The number of bankruptcy filings fell 1.8 percent in September 2017 compared to September 2016. Overall, there were 790,830 bankruptcies filed by Michigan residents and others through Sept. 30. There were 805,580 bankruptcy cases in the prior year. According to the Administrative Office of the U.S. Courts, this was the lowest total over any 12-month period since June 2007. However, the decline in overall bankruptcies in the period between September 2016 and September 2017 was the lowest in a one-year period since 2011.
People struggling with debt may turn to avenues such as taking on a second job or bringing in a renter to help with the bills. Sometimes, these approaches pay off. Other times, though, they can be risky or unnecessary. For example, an improperly vetted renter could cause significant property damage.
If one judge had his way, Michigan residents and others would not face debt limits when filing for Chapter 13 bankruptcy. He and others shared this sentiment at an October meeting of the American Bankruptcy Institute Commission on Consumer Bankruptcy. This may help those who don't qualify for Chapter 13 bankruptcy but don't find Chapter 11 to be a realistic alternative.
Michigan residents who are looking for ways to better handle their high-interest debts may want to look into debt consolidation. This may allow them and others to make one payment each month at a lower interest rate than what is currently being paid. Debt consolidation may be best for those who have total debts that are less than 50 percent of their income.
Consumers in Michigan and around the country often turn to credit cards following an unexpected financial setback such as a layoff or illness. Paying revolving debt off can be difficult for people who are struggling to make ends meet because minimum monthly payments are made up almost entirely of interest, and other options to pay down debt, such as selling assets or borrowing at more attractive rates, are often not available to those with unmanageable financial situations.
Although each bankruptcy case is unique, there are many common financial issues. A job loss, divorce or injury can put you in enough distress to declare bankruptcy. However, another common reason for financial turmoil is providing financial assistance to a child.
Roughly half of Americans in Michigan and elsewhere who hold credit card debt carry a balance for at least two years. Of those who admitted to carrying a balance for at least two years, half said that they have had it for five years. This was according to a study of 2,000 adults conducted by Creditcards.com. Baby boomers and those in the Silent Generation were the most likely to carry such debt.
Michigan debtors who are considering filing for Chapter 13 bankruptcy may want to know if purchasing or renting a home would be feasible. Because Chapter 13 bankruptcy can remain on a person's credit for years, obtaining a home can be difficult. However, it would not be impossible.
Changes to the way that medical debts are treated on credit reports may be helpful to some Michigan residents. Starting on Sept. 15, 180 days must pass before an unpaid medical debt can appear on a person's credit report. In addition, a medical account in collections will be deleted if the balance is eventually paid for by a health insurance provider. While these changes may help, they may not help as many people as anticipated.
Michigan consumers who are considering filing for bankruptcy might wonder what it will cost and whether it is the right choice for them. Depending on the situation, a person might file for Chapter 7, Chapter 12 or Chapter 13 bankruptcy. Each type has different filing fees, and if the debtor chooses to obtain legal representation, there will be attorney's fees as well. Possible alternatives to bankruptcy include negotiating the debt with creditors and selling something of value to pay off bills.