Michigan consumers may agree that most individuals face periods of financial difficulty at some stage of their lives. There are those who manage to minimize the damage by effective debt management or even selling personal assets to free up some funds. However, others end up desperate and despondent when their finances seem to be in a continuous downward spiral. This may be an opportune time to consider the protection offered by Chapter 13 or Chapter 7 bankruptcy.
While bankruptcy may seem to be a drastic step to take, and not ideal for every consumer, it may certainly offer a way out of a desperate situation. From the two available personal bankruptcy options, Chapter 7 is commonly suited for individuals without a regular income and may seem the most severe. Chapter 7 bankruptcy may discharge most unsecured debts, including credit card debt, but entails the liquidation of most to cover creditor claims.
Consumers who have a monthly income may qualify to file for Chapter 13 bankruptcy. With this protection plan, individuals are afforded the opportunity to continue paying their creditors by way of an extended payment plan of up to five years, which must be approved by the court. While one remains responsible for payments on mortgages, along with other liens and debts, one will be protected against foreclosure and repossessions. Suspended utility services may also be restored.
To establish if personal bankruptcy is a viable option to rebuild a Michigan consumer’s financial stability, it may be a good idea to consult with financial and legal advisors. They may also be able to determine whether an individual qualifies for Chapter 13 or Chapter 7 bankruptcy protection. Those who are concerned about bankruptcy damaging their credit score may want to first understand that their desperate situation has likely already caused considerable damage. Consumers who address the situation by filing for personal bankruptcy may find that it is possible to build a stable financial future after bankruptcy, while at the same time working on building a healthy credit score again.
Source: dailyprogress.com, “Bankruptcy — answer to a prayer for some“, Robert Legge and Deborah Reed, July 4, 2014