Bankruptcy Law

Filing for bankruptcy is not a decision that is easy to make. Pride, fear of the unknown and feelings of failure can greatly affect your choice. There is no certain way to know if bankruptcy is the right choice for you. However, if your debt is overwhelming, or you are facing foreclosure, and have tried everything else, then bankruptcy may be the best option for you and your family to start fresh.
There are two types of bankruptcy available to individuals- Chapter 7 and Chapter 13.


In a Chapter 7, most debts are discharged, meaning the debt is waived or dismissed. This is also known as “straight bankruptcy” and is the most common type of case. You must qualify to file for this type of bankruptcy by meeting a means test. Basically, if you have any ability to afford to repay a portion of your debts, you may not qualify for a Chapter 7 and have to use a Chapter 13 instead.
Over the course of your case, your available assets may be sold by the bankruptcy trustee to pay your creditors. You can keep some property, but it must qualify as exempt property.


In a Chapter 13, your debts are reorganized to allow you to make partial or full payments on your debts as determined in a repayment plan. Remaining debt is discharged at the completion of the payment plan. This type of bankruptcy is used when, after paying for the basic necessities of life, you have disposable income remaining to pay your debts. In other words, you didn’t pass the means test to qualify for a Chapter 7.
Chapter 13 is common in cases where you have mortgages or loans on your property that you want to bring current through the repayment plan so you can keep the property.


When filing bankruptcy in Michigan, you can choose to use federal property exemptions or those provided by Michigan state law. Which exemptions you choose depends which are best for your particular situation. Certain exemptions have value limits, such as your home, vehicle, wages and household goods.


While you can file a bankruptcy on your own, bankruptcy laws and rules are complex. The court does not excuse mistakes if you represent yourself- you are held to the same standards as someone who knows the laws and rules inside and out. Using an attorney can ensure that your case is handled properly, resulting in the fresh start you are working toward.

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