Bankruptcy Process

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Steps In The Bankruptcy Process

Since bankruptcy law is mostly federal, a Michigan bankruptcy filing is essentially the same as filing in other states.

Consultation With An Attorney

Personal bankruptcy comes in two forms – Chapter 7 and Chapter 13. The differences can be important. Before proceeding, you’ll want to speak with an attorney to understand what kind of bankruptcy is right for you.

Chapter 7 or Chapter 13 Bankruptcy

A Chapter 7 bankruptcy has a lot of advantages. It is generally quick and easy and may be completed within just a few months. You don’t have to pay off your creditors and can keep your essential properties for day-to-day living. On the other hand, you will have to give up virtually all of your luxuries and house or car if you’ve been behind on your payments. There is no option under Chapter 7 to catch up on those delinquent payments.

Under Chapter 13, you will have to repay some or all of what you owe, but the court will give you a three- or five-year repayment plan. Because you’re engaging in that repayment process, you can keep your property and prevent foreclosure on your home and repossession of your car. In fact, if you have a debt that you have tried to work out a payment plan on with an uncooperative creditor, you can use Chapter 13 to force them into accepting a payment plan. The disadvantage is that the payment plan on your debts may be more than you can afford.

Fill Out Necessary Forms

Your attorney will help you with the following steps, including legal documents you may need to fill out.

  • Look at Chapters 7 and 13 to see which is better for you
  • Make sure that bankruptcy will clear the debt you need to get rid of
  • Find out what property you can keep
  • Make sure you qualify – if you have never filed before, you do
  • Consult with a Michigan bankruptcy attorney

Your attorney will guide you through the process. You will need to gather all your financial documents and be careful!  Anything left out now will not be discharged in your bankruptcy.

Automatic Stay

During the bankruptcy process, an automatic stay is often filed to protect you from creditors by halting further debt collection on their part.

Take note of certain exemptions to bankruptcy. You can use state or federal exemptions to keep some of your property. If spouses file together, they can double some of the exemptions. COVID-19 payments may be exempt as well. Your Michigan bankruptcy attorney will be able to guide you in choosing the better option for you.

Michigan provides a homestead exemption to protect $40,475 in residence equity; this increases to $60,725 for seniors and the disabled. This exemption can’t be doubled for spouses. Likewise, you can protect equity of up to $3,725 in a vehicle. Nearly all retirement accounts are fully protected. Michigan also allows for personal property exemptions:

  • Burial plots
  • Certain unpaid wages
  • Family pictures
  • Clothing – but not furs
  • Prescribed health aids like wheelchairs
  • Six-month supply of food and fuel
  • Household goods up to $4,050 in value but no item that exceeds $625 in value
  • Computers and pets up to $700 each
  • Tools of the trade up to $2,700
  • Certain public benefits, including worker’s comp and unemployment comp
  • Insurance benefits

Confirmation Hearing

Attend the required creditor’s meeting, also referred to as the confirmation hearing. Stop paying any discharged debts. Go to your confirmation hearing and make any payments required (in Chapter 13).

Credit Counseling

Most individuals who file for bankruptcy take a credit counseling course. You will learn how to balance a budget and manage finances. Then, you’ll file your certificate.

Final Discharge of Debts

Next, you’ll receive your debt discharge. Bankruptcy will discharge – get rid of – most of your unsecured debt. Things like mortgages and car payments are secured by the property you are buying, and you can’t discharge those debts unless you return the property. But you can’t get rid of things like tax debt, child support payments, and most student loans.

Consult a Michigan Bankruptcy Attorney Today

As you can see, bankruptcy is complicated. An experienced and knowledgeable Michigan bankruptcy attorney can help you through this complicated process. Contact us to get started today!

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