Michigan Bankruptcy Overview: Chapter 7
Chapter 7 bankruptcy is one of several debt management options that may be available to you as an individual or a business. In a Chapter 7 bankruptcy, your eligible assets are liquidated and distributed to creditors. The upside is that you receive a full debt discharge even if your creditors have not been fully paid off. Chapter 7 bankruptcy is generally used by debtors who cannot pay their debts even under an installment plan. However, you must qualify for Chapter 7 in order to pursue it as a viable means to address your debt situation. The following is a primer on Chapter 7 bankruptcy; however, to learn more about your debt relief options, contact attorney Nancy Neal Joyce today.
Filing
You must complete a court-approved credit counseling course at least six months before filing for Chapter 7 bankruptcy. You may then file in a federal bankruptcy court with appropriate jurisdiction – generally, a court located either where you live or where your assets are located. The court will decide whether or not to accept your Chapter 7 bankruptcy petition based on your income and debts. If it refuses your petition, it may dismiss it or convert it into a Chapter 13 petition. Once your application is approved, the court will issue an automatic stay that prevents your creditors from seizing your assets, filing lawsuits against you or even directly contacting you.
Exemptions
Although Chapter 7 allows your creditors to seize and sell your assets, not all of your property is subject to seizure in bankruptcy. Both state and federal law provide exemptions that allow you to either prevent creditors from seizing your assets, or to demand partial compensation for an asset seizure. State and federal exemption rules differ, and Michigan is one of several states that allow you to choose whether to apply state or federal exemptions, depending on which rules are most advantageous to you. Property subject to partial or total exemption includes your home, your vehicle, your work tools and your household appliances.
Dealing with Creditors
Most debtors have two types of creditors – secured and unsecured. A secured creditor has the right to seize a specific asset to satisfy the debt if you default (i.e., a piece of property that has been used as collateral for a loan). Your bank, for example, may have the right to seize and sell your home if you default on your mortgage payments. In a Chapter 7 bankruptcy, however, a secured creditor must obtain the permission of the bankruptcy court before it seizes your secured asset. In addition, you can ask your secured creditor to allow you to reaffirm the debt so that you can keep the asset as long as you keep up with your payments. An unsecured creditor does not have the right to seize any particular asset to satisfy its debts.
Discharge
The final result of a Chapter 7 bankruptcy proceeding is a complete discharge of your obligation to pay any of the debts included in the bankruptcy. This discharge applies even if your creditors have not been fully satisfied – they can never come at you again for any debt that has been discharged. Federal law prevents the discharge of certain debts, however. For example, you may not receive a discharge of any debt owed to a creditor who you did not list in your bankruptcy filing. Likewise, certain debts, such as debts obtained through fraud, criminal liability, or domestic support obligations, cannot be discharged in a Chapter 7 bankruptcy proceeding.
To Attain Financial Freedom, Contact Attorney Nancy Neal Joyce Now
Nancy Neal Joyce can prepare and file your bankruptcy petition, get your creditors off your back during the proceedings, secure a debt discharge, and save many of your assets. Call her Livonia, Michigan office at (734) 427-7772 to schedule an appointment for a free consultation. Ms. Joyce will work with you personally to tailor a Chapter 7 petition that is based on your personal financial needs. Contact her today to learn more about how she can help you wipe your financial slate clean and start life anew without oppressive debt.
