Those who are thinking about filing for bankruptcy in the state of Michigan might be wondering what they can expect out of the process. While bankruptcy is not a cure-all for financial problems, it is sometimes the best option. Here is some handy information about how one qualifies for and goes about filing for bankruptcy.
Some people may think that bankruptcy is a way to erase all debts, but that is simply not true. In Michigan, some debts will remain afterward, including taxes, criminal and traffic fines, back child support, most student loans and anything not specifically on the list of debts to be discharged.
In Michigan, those seeking bankruptcy must also complete a state-mandated credit counseling course within six months prior to the filing. This course requires debtors to contact their creditors to obtain a workable payment plan or seek a debt consolidation loan. After the documents are filed, taking a financial management course is also necessary.
There are two different types of bankruptcy – chapter 7, the discharging of debt while keeping a home or property not in default, and Chapter 13, a repayment plan that usually allows the debtor to keep a home, automobile and certain other property even though the loans for such properties are in default.
Michigan bankruptcy filings require extensive and often complex paperwork, including a two page petition and a list of all the debts to be discharged and property to be excluded. Deeds or titles of property owned and verification of income, expenses and financial transactions for two years prior to filing are also needed. The fee for Chapter 7 filings is $299, while Chapter 13 is $274.
Fortunately, once the paperwork is filed, the harassing phone calls from creditors can be stopped. In fact, creditors are required by law to cease contact once advised of the bankruptcy, but the court may not inform them for several weeks. To speed along this process and cease the calls, debtors should let creditors know of the filing right away and supply a case number.
Bankruptcy proceedings consist of a short meeting (called a 341 meeting) with a bankruptcy trustee. The trustee may ask clarification questions regarding financial status and the debtor is sworn under oath to answer. The debtors’ attorney and creditors may also be present.
Unless a debt or its discharge is disputed, bankruptcies don’t go to court. Creditors have 60 days after the 341 meeting to challenge any debts included. If the bankruptcy is undisputed, the process is typically finished in three to six months.
Since there are so many steps involved in filing a Michigan bankruptcy, it is recommended that those considering this debt relief option contact a local attorney that specializes in bankruptcies for further assistance. The right attorney can be an invaluable asset, protecting your property and your interests to the full extent of the law during an emotional and difficult time.