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During these
difficult economic times, it is oftentimes very hard to keep
sanity in your life. Bankruptcy is an option to help
you alleviate the stress and aggravation of creditors
seeking their money.
There are essentially two
types of consumer bankruptcy cases: Chapter 7 &
Chapter 13.
Chapter 7 Bankruptcy
The goal of a Chapter 7
bankruptcy case is to give you a "fresh start" in life by
discharging most of your debts and allowing you to retain
most (and oftentimes all) of your property. An order of
discharge relieves you of all personal liability on any
debts dischargeable under the Bankruptcy Code and prevents
your creditors from trying to collect discharged debts.
Stopping Your Creditors-The Automatic Stay
Once the bankruptcy
petition is filed, you, your exempt property, and property
of the bankruptcy estate are all protected by the automatic
stay provisions of the Bankruptcy Code. The automatic stay stops the pressure
you feel from your creditors because it stops all collection
efforts, all harassment, and all foreclosure actions.
The automatic stay
prohibits your creditors from trying to collect your pre-petition debts.
A creditor who
knowingly violates the stay may be held in contempt of court
and required to pay your attorney fees.
Your Court Appearance-The Meeting of the
Creditors
Between 20 and 40 days after your case is
filed, you will be required to attend a meeting of the
creditors at the Bankruptcy Court. All creditors that
you have listed on your petition will be notified of the
meeting. Your creditors will have the opportunity to
present reasons why their debts should not be discharged.
However, in the routine case, your creditors seldom appear.
You are required to bring to the meeting a government issued
photo ID such as your driver's license or passport and your
social security card. If you own a house, you are
required to bring a copy of your deed and your most recent
mortgage statement. The Bankruptcy Trustee is not
allowed to hold the meeting without these documents.
Plan on spending a few hours at the courthouse, although the
actual meeting will only last approximately 10 minutes.
We will give you detailed instructions on how to prepare for
the meeting.
What
you can keep-Exempt Property
Most people will not lose
anything. The Bankruptcy Code (and Michigan state law)
provide generous exemptions that allow you to keep most or
all of your property. Generally, up to a certain
value, the Bankruptcy Code lets you keep your home, a car,
your interest in retirement plans, and household goods
including clothing, furniture, appliances, and the like.
If you have other property that you want to keep, you can
reaffirm certain debts that will survive the general
discharge.
Your "Fresh Start"
In the end, most individuals are discharged
of their debts within 90 days. This means that you do
not need to pay these debts and your creditors will be off
your back.
Chapter 7 Bankruptcy is a viable option for
many individuals. If you are considering filing for
bankruptcy, you have to look at the economics of your
decision. Do you need the relief that a fresh start
would provide? Are the phone calls and letters from
you creditors overwhelming you? Are you prepared for
the limitations on your credit that filing for bankruptcy
would create? In the end, it is a financial decision.
If you feel bankruptcy is an option for you, please contact
us for a free evaluation of your case.
Chapter 13
Bankruptcy
Many people use
Chapter 13 to save their homes from foreclosure or their
cars from repossession. If you are behind on your
mortgage and car payments, Chapter 13 can stop a foreclosure
or repossession. Under Chapter 13 of
the Bankruptcy Code, you may pay your creditors in installments over a period as long as
five years. If you have net monthly income in excess
of the state median family income, the plan must provide for
a five-year payment period. You must make these payments out
of your future income directly to the Chapter 13 trustee,
who will then disburse the money to your creditors entitled
to receive it under the plan. If you comply with the
provisions of the plan, you may retain most, if not all, of
your property and will be granted a discharge of most of
your indebtedness.
Chapter 13 Bankruptcy is similar to debt consolidation
(oftentimes offered by "non-profit" entities) except under
Chapter 13, your plan has real teeth, so to speak.
Using a debt consolidation company, if your creditor refuses
to reduce or negotiate a debt, there is no real recourse.
Your interest still accrues and your total debt may keep
growing. Under Chapter 13, the Bankruptcy Court
approves a new interest-free plan for repayment.
In
the end, if you comply with the terms of the plan, you are
relieved from liability for the remainder of your
dischargeable debts. Whether Chapter 13 makes sense
for you or not requires careful consideration with the help
of a skilled bankruptcy attorney. For more information
about how bankruptcy could help you, visit
www.michiganbankruptcycenter.net. For a free
evaluation of your case, please contact us.
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