Understanding Chapter 13 Bankruptcy

Understanding Chapter 13Many of us have heard the term “Chapter 13 Bankruptcy,” but few have a complete understanding of what this type of bankruptcy entails.  Chapter 13 bankruptcy offers debtors an opportunity to identify certain debts and negotiate a repayment plan for them with their creditors over a specific period of time.  For those seeking a manageable solution for repaying some of their overwhelming debt, Chapter 13 may be a good option. Here is what you need to know about a Chapter 13 bankruptcy:

Chapter 13 bankruptcy involves repaying debt according to a plan.  By contrast, a Chapter 7 bankruptcy involves liquidating most of the debtor’s assets to repay creditors.  Chapter 13 allows the debtor to keep their qualifying assets while repaying their creditors.  Therefore, individuals who may be interested in filing under Chapter 13 may be those who have valuable assets which they would not be able to keep under a Chapter 7 bankruptcy.  Further, those who are seeking to avoid foreclosure on their home or repossession of their vehicle and want to negotiate a way to become current on their payments may prefer a Chapter 13 filing.  Chapter 13 also provides those who are not eligible to liquidate under Chapter 7 a chance at finding relief from their debt and an opportunity to financially recover.

Under a Chapter 13 bankruptcy, a debtor proposes a repayment plan for all of their qualifying debts.  The repayment plan will be specific in terms of indicating the creditors who will be paid and in what amount.  The amount of the debtor’s repayment will depend on several key factors such as the debtor’s available disposable income, the debtor’s sources of income, and the amount proposed to be repaid to the creditors.  After this information is gathered the debtor will be able to propose a monthly payment plan.  Once the bankruptcy court approves the plan, the debtor will be required to follow its terms for three to five years.  Once the plan term is completed, the debtor is ordinarily not obligated to repay what is left of their dischargeable debts.  However, during the repayment period, any extra disposable income must be devoted to paying any unsecured debts.

One benefit of Chapter 13 is that once your debts become part of the repayment plan, they will no longer continue to accrue interest or late fees.  Therefore, the amount owed will be what is included and approved under your filing and cannot increase beyond the date the debtor files.  Additionally, there are limits on the amount of secured debt and unsecured debt a Chapter 13 debtor may have.

Consulting with an experienced bankruptcy attorney will help you in determining if a Chapter 13 bankruptcy is right for your circumstances. We have the knowledge and experience you need to help you understand bankruptcy and your options. Please contact us online or by phone if we may be of assistance.   http://bestmichiganlawyer.com/contact-us

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How to Efficiently and Effectively Prepare for Your Bankruptcy

Reaching the point when you decide you need to file for bankruptcy is no easy process.  Typically it involves a thorough evaluation of your condition and coming to terms with your financial realities.  Once the decision is made, the next step is to prepare yourself for the bankruptcy process. This process is not simple and can be overwhelming.  Fortunately, by taking specific actions to prepare before your bankruptcy begins, you can help make the process more efficient and effective.

Know Your Debts and Assets

When initially preparing to file it is important to conduct a detailed inventory of all of your debt and assets.  Bankruptcy law takes into consideration what you have and what you owe.  In some cases, there may be debt which does not qualify for bankruptcy.  Michigan, like most other states, have specific laws regarding what assets may be included in or excluded from bankruptcy.  Therefore, being aware of everything that will possibly be discharged or excluded from the bankruptcy is a critical piece of your preparatory process.

Gather Legal Documents

Gather all correspondence from your creditors.  Often those facing bankruptcies have legal actions against them for unpaid debt.  For example, if you failed to pay your credit card balance you may be facing a lawsuit from the credit card company to recover the debt.  By collecting all legal documents pertaining to creditor actions against you, you will later be in a position to communicate with your creditors regarding your debts and ensure they are correctly included in the bankruptcy.

Tax Returns

Some other key items that you will need to have ready are your tax returns.  Having at least two year’s prior tax returns will be helpful to your filing.   If you have not filed taxes, you will need to be prepared to explain why you have not.  If you have not paid some of your taxes, this will be an important area to address and consider before filing for bankruptcy.  It is also important to note that under most circumstances, unpaid tax debt will not be eligible for bankruptcy discharge.


Bankruptcy allows for certain exemptions.  What this means is that you may ask that certain assets not be considered part of the bankruptcy and remain in your possession.  For instance, in Michigan some examples of possible exemptions include your home, qualifying personal property up to a certain value, pensions, and some public benefits.  Determining the assets for which you may seek bankruptcy exemptions will help you prepare for the future.

In order to fully prepare for bankruptcy, it is critical that you consult with an experienced bankruptcy attorney who can help you ready yourself for this complicated process.  We the have experience and knowledge you need to prepare for and successfully navigate this process.  Please contact us online or by phone if we may be of assistance.  http://bestmichiganlawyer.com/contact-us

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When You Should File for Bankruptcy

Bankruptcy is a word which can conjure up a lot of different images for people.  For some, this word may bring to mind thoughts of news stories of corporate giants who have fallen into debt.  For others, bankruptcy can be synonymous with the story of an everyday person seeking a way out from under their mounting bills. For many people in severe debt, bankruptcy can offer a light at the end of the tunnel and the possibility of a financial new beginning. However, for those considering declaring bankruptcy, deciding whether or not to file, will depend on and several factors.

The first step in determining if personal bankruptcy is appropriate for you is to take a detailed assessment of your financial circumstances.  This means taking into considering all of your assets including retirement accounts, business holdings, stocks, savings accounts, vehicles, college savings accounts, and property, and comparing it with your debt.  If you find that what you owe exceeds all of your assets and you are having difficulty making the payments on your bills, bankruptcy may be an option which should be further investigated.

Next, you will need to determine if you qualify for bankruptcy.  There are three main types of bankruptcy which are commonly mentioned; Chapter 7, Chapter 11, and Chapter 13.  Which type you choose will depend on your goals and situation. However, Chapters 7, 11 and 13 bankruptcy have eligibility requirements which must be met in order to proceed.  For instance, Chapter 7 requires that the filer’s income level be below a certain threshold in order to qualify.  Chapter 13 on the other hand, places limitations on the amount of the debts themselves.  Further, depending on your situation, you may be eligible for Chapter 11 or 13 even though you cannot qualify for Chapter 7 bankruptcy relief.

Next, you will need to find out if your debt is considered “priority debt.”  What this means is that certain kinds of debt generally do not qualify to be discharged in bankruptcy.  These debts are called priority debts. Some examples of priority debts would be child support obligations, student loans, most tax debts, and money which was owed to employees of a business within 180 days of the bankruptcy filing.  If the primary debt you are seeking to relieve yourself of is priority debt, bankruptcy may not be the best solution to your situation.

Deciding to file for bankruptcy can be a difficult decision which involves taking an honest look at your situation and coming to the conclusion that you need help.  If you find that your debt has reached a point where it is no longer manageable, it may be time to consider the relief which filing for bankruptcy can bring.  However, this is not a choice which should be entered into without knowing all of the facts about bankruptcy and how it will look when applied to your circumstances.

If you are considering filing for bankruptcy, it is critical that you understand your options and obtain advice from an experienced and knowledgeable bankruptcy attorney.  We the have experience and knowledge you need and can provide you with information which will help you make informed choices about your financial future.  Please contact us online or by phone if we may be of assistance.

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