Bankruptcy
MICHIGAN BANKRUPTCY LAWS -
TYPES OF
BANKRUPTCY
CHAPTER 7 OVERVIEW
Chapter 7 is the most common type of bankruptcy,
it is sometimes referred to as "liquidation
bankruptcy", or "straight bankruptcy". The basic
purpose of chapter 7 is to provide you with a
fresh start by wiping out all qualifying debts
including credit cards, medical bills,
repossession deficiencies, law suits as well as
a variety of other debts. Bankruptcy lawyers can
help with the process. In chapter 7 there is no
repayment required for most unsecured debts,
your debts are wiped out completely and
permanently. In about 99% of chapter 7 cases,
the consumer keeps all property, and eliminates
most debts. The entire process usually takes
less than 4 months to complete. After the
bankruptcy is over, the consumer may choose to
selectively pay back debts, such as debts to
family members, however repayment is not legally
required.
If you need help with the different types of
bankruptcy, please contact a Bankruptcy Lawyer
today!
THE CHAPTER 7 PROCESS
In chapter 7 the typical consumer only has one
meeting with the bankruptcy trustee. The purpose
of the meeting is to give creditors a chance to
ask questions, although it is very rare that a
creditor shows up; it is mostly handled by
attorneys. The trustee may also ask you
questions about particular items on your
petition usually focusing on assets or income.
Most meetings take only a few minutes. Some
consumers feel some level of anxiety or fear
leading up to the meeting with the bankruptcy
trustee, but there is no reason to fear the
trustee. The trustee is looking for people who
are hiding assets or trying to defraud the
system, they don't want to harass or scare the
common consumer. The meeting will take place in
an ordinary conference room, and the trustee is
not a judge; the setting is informal. After the
meeting, the first thing most people say is
"...that's it?...that was easy". Once the
meeting with the trustee is done, the only thing
left to do is keep your address current with the
court, and wait for your discharge to come in
the mail.
CHAPTER 13 OVERVIEW
Chapter 13 provides consumers with a way to
consolidate debt under federal law and repay
creditors a portion of what is owed over time.
The idea behind chapter 13 is that the consumer
makes sufficient income to pay all current
living expenses (rent, food, car, utilities,
etc.), but not enough to pay off all debts in
full or comply with creditor's demands. In
chapter 13, living expenses are paid first, and
then whatever is left over goes into the
consolidation plan. The plan is not based on
what you owe (in most cases), it is based on
your ability to repay creditors. The calculation
of your plan payments involves many variables,
but most importantly it is based on your income
and expenses. Whatever is left at the end of the
month goes into the plan, even if it only pays
creditors pennies on the dollar. Chapter 13 can
be particularly useful for consumers with assets
over the exemption amounts, or non-dischargeable
debts.
THE CHAPTER 13 PROCESS
In chapter 13, you must submit a plan in which
you set out a budget detailing your take-home
pay and monthly living expenses. Any excess
income is paid to the bankruptcy trustee who
then distributes money to creditors on a
pro-rata basis. The plan lasts for 36 to 60
months, unless your debts are fully repaid in a
shorter period of time. At the end of the
chapter 13 plan, any amounts still owing on your
unsecured debts are forgiven. Chapter 13
payments can be automatically withdrawn from
your bank account by the trustee if you choose.
MORTGAGE PROBLEMS
Another benefit of chapter 13 specifically for
homeowners is back mortgage payments can be put
into the chapter 13 plan and paid off over the
plan period, rather than all at once. So long as
you can continue to make regular post-petition
mortgage payments, the bank can't foreclose on
your house because you chose to put mortgage
arrearages into a chapter 13 plan. In fact,
chapter 13 was originally designed for this
purpose, to prevent foreclosures.
TAX DEBT INFORMATION: - Typically government
debts are not dischargeable, however there are
great benefits to putting tax debt into a
chapter 13 plan. Chapter 13 freezes interest and
penalties on taxes. This gives you a chance to
budget out a repayment plan in real dollars, the
payments you make go directly to reduce the
principle. Most people trying to repay back
taxes are fighting an uphill battle with
interest and penalties working against them, but
in chapter 13, you get a break from the
government and pay off just what you owe on the
day you filed the case.
If you need help with the different types of
bankruptcy, please contact a Bankruptcy Lawyer
today!
Michigan BANKRUPTCY LAW FOR BUSINESSES
OVERVIEW
Bankruptcy law generally works the same for
businesses as it does for individuals, with some
notable exceptions. First, incorporated entities
can not claim any exemptions. This means all the
property an incorporated business owns is
subject to administration by the bankruptcy
trustee. Second, incorporated businesses can not
file chapter 13, instead, they must file either
chapter 7 or chapter 11. The chapter 7 process
works very similarly for businesses as it does
for consumers, one helpful illustration of a
business bankruptcy is the shop-owner who simply
throws the keys on the counter one day and walks
out never to return. Of course this is just an
illustration possession of the business premises
must be maintained until that control is turned
over to the bankruptcy trustee.
If you need help with filing bankruptcy for your
business, please Contact a Lawyer who is
familiar with bankruptcy laws for businesses.
CHAPTER 11 BANKRUPTCY INFORMATION
Chapter 11 works for businesses similarly to
chapter 13 for individuals. One of the main
differences is the business owner or president
becomes the trustee in a chapter 11 called the
"debtor in possession". This carries with it a
plethora of responsibilities and duties to
maintain the business for the benefit of
creditors. Also, in chapter 11 the United States
Trustee is intimately involved in the operation
of the business until the case is complete. The
bankruptcy court takes debtor in possession
fiduciary responsibilities very seriously.
Chapter 11 is a major commitment on the part of
the business owner or president, and the
attorney involved. The complexities of chapter
11 are beyond the scope of this website, but can
be explored in a free consultation with a
bankruptcy attorney.
Experienced, Dedicated, Compassionate
E-Mail or Call 313-963-9500 • Free Consultation
McGuigan Law, PLLC
36700 Woodward Ave, Suite 209,
Bloomfield Hills, MI 48304
248-906-0457
535 Griswold Street, Suite 1650
Buhl Building
Detroit, MI 48226-3604
313-963-9500 phone
313-963-9504 fax
info@mcguiganlaw.com
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