Bankruptcy Process In Michigan – Get To know The Laws
Residents of Michigan who are facing debt can obtain relief under the federal bankruptcy laws. Chapter 7 and chapter 13 are two main types of bankruptcy outlined by the US code that halt creditors and help you to protect your exempt property.
The Federal Bankruptcy Process in Michigan
It is mandatory for all individual debtors to complete a credit counseling course within six months before filing for bankruptcy, and to go through a financial management course within 45 of filing bankruptcy.
If you want to file a bankruptcy under chapter 7 you need to qualify the Michigan “Means Test”. Basically the bankruptcy court will see your average income for 6 months before filing for bankruptcy and compare this income with Michigan median income. If your income is below the median income you are free to choose chapter 7. But if your income is over the median income then you need to complete the means test by calculating your income and expense information and the test will determine if you can fill for chapter 7 or you must file chapter 13.
Initially you need to show your attorney your current income sources, your expenses, debts, property. The other information you need to collect is your major financial transactions for the last 2 yrs, documents for any loan etc. Once you have all this information you should go through Michigan exemptions.
These are the exemptions or the properties you can protect from your creditors and hence you can keep this property with you and you have the option to use the federal exemption also in addition to your Michigan exemptions. Thus through this exemptions you can keep a certain amount of your assets safe with you in bankruptcy. The exemptions work differently on whether you are filing for chapter 7 or chapter 13 bankruptcies. Sometimes it protects the entire value of your asset or sometimes it protects up to a certain dollar amount of an asset. To keep non exempt property, a debtor must generally pay the trustee the value of the non-exempt property.
The amount of property you can exempt depends on which state’s exemption laws are you using. There are also federal non bankruptcy exemptions but you cannot combine federal non bankruptcy with non bankruptcy exemptions.
Your attorney will fill out the required Bankruptcy forms using the information provided by you. These forms include information regarding where you live, your assets (any property you have such as bank accounts, books, vehicles, etc), your income and expenses, and who you owe money to. At your signing appointment you and your attorney will review these documents to make sure everything is correct, you will sign them, and the attorney will file them with the court.
Chapter 7 or 13 which one to select :
A repayment plan needs to be submitted if you all filing under chapter 13 bankruptcy. And the plan should be delivered in good faith. Generally these payments will be withdrawn directly from your wages. A bankruptcy judge who will either confirm or deny the repayment plan. If your plan is confirmed the dischargeable debts that you need to pay will be eliminated. Chapter 7 and chapter 13 bankruptcy filing have its own advantages and disadvantages which your attorney will discuss with you.
As soon as you file for bankruptcy an automatic stay goes into effect which prevents creditors from any foreclosure proceedings, garnishments, or filing any lawsuits against you. After filing a trustee will be appointed to you by the court. The trustee will go through all your papers and, in a chapter 13, will ensure that the creditors are paid as much as is fair and can challenge any element of your case. The trustee calls a meeting nearly a month after filing. This meeting – called the 341 Meeting of Creditors – is a short hearing with you, your attorney, and the Trustee. The Trustee makes sure you are who you are, the assets listed are all the assets you have, that your social security number is correct, and that you did sign your bankruptcy papers.