Filing Bankruptcy In Michigan

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Michigan offers more options in their Chapter 7 bankruptcy, making it more likely to fit the needs of any given individual. However, the decision to file for bankruptcy is still an extremely important one, and should be made with the assistance of an attorney. Chapter 13 bankruptcy also offers many benefits. While they both have up sides and down sides, it is entirely based on each person's circumstances.


Michigan Bankruptcy Topics

  1. Personal Bankruptcy Options
  2. Keep Your Home: Bankruptcy and Foreclosure
  3. Michigan Exemptions to Bankruptcy Liquidation
  4. Options for Filing Bankruptcy
  5. Local Bankruptcy Courts and Trustees


Personal Bankruptcy in Michigan

For the majority of individuals who have fallen into major debt, Chapter 7 will inevitably be the choice of bankruptcy. Moreover, although Chapter 13 offers some major benefits over Chapter 7, it remains the most widely chosen.

Chapter 7 Bankruptcy

In Michigan, the median income figure used is $44,703 for an individual, $53,575 for couples, $63,339 for three person households, $76,312 for four person households, and an additional $6,900 for each addition family member. These medians are provided as the check for the government mandated 'means test.' A debtor must pass this test by being under their given median in order to qualify for any bankruptcy option. After this, Chapter 7 bankruptcy allows the debtor to drop most of their debts in exchange for the bankruptcy taking most of their possessions, except for 'exemptions,' bringing the nickname 'fresh start' bankruptcy. These possessions are liquidated to repay creditors, bringing a second nickname 'liquidation' bankruptcy.

Chapter 13 Bankruptcy

First, the debtor must also pass the means test for Chapter 13 bankruptcy. In addition a private individual can have no more than $1,010,650 in secured debts or $336,900 in unsecured debts to qualify for this form of bankruptcy. It is often called 'wage earners' bankruptcy because it is designed for those who have lost track of their finances, but still earn a regular income. A plan is created with the bankruptcy court to help the debtor organize all of his or her debts and repay them within 3 to 5 years. This 5-year limit is required by law, but may be adjusted in some cases through the bankruptcy court. The debtor is able to maintain all of their possession with this type of bankruptcy.

Filing Bankruptcy during Foreclosure

In many cases, if the debtor has a pending foreclosure, filing for either Chapter 7 or Chapter 13 bankruptcy will allow the debtor to keep their home. This is possible through the 'automatic stay' that is granted to the debtor after successfully filing for bankruptcy. The automatic stay prevents creditors from attempting to collect debts from the debtor. However, this does not work in all cases. If the foreclosure was filed before the bankruptcy, or if the creditor proves the home will lose substantial value during the bankruptcy process, they may be granted permission to continue the foreclosure.

Michigan Bankruptcy Exemptions

In the state of Michigan, debtors may claim exemptions through two schemes. One, under the state exemptions laws as well as the Federal supplemental exemptions and two, they may chose to use only the Federal exemption set:

Type of Asset(s)

Details on Applicable Exemption(s)

Homestead

Property to $3,500

Insurance

Disability, Mutual, Life, Health, and Fraternal Benefit Society

Miscellaneous

Property of business

Pensions

Firefighter's/Police Officer's, ERISA, IRA, Judges, Legislators, Probate Judges, Public School Employees, and State employees

Personal Property

Household items to $1,000, Burial plot, Clothing, Church pew, Photographs, 2 cows, 100 hens, 5 roosters, 10 sheep, 5 swine, hay, Food and fuel for 6 months, if head of household

Public Benefits

AFDC, Crime victim, Social Welfare, Unemployment, Veterans' , and Workers’ compensation benefits

Tools of Trade

to $1,000

Military gear

Michigan Bankruptcy Court Filing Options

Need Bankruptcy Advice?

Use a Bankruptcy Lawyer

Though a debtor may have little financial means during a bankruptcy, a bankruptcy lawyer may be a necessity for some. Bankruptcy lawyers are trained professionals that are able to guide debtors through all steps of a bankruptcy. They will provide support through court hearings and meetings in addition to the legal guidance.

Use a Bankruptcy Filing Service

This service is not often recommended for those who file bankruptcy. Filing services provide no legal advice. Their sole purpose is to alleviate paperwork duties from the debtor and nothing more.

File “Pro Se”

To file pro se is to file on one's own without legal guidance or other services. This method has many risks. Filing bankruptcy is not an easy process, and requires much more guidance for most. This method however may be of necessity because other options will cost the debtor money that they most likely do not have.

Courts and Michigan Bankruptcy Trustee Information

Michigan Eastern Bankruptcy Court Main Office

Street Address:

Suite 2100
211 West Fort Street
Detroit, MI 48226
Phone: 313-234-0068

Michigan Western Bankruptcy Court Main Office

Street Address:

Room 200
One Division Street, N.
Grand Rapids, Mi 49503-3132
Phone: 616-456-2693

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