Filing for bankruptcy typically represents a low point in the financial lives of people in Michigan, but the chance to clear out debts offers opportunity for the future. A bankruptcy will linger on a credit report for at least seven years and impact an individual's ability to rent apartments or obtain loans. Despite this, people can rebuild their credit scores with proper money management.
Some Michigan consumers who feel overwhelmed by their financial obligations might consider filing for bankruptcy. Most types of unsecured debt can be discharge, but people should be aware that most tax liabilities cannot be.
When unemployment or medical problems strike Michigan residents, incomes could fall and bills may go unpaid. However, bankruptcy could represent a viable approach for eliminating debts and reclaiming financial health.
When people in Michigan struggle with overwhelming debt that seems impossible to repay, there may be only one way forward to help protect their financial future: bankruptcy. However, for many, the costs associated with filing for bankruptcy can make this option difficult to access. As many people who file for bankruptcy are dealing with an extremely tight financial situation, the potential costs can seem insurmountable.
Michigan residents and others who file for bankruptcy may see their credit score drop by as many as 200 points. However, a lack of negative information on a credit report prior to the bankruptcy has little impact on how much damage it will do to a specific individual. Typically, the fact that a person has filed and how long ago it occurred play the biggest roles in impacting a person's credit.
Michigan residents and others who have student debt may be familiar with the fact that those debts usually cannot be discharged in bankruptcy. The only way they can be discharged is if a student would experience an undue hardship if forced to repay them. While undue hardship is meant to be a high standard to reach, there is no specific criteria for determining what that looks like.
Michigan residents who are overwhelmed by their financial obligations to the point that they are unable to repay all of their debts may want to consider bankruptcy as an option. There are two primary types of consumer bankruptcy that may offer debtors some relief.
Sooner or later many Michigan families need to reach for a credit card when an unexpected expense pops up. Credit card debt has become a fact of life for many American households. The Federal Reserve reports that credit card balances nationwide exceeded $1 trillion in 2017. A senior analyst from CreditCards.com has advised consumers to work on paying off their debts in 2018 because interest rates are rising. This will add to the cost of maintaining debt and could prompt more people to fall behind on payments in the near future, he said.
In Chapter 13 bankruptcy cases, debtors have the ability to modify their mortgages in certain situations. A string of recent decisions may signal a trend that could affect the way bankruptcy courts in Michigan address these modifications. In these cases, a number of Ohio judges have issued rulings that greatly expand a debtor's access to so-called "cram down" modifications to a residential mortgage. This is a major change from the status quo.
The effect that the economy has on Michigan residents and others throughout the U.S. varies depending on the age group of the citizens. For instance, it should come as no surprise that the economic crisis of 2008 hit Millennials, who were just finishing college and getting prepared for their first job, differently than members of Generation X, who were stuck paying mortgages for a house that had devalued. Bearing that in mind, it follows that different generations will have different credit profiles with some struggling more than others.