If you’re becoming overburdened with debt that just seems to keep growing no matter how much money you throw at it, bankruptcy may be a way out for you. Bankruptcy laws were made to provide individuals and companies with a way to address overwhelming debt and create a path to financial stability.
If your debt is keeping you awake at night, our Michigan bankruptcy attorneys serving Hillsdale can help. Call us today at 734-663-0555 or contact us online for a confidential consultation today.
What Is Bankruptcy?
Bankruptcy is a legal process that enables people and companies who are unable to repay their debts to seek relief from some or all of their financial obligations. Bankruptcy proceedings provide a structured framework for dealing with creditors, managing assets, and paying some outstanding debt in a way that’s fair to both debtors and their creditors.
One of the most significant advantages of filing for bankruptcy is the immediate protection provided by an automatic stay. This legal safeguard prohibits your creditors from taking any actions to collect your debts. Once you have filed your bankruptcy petition, the automatic stay is in effect, and creditors cannot send you collection letters, make collection calls, file lawsuits, initiate foreclosure proceedings, repossess assets (like your car), or garnish your wages or bank accounts. If a creditor wishes to resume collection activities during your bankruptcy case, they must first obtain permission from the bankruptcy court.
Individuals or married couples can obtain bankruptcy through a Chapter 7 or a Chapter 13 bankruptcy.
Chapter 7
This is often referred to as “straight bankruptcy” or “liquidation bankruptcy.” In this type of bankruptcy, non-exempt assets are sold (liquidated) to repay creditors. Federal bankruptcy laws or Michigan state law specifies which assets are exempt from liquidation. For example, under Michigan law, debtors can keep up to $40,475 of the value in their homestead if they are under 65. They can retain up to $3,525 in the value of their vehicle. After the debtor’s property is liquidated and that money is paid to creditors, certain types of debt, such as medical bills, credit card debt, and personal loans, can be discharged through Chapter 7 bankruptcy.
To qualify for Chapter 7 bankruptcy, individuals must fulfill specific eligibility requirements. One crucial step involves completing a credit counseling course from an approved agency prior to filing the bankruptcy petition. Additionally, individuals must pass the “means test,” which evaluates their income in comparison to the median income for their state and assesses their disposable income to determine if they can reasonably repay creditors.
Those who previously filed for Chapter 7 and received a discharge must wait eight years from the filing date of the previous Chapter 7 case before filing again.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as “wage earner’s” or “reorganization” bankruptcy, offers a structured repayment plan spanning three to five years. This option is typically chosen by debtors who possess sufficient disposable income to pay at least a portion of their debts. Chapter 13 provides several benefits, such as the ability to halt foreclosure proceedings and retain ownership of a home or to extend payments on other secured debts for the plan’s duration.
Once the bankruptcy court approves the Chapter 13 plan, debtors make regular payments to a designated bankruptcy trustee. The trustee then distributes these funds to creditors according to the plan’s terms. Upon successful completion of the plan, debtors may be granted a discharge of any remaining qualifying debts, providing them with a fresh financial start.
To qualify for Chapter 13, you must have a regular source of income. As of June 22, 2024, your secured debts (such as mortgages and car loans) must total less than $1,395,875, and your unsecured debts (such as credit card debt and medical bills) must be less than $465,275. These limits are adjusted periodically to account for inflation. As with Chapter 7, you must complete a credit counseling course from an approved agency before filing for bankruptcy.
How Does Bankruptcy Help People?
Bankruptcy provides people with significant relief as soon as they file. Some of the benefits take longer to realize.
- Protection from Creditors: Once a bankruptcy petition is filed, an automatic stay is put in place, preventing creditors from pursuing collection actions. This offers immediate relief from harassment and allows debtors to focus on their financial reorganization.
- Debt Relief: One of the primary benefits of bankruptcy is the discharge of certain debts, giving individuals a chance to start over with a clean slate.
- Asset Protection: Depending on the type of bankruptcy, certain assets might be protected from liquidation, ensuring debtors have the essentials to rebuild their lives.
How Can Attorneys Help?
Bankruptcy law is complex, and navigating the process without legal counsel can be daunting. If you don’t fill out the forms correctly, you could accidentally lose an exemption or skip a creditor. Here’s how attorneys can assist:
- Choosing the Right Path: An attorney can assess your individual circumstances and help you decide whether bankruptcy is the right option for you. They can also help you determine which type of bankruptcy (Chapter 7 or Chapter 13) is most suitable.
- Paperwork and Filing: Bankruptcy involves extensive paperwork and strict filing deadlines. An attorney can ensure that all documents are prepared correctly and filed on time, reducing the risk of errors or delays.
- Dealing with Creditors: Attorneys can handle communication with creditors on your behalf, ensuring that you’re treated fairly and that your rights are protected.
- Representation in Court: If your case goes to court, an attorney will advocate for your interests and present your case in the most favorable light.
- Emotional Support: Bankruptcy attorneys can offer not only legal expertise but also emotional support throughout the process. They can alleviate some of the stress associated with bankruptcy.
Why Entrust Your Hillsdale Bankruptcy to Marrs & Terry?
Filing bankruptcy involves intricate laws and court procedures where a single misstep could jeopardize your case and hinder your path to debt relief. Experienced legal counsel can streamline the process and alleviate stress. For decades, individuals and families in Hillsdale, Michigan, have relied on the bankruptcy lawyers at Marrs & Terry for unwavering guidance and support in their pursuit of financial freedom.
Here’s why our clients choose us:
- Experience: Our seasoned attorneys possess a deep understanding of bankruptcy laws and their nuances. This enables us to craft personalized solutions that align with your unique needs and goals. We have a proven track record of success in helping clients achieve positive outcomes for their legal and financial situations.
- Honesty: When you seek assistance from Marrs & Terry to overcome financial challenges, you can expect a transparent and honest assessment of your situation and your available legal options. We won’t sugarcoat the truth or tell you just what you want to hear. Our attorneys are committed to helping you identify and pursue realistic solutions to your problems.
- Results-Oriented Focus: We prioritize active listening to ensure that we understand your priorities and concerns. Our focus lies in helping you achieve both your immediate and long-term goals through tailored legal strategies. Throughout your case, our attorneys will provide the advice and support you need to make informed decisions at every step.
Contact a Seasoned Bankruptcy Attorney Today
Remember, bankruptcy isn’t the end; it’s a new beginning. With the right legal guidance and a commitment to responsible financial management, it’s possible to emerge from bankruptcy stronger and more financially secure.
Ready to explore your options? Contact Marrs & Terry today at 734-663-0555 or reach out online to schedule an initial case evaluation with our experienced bankruptcy lawyers serving Hillsdale County. We’ll assess your unique situation and help you determine if filing for Chapter 7 or Chapter 13 bankruptcy is the right path to achieving financial freedom.