Michigan Bankruptcy Overview: Chapter 13
Chapter 13 bankruptcy has helped millions of people escape the clutches of oppressive debt burdens. If you are contemplating filing for bankruptcy as either an individual or a sole proprietor of a business, Chapter 13 might be the answer you have been looking for. Keep reading to learn more about how Chapter 13 bankruptcy may be the right debt relief option for you.
The Difference between Chapter 7 and Chapter 13
Under Chapter 7, your non-exempt assets are liquidated to pay your creditors, and you receive a court-ordered discharge of your remaining debts. Under Chapter 13, there may be no need to liquidate your assets. Instead, you repay some or all of your debts under a three to five year repayment plan approved by the bankruptcy court. The advantage of the payment plan is that it will contain terms that are favorable to you such a lower interest rates. If certain conditions are met, you will receive a court-ordered discharge of any remaining debts once you have completed your payment plan. Under Chapter 7 however, all of your debts are discharged at once, rather than paid back over a period of years as with Chapter 13.
Benefits of Chapter 13 Bankruptcy
- Debtor Eligibility: Many debtors file for Chapter 13 bankruptcy because they are ineligible to file for Chapter 7 bankruptcy. Chapter 13 might be your best option if your income is high enough to disqualify you from Chapter 7 bankruptcy under the statutorily mandated Means Test. Specifically, it is important to keep in mind that you ineligible for Chapter 7 bankruptcy if your household income exceeds the average for Michigan households.
- Debt Eligibility: Some debtors choose Chapter 13 because they hold debts that are not dischargeable under Chapter 7. If you hold mostly non-dischargeable debts such as federally guaranteed student loans, the Chapter 7 discharge may be of little use to you. Chapter 13 might represent your ideal solution because it will allow you to include your non-dischargeable debts into your payment plan.
- Asset Liquidation: Another benefit of Chapter 13 bankruptcy is that it generally does not require you to liquidate your assets as long as you keep up with your payments. Although some assets are exempt from liquidation even under Chapter 7, many Chapter 7 filers are forced to liquidate most of what they own. If you wish to keep certain assets that are not considered exempt under Michigan or federal bankruptcy law (e.g., should you want to keep your home despite an oppressive mortgage), Chapter 13 may enable you to keep them.
Chapter 13 Eligibility
To file for Chapter 13, you must have a stable, regular income. Your income must include sufficient disposable income to repay your debts over the repayment period, taking into consideration your total debt burden. Your total secured and unsecured debts must not exceed the federally mandated statutory limits ($394,725 in unsecured debt and $1,184,200 for unsecured debt as of 2016). You are also required to complete a credit counseling program under the auspices of the U.S. Trustee’s Office.
The Chapter 13 Bankruptcy Procedure
Your Chapter 13 bankruptcy petition must identify all of your creditors. Your attorney will help you prepare a repayment plan and turn it in to the bankruptcy court. Although your creditors may object to the plan, ultimately it is the court that must approve or deny your petition. The court may require you to modify the terms of your payment plan before it is approved.
Contact Seasoned Michigan Bankruptcy Attorney Nancy Neal Joyce Today!
Attorney Nancy Neal Joyce is available in her Livonia, Michigan office at (734) 427-7772 to discuss your Chapter 13 options. You will speak directly with her, and your initial consultation will be free of charge. Should you decide to work with Ms. Joyce, she will personally prepare your bankruptcy petition herself rather than delegating it to a paralegal or a legal secretary. Attorney Nancy Neal Joyce is proud to offer low fees and high-quality, client-centered representation. Call her today to learn more about how she can make a difference for you.
