have a vehicle and a credit card company, for example, gets a judgment against you, that credit card company with that judgment would be entitled to come and grab things like your car, for example, or other assets that you may have. The most common kinds of assets that are seized, of course, are money. Things like bank accounts can be garnished or wages that can be garnished or a state tax return which can also be garnished. But again they can have a deputy sheriff show up at your house and actually seize the asset.
One thing I recommend to my clients to do, who have that happen to them is come in and file bankruptcy immediately. By filing Chapter 7 Bankruptcy if you file fast enough you can stop them from selling the asset and a lot of the time because of the fact that it’s considered a preferential payment we can often get that asset back. But again it has to be done before the asset is actually sold. Unfortunately, a lot of the time, once it’s sold you’re out of luck and the value of that these assets get sold for often are very, very low which can be very disappointing to people where they’ve just lost something like the vehicle that they were using to get to work.
Point being, if you have lost an asset as the result of a judgment against you I strongly advise you to come see me immediately. My phone number is 586-693-2000. Let them know that it’s an emergency and I’ll be happy to meet with you personally.
Hi, I’m Mike Greiner, I’m an attorney with the Financial Law Group located here in Warren and I’m here today to talk to you about chapter 13 bankruptcy and how we’ve been able to take the second mortgage lean on people’s homes through chapter13 bankruptcy. You can contact us by the way at 586-693-2000 and our website is financiallawgroup.com. Now coming back to chapter 13 bankruptcy, something a lot of people have thought coming into my office is that they can get rid of a second mortgage through chapter 7 bankruptcy.
Mortgages actually include two elements. There is the note which is the personal liability that, that you have for the mortgage and there is the mortgage which is actually the lien that the mortgage company has on your home. The lien is the right, the property rights that the mortgage company has so that they can take back your home if you do not make your mortgage payments. The the note is just the personal liability you have. Just like a credit card. You have a note with a credit card and it’s that personal liability you have to pay that debt. The Chapter 7 bankruptcy does actually wipe out the personal liability.
So the mortgage company, although it used to not happen very often. It happened more and more frequently recently could sue you under the note, just like a credit card can to collect on that debt. They also, as a result of the mortgage, have foreclosure rights against your property. By filing Chapter 7 bankruptcy you get rid of the rights that the mortgage company has to sue you personally. They still have the rights to foreclose though. Those rights, in this day and age with the property values have declined, might be worthless because the fact that your home might be worth less than what you owe on the first mortgage, or what you owe on property taxes. If that’s the case, then once the foreclosure happens the second mortgage would get nothing. So there’s no reason for the second mortgage to foreclose. So I’ve had a lot of clients who’ve come in they’ve just filed chapter 7 bankruptcy. They’ve gotten rid of their personal liability for the second mortgage. They might not be planning on staying in the house for very long or at some point moving out, or might not know. But the bottom line is that they’re in a situation they just want to get rid of the personal liability and they don’t really care if there’s that lien sitting out there that could potentially foreclose on their house someday if the value of the first mortgage goes down base on the payments that you make. And the value of the property goes up, based upon the property value starting to bounce back. So if you’re in situation chapter 7 bankruptcy can certainly be helpful to you.
If not however then the other option is we can actually file a chapter 13 case. Now chapter 13 scares a lot of people because that’s the chapter where you pay certain payments that could go toward your creditors. A lot of my clients though actually pay nothing or very little toward their unsecured creditors, unsecured creditors would include things like credit cards and medical bills. The secured creditors would include things like your mortgages and car loans, those debts have to be paid unless you want to surrender the property.
So if you have a car loan that you want to that, that, that where you wanna keep the vehicle. You need to keep making those payments. That payment could potentially be included in chapter 13 bankruptcy. And there are certain circumstances where it can actually reduce the amount you owe on the car based upon chapter 13 bankruptcy. Although those opportunities have really been narrowed when law was changed a few years ago. Your first mortgage, either you’ll have to stay current on, or if you’re behind on it, we can get you caught up on that mortgage through chapter 13 bankruptcy. We can’t actually change the payment, on the first mortgage, but we can get you caught up on it, with no interest, over a period of time. Which often times is a better deal than you can get anywhere else. But the second mortgage, that’s the key if the property values of your home have declined, to the point where you owe more on the first mortgage then your home is worth, then there is no equity there.
In the house for a second mortgage, if that’s the case then through chapter 13 if you make all your payments on chapter 13 case, even if you pay nothing toward the second mortgage, then that second mortgage can be wiped off your home and you will never owe that second mortgage again. A lot of our clients have found that to be very helpful, and especially with the way that the mortgage companies really don’t work with people to do mortgage modifications. A lot of people have found that this is really the most effective mortgage modification out there. We have a unique opportunity now where so many people have second mortgages because of the way the mortgage industry was a few years before the crash.
Property values have declined so much because of the economic crisis we’re in. Although it’s a crisis it’s difficult for a lot of people. It’s also an opportunity. And the opportunity is that you can get rid of a second mortgage which you might not have been able to pay off for many years or ever. But you can get rid of it often with a very low payment through chapter 13 bankruptcy. If you want to find out if this will work for you give my office a call. I have free consultations. Number’s 586-693-2000 and our website is financiallawgroup.com. I’d be happy to discuss your options on this.
Hi. I’m Mike Greiner. I’m an attorney with the Financial Law Group here located in Warren and we specialize in bankruptcy law here at the financial law group. Our phone number is 586-693-2000. Our website is financiallawgroup.com. And I’m here to talk to you today about the means test for bankruptcy. A lot of people are concerned that since the change in the law a few years ago, that they might not be eligible for chapter 7 bankruptcy anymore. And what I’ve found is that most people that come into my office who are concerned about that, are actually eligible for chapter 7 bankruptcy. In fact, right before the law changed there was a big rush by people to file bankruptcy thinking that they wouldn’t be able to file bankruptcy after the law changed and really, for most of those people, they could have easily filed Chapter 7 bankruptcy.
The requirements for income for your household size are actually quite high and most people who would be eligible for chapter 7 bankruptcy because of the fact that they have a lot of debt would still be eligible for chapter 7 bankruptcy under the, under thee change in the law. The big change in the law was the means test. The means test only applies if most of your debts are related to your consumer affairs as opposed to business affairs. So if you’re a business person and you’ve accumulated a lot of debt related to your business affairs then to start with, the means test doesn’t even apply to you so you don’t even have to worry about it from that point.
Then what happens is the means test looks at the average household income for you. Your household is the total size of all the dependents that you’ve got living with you. Just because someone’s not a dependent for tax purposes doesn’t mean they’re not a dependent for bankruptcy purposes. So, say you’ve got a son or daughter who’s 25 years old, living with you. That person might not be someone you can claim on your taxes as a dependent, but may still for all practical purposes be a dependent of yours. And so, as a result, the courts have ruled that they could be dependent for bankruptcy purposes. So that also helps expand the size of your household.
Similar situation could be an elderly relative who’s living with you may only receive Social Security. Then what you do is you take a look at all the household sources of income and add them together for the last 6 months and divide that by 6. You come up with an average monthly income over the last 6 months and then that amount gets compared to the average household income for a family the size of your household in Michigan. And you should know in terms of income certain types of income are excluded from this. For example Social Security income, anything related to the Social Security Act and that includes for example unemployment compensation. Those are not considered income for the purposes of the means test. So again that could be something else that makes you eligible for the means test where you might not have thought you were eligible for it. Then if your higher than the average household income for family or size in Michigan, then you continue on. You can take certain deductions, to see if those deductions make it so your eligible. So say for example, if you have high child care costs. If you have to pay child support or alimony. If you have a higher mortgage payment, often times that can make it so you’re eligible for chapter 7 bankruptcy, where you might have been in the past. Also, you can take deductions for charitable contributions you make. If you make regular charitable contributions, to church. Say for example, a lot of my clients have tithed. And for them, that would be the type of thing that would be a deduction that you can take on the Means test.
I’ve also had clients who have union dues, or large deductions for insurance- health insurance, for example, or even disability insurance. Those would be deductions you can take. Life insurance, term life insurance would be a deduction you can take. So, you can see there are a lot of deductions that you can take that might be able to make you eligible for Chapter 7 bankruptcy, where you might not have been eligible for Chapter 7 bankruptcy in the first place.
My suggestion is come into my office. Give us a call 586-693-2000. I’ll be happy to sit down with you and look at all your sources of income. And talk with you about your situation and see if you are eligible for Chapter 7 bankruptcy. But don’t just assume. Because of the fact that if you look at the kind of income you have coming into your household that’s more than you thought would make you eligible for chapter 7 bankruptcy, don’t assume that your automatically ineligible, cause there could be ways working through the means test, that you would become eligible and certainly worth taking the time to look at.
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