Filing for Chapter 13 Bankruptcy In Michigan

Michigan led the country in unemployment in 2009, putting many of its citizens in financial trouble, trying to learn how to file bankruptcy in Michigan. Bankruptcy is not always the answer for someone having trouble paying their bills, but it is certainly one of the options that should be explored. It carries a negative consequence of damage to the filer’s credit rating for years to come and difficulty obtaining credit for a significant part of that time. However, for troubled debtors facing possible foreclosure or repossession, those consequences may be worth it.

Finding a Solution

The first step is to explore all possibilities carefully. That may include everything from credit counseling to short sales, and from budgeting to bankruptcy. If bankruptcy appears to be the best option, there are still two choices:

Chapter 7 – or liquidation, in which the debtor may be required to liquidate, or surrender, some of their property. In exchange, much, if not all, of their debts will be discharged. Only those whose income is low enough to meet the “means” test are eligible for this option.

Chapter 13 – or reorganization, in which the debtor devises a plan to pay off their debts over a three- to five-year period, in some cases at reduced rates. At the end of that plan, many of their remaining debts will be discharged, as well.

Following the Plan

For those who chose chapter 13 bankruptcy, the process begins with a court-imposed stay, or hold, on all debt collection efforts by their creditors that lasts the life of the bankruptcy. While a creditor may petition the court to lift the stay, it is at the court’s discretion whether they comply or not. The process then includes a number of very precise steps:

Credit counseling is required for everyone who files bankruptcy before their petition is accepted. This counseling must be completed through an agency approved by the United States Trustee’s office.

A repayment plan must be formulated and submitted to the bankruptcy trustee within 15 days of the filing. The plan allows the filer to pay off their debts in a three- to five-year period, often at reduced rates. Those debts must be paid in their order of importance, including priority debts such as tax debts and support payments, then secure debts, and finally unsecured debts. Those that remain at the end of the payment schedule, other than secured debts, may be discharged.

The bankruptcy trustee calls a meeting of the creditors and the debtor to explain the repayment plan and answer any questions the creditors may have.

The court either accepts the plan or orders modifications, finally instituting the plan by court order.

The debtor completes a budget counseling class at an approved agency.

If any secured debt amounts remain, the debtor continues to make those payments regularly with their additional assets to avoid repossession or foreclosure.

Getting Legal Help with Chapter 13 Bankruptcy in Michigan

While there are a number of steps to this type of bankruptcy process, there are a many benefits that cannot be realized and some pitfalls that cannot be avoided without the guidance of an experienced bankruptcy lawyer. Most are committed to standing with their clients and helping them get back on solid financial footing for a better future.

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