Bankruptcy Process in Michigan
Team Up With a Wayne County Bankruptcy Lawyer for Help
If you are considering filing for bankruptcy, it is imperative to be informed on the process. Bankruptcy can take time and involves several important steps. In order to ensure accuracy, it is necessary to have a skilled Wayne County bankruptcy lawyer by your side throughout the process. The first three things you must do to start the process are:
- Complete a credit counseling course
- Fill out a bankruptcy petition and any other forms required by the court
- File the documents with the proper Michigan bankruptcy court
The process for filing for bankruptcy is similar in all states because the procedure is regulated by federal law. There are Michigan-specific steps; however, that require certain details for your forms. Also, the exemptions available in your bankruptcy are based on the specific laws in Michigan. The process of bankruptcy will depend on which Chapter you choose to file for. For all chapters, you will have to complete the credit counseling within six months before you file. After your petition and documents are filed with the court, you will have a bankruptcy means test performed. This involves analyzing your income and expenses in or to determine if you can repay any or all of your debts.
Means Test to Determine Chapter 7 vs. Chapter 13
The step of the bankruptcy process requiring a means test is important because it determines which Chapter you are eligible to file for. The test will look at your average income over a six month span. If your income is below the median for the state of Michigan, you may be eligible to file for a Chapter 7 bankruptcy. If your income is above the median, the test will then take into account your expenses and come up with a disposable income. After deducting your expenses from your average income, there will be a determination if you would be able to repay any or all of your debts. If it appears that your disposable income will not cover debt repayment, you may still qualify for a Chapter 7. If the test reveals that you are able to repay debts, you may not qualify and instead file for a
Chapter 13 bankruptcy.
Moving forward after the means test, you will need to gather all the necessary paperwork. Documents are required to verify your expenses, debts, property, taxes, deeds, loans and everything else involved in your finances. After you have all the information required, you should look into which property is exempt in the state of Michigan. Exemptions often effect the decision of which Chapter to file for. In a Chapter 13 bankruptcy, your property is generally safe because you will be repaying your debts. In a Chapter 7 bankruptcy; however, some of your property may be liquidated in order to repay your creditors. For this reason, people may choose to file for Chapter 13 even if they qualify for a Chapter 7 bankruptcy. Chapter 7 bankruptcy involves discharging the debts you cannot pay for but in turn, you may lose some property.
Filing for Chapter 13 in Michigan
The process of filing for Chapter 13 bankruptcy often takes longer than the Chapter 7. Your debts are not necessarily discharged so you may have to submit a proposed repayment plan for your debts. The plan will be reviewed by the parties involved and it must pass three tests:
- The plan is delivered in good faith
- The unsecured creditors need to be paid as least as much as they would receive if a Chapter 7 bankruptcy was filed. This may be the value of your non-exempt property because in Chapter 7 they would generally receive the money from your liquidated non-exempt property.
- The disposable income in your case must be paid in the plan for at least three years. If necessary, the plan may be as long as five years.
Automatic Stay in Bankruptcy
After this part of the process is complete and the paperwork is filed, an automatic stay will come into effect. This will halt all creditor collection activities, including calls or claims against you. If there is a foreclosure proceeding in place, it will also be stopped. During this time, the bankruptcy trustee will take control of your debts and property that is not exempt in Michigan. The trustee will deal with creditors and see that they are repaid the accurate amount. This person will also review your paperwork to make sure it is all forthcoming and accurate. There will then be meetings with the creditors that usually only lasts a few minutes and all parties will review the plan. If you are filing for a Chapter 13, there will be a hearing wherein the judge will either confirm or deny the plan. If confirmed, you will follow the plan and move forward.
Looking for a lawyer for your bankruptcy in Wayne County?
If you need assistance through the bankruptcy process, do not hesitate to contact a Wayne County bankruptcy lawyer from our firm. We have more than 50 years of combined experience assisting the residents of Wayne County in their bankruptcies. Our firm offers a free case evaluation as well, so you are able to ask questions and discuss your situation with a skilled lawyer at no cost to you! Need an attorney for your bankruptcy in Wayne County, MI? Contact a Wayne County bankruptcy attorney today for help in your bankruptcy case!