If you’re struggling under the weight of crushing debt in Adrian, Michigan, it’s time to consider whether bankruptcy is right for you. Depending on your circumstances, bankruptcy may afford you financial relief by allowing you to restructure your finances or get a fresh start. You should not make this decision lightly. Instead, you can turn to the bankruptcy lawyers at Marrs & Terry for advice. We can evaluate your situation and help you develop a legal strategy to resolve your debts.
Ready to take the first step on the path of financial health and a debt-free life? Contact a bankruptcy attorney at Marrs & Terry today for an initial case review to discuss whether filing for bankruptcy is right for you.
Understanding Bankruptcy
Federal bankruptcy law allows people with unmanageable debts to resolve those debts through a court-supervised process. Depending on which chapter they file under, a debtor may liquidate (sell) assets to pay down debts or create a repayment plan to repay creditors over time. Bankruptcy gives financially struggling individuals a fresh start. It also ensures that at least some creditors receive some payment on owed debts, although how much they receive depends on the situation.
Bankruptcy is not a magic wand that will resolve all of a debtor’s problems. Rather, it has long-term consequences that should be carefully considered before filing. A bankruptcy filing will remain on a debtor’s credit report for several years, which can hurt their credit score. However, the fresh start afforded by bankruptcy can enable people to rebuild their credit scores and finances.
The Benefits of Filing for Bankruptcy
Filing for bankruptcy may afford you various legal benefits and protections as you work to resolve your debts and gain a fresh financial start. Some of the most critical benefits of pursuing bankruptcy include:
- The automatic stay: When a debtor files a bankruptcy petition, the law automatically imposes a stay on collection efforts. Under the automatic stay, creditors may not begin or continue most types of debt collection efforts, such as sending debt collection letters, calling the debtor, filing lawsuits, or foreclosing on or repossessing property. Any creditor wishing to pursue collection efforts during bankruptcy must obtain the court’s approval. Creditors who violate the automatic stay may face legal penalties.
- Discharge of debts: At the end of a bankruptcy case, the court can order the discharge of eligible outstanding debts. A bankruptcy discharge means a debtor has no further legal obligation to pay discharged debts, and creditors may not undertake collection efforts for those debts. Obtaining a discharge can give debtors a fresh start to get back on the path toward financial health.
- Debtor-in-possession: In certain types of bankruptcy proceedings, a debtor can keep ownership and control of their assets, becoming a “debtor-in-possession,” rather than turning over assets to a bankruptcy trustee. As a debtor-in-possession, you can keep your home or vehicle as you restructure your payments to get current on your debt.
Types of Bankruptcy for Individuals
Under federal bankruptcy law, individuals typically choose between two forms of bankruptcy: Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
In Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, a debtor sells, or “liquidates,” their property to generate funds to pay creditors. Chapter 7 filers may keep some “exempt” property listed under federal bankruptcy or state law. A bankruptcy trustee then sells the debtor’s non-exempt property and pays the proceeds to the debtor’s creditors according to the provisions of the Bankruptcy Code. After the trustee has distributed the proceeds of the debtor’s estate, the bankruptcy court will order the discharge of any remaining eligible debt still owed by the debtor.
Individuals must meet specific eligibility criteria to file for Chapter 7 bankruptcy, including the means test. The means test determines whether a debtor has sufficient income to repay their debts over time by examining whether the debtor’s income falls below the median income in the state or the debtor’s monthly disposable income. Disposable income in this sense is defined as income left over after paying necessary expenses. Filers who do not meet the means test may have to file for Chapter 13 bankruptcy instead.
Chapter 13 Bankruptcy
In Chapter 13 bankruptcy, also known as “wage earner’s” bankruptcy, a debtor creates a three- or five-year repayment plan to pay down debts. A debtor may propose a Chapter 13 plan; however, their creditors may have the opportunity to propose an alternative plan, with the bankruptcy court ultimately making the decision on which plan to approve. Under a Chapter 13 plan, a debtor turns over their disposable income to a trustee, who disburses the funds to the debtor’s creditors per the terms of the plan and the Bankruptcy Code. Upon completing their Chapter 13 plan, a debtor may receive a discharge of any remaining eligible debt they still owe.
Although Chapter 13 bankruptcy requires debtors to repay debts, this form of bankruptcy has several advantages over Chapter 7 bankruptcy, including allowing debtors to keep their home or car by getting current with mortgage payments or restructuring secured loans to extend them over the duration of the Chapter 13 plan.
Individuals may file for Chapter 13 bankruptcy if they have combined unsecured and secured debt of less than $2.75 million.
Why Choose the Bankruptcy Lawyers of Marrs & Terry?
Pursuing bankruptcy can involve a complex, time-consuming process. Having an experienced legal representative at your side can make the process less stressful and more efficient. But how do you know when you’ve chosen the best bankruptcy lawyer for your case?
For over 20 years, the people of Lenawee County have turned to the legal team at Marrs & Terry for dedicated guidance and support through the bankruptcy process. They do so because of our:
Experience – Our bankruptcy lawyers have decades of combined legal experience and insight into federal bankruptcy law, which allows us to develop tailored legal solutions to help you achieve your goals. Our firm has built a proven record of success, having helped many satisfied clients discharge their debts and move on with their lives.
Honesty – You can expect complete honesty and transparency from your bankruptcy attorney. We’ll never tell you just what you want to hear or sugarcoat things that are better said openly and honestly. Our attorneys want to provide you with realistic solutions to the problems you’re facing. We’ll let you know if we think you might make a wrong decision. However, we understand that you have the final decision and work hard to empower you to make informed choices.
Focus on results – Our attorneys will take the time to listen to what you have to say so that we better understand what’s most important to you. Our firm will work tirelessly to help you achieve your short- and long-term goals by providing the advice and information you need to make your decisions.
Contact Us Today for an Initial Case Evaluation to Discuss Your Options
If you can no longer afford to pay bills or other debts, bankruptcy can offer you a fresh start free from crushing debt. Contact Marrs & Terry today for a confidential consultation with our bankruptcy lawyers serving Adrian, Michigan. We look forward to discussing your legal options and whether filing for bankruptcy can resolve your financial troubles.