There are two main types of bankruptcy discharged in Michigan: chapter 7 bankruptcy and chapter 13 bankruptcy. The act of going bankrupt refers to a legal proceeding where someone that is unable to pay their bills. Bankruptcy is a fresh financial start that is provided by our federal government.
Unpaid bills and debt can accumulate which can lead to the threat of property repossession and/or banishment of wages thus, forcing many people to look into declaring personal bankruptcy. This may seem like a workable approach but it is important to understand the two types of bankruptcy to have a basic understanding of how the process works.
With the help of a local bankruptcy attorney, Michigan residents who end up overwhelmed with debt can seek relief under the federal government’s bankruptcy laws. Below we will discuss in depth the two most common types of personal bankruptcy in Michigan: Chapter 7 and Chapter 13.
Many people are forced to file for chapter 7 bankruptcies, known as liquidation, each and every year. In chapter 7 bankruptcy, certain assets are handed over to an appointed trustee and are liquidated as payment for outstanding debts.
In chapter 7 bankruptcy it is right for debtors to keep some personal possessions or property. All other debts left are often cleared except for they cannot be discharged. After the sales of assets, creditors will receive what is available from the proceeds. Upon the discharge of a debtor, a creditor cannot make future collection attempts.
This involves debt adjustment and not liquidation assets - debtors are often permitted to keep almost all properties they own. Creditors, trustee and the court must approve the reasonable repayment plan of which the debtor must give. Any reimbursement plan needs to enable creditors to get installments that are equal to what they could have gotten amid the Chapter 7 bankruptcy.
Upon acceptance of a plan, the trustee now collects payments from the debtor - this will make sure that available funds are given to creditors. The chapter 13 bankruptcy relies on the debtor having a stable source of income, plus the capacity to clear off debt balances. Repayment plans generally runs for 3 to 5 years - creditors are not allowed to take any form of collection action against debtors during this period.
Some tips to note before considering filing for bankruptcy
Here are few facts you must consider before taking up a bankruptcy file:
- Bankruptcy allows debtors to discharge all or part of their debt. In chapter 13 bankruptcy for instance, debtors repay all or part of their debt based on a reasonable payment plan.
- Under a bankruptcy, a debtor proposes a 3-5 years repayment plan to the creditors offering to repay all or part of the debts from the debtor's future income.
- For anyone to file for bankruptcy, he/she must have a regular source of income, including other disposable income - this is crucial when applying for a payment plan.
- A personal bankruptcy is generally employed by debtors who wish to keep secured belongings or assets, like a home or car, when they have much more collateral in secured resources than they can protect with the Michigan personal bankruptcy exemptions.
If you live in Michigan, you can always get bankruptcy guide and help from a competent local bankruptcy lawyer which will make the process easier for you.
Bohikian Law Group specializes in chapter 7 and chapter 13 bankruptcies in Michigan. Contact us today to find a bankruptcy attorney that will help you in debt relief at http://www.bohikianlaw.com/ today.
No comments:
Post a Comment