Resources > Bankruptcy 101
What is Bankruptcy?
Bankruptcy is a federal process that allows individuals and business to either eliminate or re-organize their debts. Individuals seeking bankruptcy protection can file under either Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is often referred to as a liquidation bankruptcy, whereby in theory the filer’s assets are liquidated by a trustee to satisfy his/her creditors. A Chapter 13 bankruptcy allows a filer to reorganize and pay back his/her outstanding debts. A Michigan bankruptcy attorney should help you decide which Chapter you should file under.
Call (248) 825-8042 today to schedule a free confidential consultation to determine whether a Chapter 7 or Chapter 13 bankruptcy is right for you. Or, contact us here. Hermiz Law serves the entire Metro-Detroit community with offices in Troy, Warren, and Detroit.
Chapter 7 Bankruptcy - Liquidation
In Michigan, debtor’s have the option to file under Chapter 7 of the U.S. Bankruptcy Code. A Chapter 7 bankruptcy is typically referred to as a liquidation bankruptcy, where the trustee liquidates the petitioner’s assets in order to satisfy their creditor's claims. However, a true liquidation rarely ever occurs, due to the property exemptions afforded my Michigan and Federal laws.
Once a Chapter 7 petition is filed, the Bankruptcy Court issues an automatic stay which immediately stops virtually all collection activities against the debtor. The Chapter 7 process usually lasts between 60-90 days.
Before a petitioner may file for Chapter 7 protection, he/she must satisfy the pre-filing bankruptcy credit counseling requirement. The credit counseling requirement may be satisfied through an on-line course. In addition, the debtor must also complete a pre-discharge course before being discharged. You should consult with a Chapter 7 bankruptcy attorney if you're considering filing.
Chapter 13 - Reorganization
Michigan debtors also have the option of filing for bankruptcy protection under Chapter 13 of the U.S. Bankruptcy Code. A Chapter 13 bankruptcy is referred to as a reorganization or a “wage earner’s” plan. This plan enables individuals that don’t qualify for Chapter 7 protection to re-organize and repay their outstanding debts over a period between 3-5 years.
The amount you pay and the repayment terms depends upon your unique situation. Your repayment plan must be approved by the bankruptcy judge and go through the assigned trustee. Your debts and amounts on those debts will be repaid according to their priority.
Once your repayment plan is complete, you will be discharged. Your discharge is conditioned upon completing a budget counseling course.
Free Consultation | Call (248) 825-8042
If you are considering bankruptcy and would like to learn more about your options, we would be glad to meet with you and review your situation during a free no obligation consultation at our Troy office.
Give us a call at (248) 825-8042 or contact us to schedule a free consultation.
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