Chapter 7 Bankruptcy

Michigan Chapter 7 Bankruptcy Attorney

The prospect of filing for bankruptcy can be an overwhelming and intimidating one. It is difficult to contemplate losing some of your most cherished possessions to the bankruptcy process, or being forced to share your paycheck with creditors. It is important to know, however, that there are many options available to you in resolving your debts and moving on with your life, depending on your income and assets and what is most important to you. East Lansing bankruptcy lawyer Steven M. Feigelson has years of experience dealing with bankruptcy in Michigan, and knows how to help his clients determine what process will work best for them.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is also referred to as “liquidation,” and it is the most common form of bankruptcy filed. For many it offers a fresh start, because once debts are discharged through the Chapter 7 process, creditors are permanently prohibited from attempting to recover them. Chapter 7 bankruptcy can be used to discharge many different forms of debt, including credit card debt, medical debt, personal loan debt, or money owed on an automobile or home. However, Chapter 7 cannot be used to discharge student loans, alimony owed, or debts from certain taxes.

Qualifying for Chapter 7

Chapter 7 bankruptcy is not available to all individuals. Rather, under the 2005 Bankruptcy Act Means Test, in most circumstances your income must fall below the median income for Michigan in order to qualify. You may still qualify for Chapter 7 when your income is above the median if you can show that you would be unable to pay at least $6,000 over the next year toward your debts. You also cannot file for Chapter 7 bankruptcy if you have previously done so within the last eight years.

The Chapter 7 Process

As with Chapter 13 bankruptcy, Chapter 7 requires an individual to first get all of their necessary financial documentation in order, including proof of income, expenses, debts owed, and any assets owned. These documents will be used to determine what property you have that can be liquidated to satisfy debts that you owe. However, much of your property may be exempt from liquidation under Michigan’s bankruptcy exemption statutes. Under these statutes you are allowed to keep certain assets even during bankruptcy, including:

  • Real property in the form of a home or lot up to $30,000
  • Life or health insurance benefits
  • Pensions
  • Household goods up to $3,525
  • Clothing
  • Public Benefits
  • Automobile up to $3,250

After you file a bankruptcy petition disclosing your assets and those you believe are exempt from bankruptcy proceedings, your bankruptcy case will be assigned a trustee. The trustee will evaluate all of your paperwork and call a meeting of your creditors, which is called a Section 341 meeting. These meetings are typically very short and rarely contested by creditors. Any property you have that is not exempt will be possessed by the trustee and sold to pay creditors. If after 60 days, neither a trustee nor creditor has challenged your bankruptcy petition, the court will discharge your debts within three to six months.

The Advantages of Chapter 7 Bankruptcy

Chapter 7 bankruptcy can be a good option for you if you are interested in discharging your debts as quickly as possible. Unlike Chapter 13 bankruptcy, where a payment plan will have to be established, Chapter 7 allows you to start fresh after as little as three to six months. However, Chapter 7 will require the selling of any property or assets that are not exempt from bankruptcy, so it is best if you have little or no property beyond basic necessities, and relatively low income.

Guiding You Through Chapter 7

If you or a loved one are considering bankruptcy, it is important to find a qualified bankruptcy lawyer who can help you weigh your options and determine the best plan for your needs. Michigan bankruptcy attorney Steven M. Feigelson understands the stress and confusion that can accompany the bankruptcy process, and is dedicated to providing his clients with legal advice that is as straight-forward and efficient as possible, and that will allow you to move on with your life. For more information about your bankruptcy options or to schedule an initial consultation, contact us at 517-333-3373 or online. We are dedicated to serving clients throughout the Lansing area and surrounding communities, including Jackson, Dewitt, and St. Johns.

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