Jump to Navigation

How long before Chapter 13 or Chapter 7 discharges debts?

Consumers in Michigan who are facing overwhelming debt may be considering the protection of personal bankruptcy. They may be aware of the available options, and know that some debts may be discharged, but they could be concerned about how long this process will take to provide relief. This depends on whether the consumer qualifies for Chapter 7 or Chapter 13 bankruptcy.

Consumers with little or no income would commonly qualify for Chapter 7 bankruptcy. This option is known as liquidation bankruptcy and involves liquidation of the consumer’s liabilities. Most unsecured debts will be discharged, and the proceeds of liquidation will settle some other debts. Once court procedures and documentation are completed -- a process that takes about four months -- the consumer will be able to walk away from the debts. However, while the process is underway, they will be protected against creditor harassment, foreclosures and repossession.

Consumers who have a regular income and want to avoid losing some assets in liquidation often opt to go with Chapter 13 bankruptcy. This offers the consumer the opportunity to draft a payment plan to be approved by the court. The payments would cover between three and five years where lower payments will continue. At the end of this period, the court will assess the remaining balances of allowable and unsecured debts, and discharges that are approved will occur at that point.

Although the individual’s name will remain on credit reports for some years, he or she will be able to use this time to obtain the services of advisors who could assist in the rebuilding of a good credit score by effective debt management. Michigan consumers may want to be aware that it can be beneficial to file for Chapter 7 or Chapter 13 bankruptcy. Taking control of one’s finances in this way may be the best opportunity to start over and ensure a stable financial future.

Source: Fox Business, "When is a Bankruptcy Officially Discharged?", Erica Sandberg, Aug. 4, 2014

No Comments

Leave a comment
Comment Information
Free Case Evaluation

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Subscribe to this blog's feed FindLaw Network
Marrs & Terry | Personalized, Efficient Counsel | Office Locations

Ann Arbor Office
Marrs & Terry, PLLC
6553 Jackson Road
Ann Arbor, MI 48103

Phone: 734-418-0365
Toll Free: 866-665-8095
Fax: 734-663-9973
Ann Arbor Law Office Map

Jackson Office
Marrs & Terry, PLLC
209 E. Washington, Suite 258
Jackson, MI 49201

Phone: 734-418-0365
Toll Free: 866-665-8095
Jackson Law Office

Credit Cards Accepted | VISA | MasterCard | American Express