Michigan Chapter 13 Bankruptcy Filing

Regain Financial Control with a Structured Repayment Plan

Chapter 13 of the U.S. bankruptcy code allows those going through financial hardship a road out by offering a payment plan over a period of three to five years. If you are struggling to cope or getting behind on your debt repayments and bills, bankruptcy can help you start over with a fresh outlook on your life and finances.

Very often a person is looking for a debt relief solution due to circumstances beyond their control - such as job loss, medical conditions, divorce, or the death of a spouse. While there are many alternatives to bankruptcy and it is not the best solution for everyone, learning more about the bankruptcy process from an experienced Michigan attorney can help you decide if a Chapter 13 bankruptcy is the smartest resolution for your specific situation.

Understanding Chapter 13 Bankruptcy in Michigan

Chapter 13 bankruptcy, also known as a wage earner's plan or reorganization bankruptcy, allows debtors with a regular income to propose a 3 to 5 year repayment plan for all or part of their debts. Filing for chapter 13 can help debtors save their home from foreclosure, make up missed car payments to prevent a vehicle repossession, and more.

The amount to be repaid to creditors is determined as part of Michigan's Means Test. As long as the debtor can continue making payments under the repayment plan, any remaining dischargeable debt is discharged once the plan completes in 3 to 5 years.

Asset Protection in Chapter 13 Bankruptcy

Unlike Chapter 7 where your non-exempt property may be liquidated, in a Chapter 13 bankruptcy, you keep your assets while a percentage of your future income goes towards paying off creditors in one combined payment. Your attorney works with you on your three to five-year plan, and then at a confirmation hearing, the court either approves or disapproves of the plan. The payment amount and time period depends on factors such as your income, property value, and your expenses.

Your payments will be made via a trustee who will oversee your bankruptcy case. In most cases, the trustee will allow you to set up an automatic bank draft from your bank account. Chapter 13 trustees do not check your monthly expenses or your expenditures that you make during your plan. This information would have already been noted at the time of filing, and the trustee can assume that these expenses will remain roughly the same unless you change your schedule.

Another added benefit to filing Chapter 13 bankruptcy is that many clients will experience relief from creditors contacting them regarding collection on a debt, as they will be barred from doing so. For many, this frees them from any sort of stress from creditor harassment and allows them the peace to think clearly about their lives again.

Calculating Your Chapter 13 Repayment Plan

The amount of your plan payment during a Chapter 13 bankruptcy is dependent on several factors, including:

• Your income
• Your essential expenses and disposable income
• Your debts
• Where you live and own property

In determining the disposable income you have to pay off your debts, you will be able to deduct essential expenses for items such as:

• Food
• Housing
• Utilities
• Clothing
• Taxes
• Alimony and child support
• Some education costs
• Childcare
• Healthcare

If your income is below Michigan's state median for your household size, you will not be required to calculate your monthly disposable income. Instead, you will create a repayment plan based on your budget.

Comparing Chapter 13 and Chapter 7 Bankruptcy Benefits

In addition to keeping your non-exempt property, Chapter 13 does have a number of benefits over Chapter 7.

If you have any personal loans with co-debtors, such as co-signers, creditors can typically seek to collect payments from them during a Chapter 7 bankruptcy. However, any co-debtors are protected from these collection efforts if you file for Chapter 13.

Additionally, while child and spousal support obligations cannot be fully discharged in any form of bankruptcy, they can be a part of the three to five-year plan with a Chapter 13 filing. This means you can pay these debts off over the duration of the plan.

Consult with a Trusted Michigan Chapter 13 Bankruptcy Lawyer

Here at Hensel Law Office, PLLC, I understand that struggling with your finances can be very stressful. I handle every aspect of your case, rather than ushering you through an assembly line of different attorneys for each phase of the process. You won't have to worry about having to tell your story to a multitude of legal professionals. I believe in treating every client with personal, individualized attention and care, using my knowledge and experience to help you take the necessary steps to get back on your feet.