What Happens to your Assets in Bankruptcy?
Assets in Chapter 7 Bankruptcy
In theory, when a petitioner files for Chapter 7 bankruptcy protection, the assigned trustee liquidates the petitioner’s assets to satisfy creditor claims. In practice, this rarely happens for a number of reasons. The single most common reason is that many of the petitioner’s assets fall under Michigan’s bankruptcy exemptions.
Property and asset exemptions are determined on a case-by-case basis, unique to that petitioner’s circumstances. Exemptions are available at both the Federal and State levels; Michigan state-level exemptions are generally considered much more favorable to petitioners.
The following is general list of assets where exemptions are available:
- Other personal property
Assets in Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is commonly referred to as a reorganization. Petitioners filing a Chapter 13 bankruptcy are placed on a court-monitored payment plan, for up to 60 months, to repay their debts. Chapter 13 bankruptcy protects petitioners from creditors and allows individuals to retain their real estate and personal property.
Why File Chapter 13 Bankruptcy Instead of Chapter 7 Bankruptcy?
Many clients often ask me why anyone would want to file a Chapter 13 bankruptcy as opposed to a Chapter 7, and the answer is quite simple: they don’t qualify. In order to file for Chapter 7 protection in Michigan, you must meet certain criteria. That criteria is determined by a number of factors, one being the means test. Usually, an individual seeking bankruptcy protection is unable to file under Chapter 7 protection if their income is greater than a certain level.
Speak with a Lawyer Today
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 consultation at our Troy office. It’s always best to speak with a Michigan Chapter 7 bankruptcy attorney to help determine what’s right for you.