Bankruptcy Attorneys Serving Spring Arbor
Sometimes, life takes you in a different direction than you’d hoped. No one sets out intending to declare bankruptcy, but if you’ve found yourself mired in debt, bankruptcy may be the best option.
Some people have the misconception that declaring bankruptcy means admitting defeat. But as any bankruptcy attorney can tell you, it’s quite the opposite. When you declare bankruptcy, you get a clean slate that you can then use to build a financially healthy future.
If you think bankruptcy might be the right option for you, get in touch with the bankruptcy attorneys serving Spring Arbor at Marrs & Terry, PLLC. We’re committed to helping each of our clients find the financial solution that’s right for them.
What Type of Bankruptcy Is Right for Me?
You may already know that there are two main types of bankruptcy in Michigan: Chapter 7 and Chapter 13. Both can help you get back on the right track financially, but they’re more different than you might think.
Chapter 7
This is often a good choice if you have a low income, a lot of unsecured debts, and few assets. Here are some of the key considerations for Chapter 7 bankruptcy:
- You must pass a means test to make sure your income is low enough to qualify
- Most unsecured debts, like medical bills, credit cards, etc., are discharged
- Some kinds of debts, including child support, spousal support, and student loans, cannot be discharged
- You can often keep your house and car, but many other assets can be sold to pay your debts
The main advantage of Chapter 7 bankruptcy is that it provides a relatively quick way to get a clean financial slate. There is an initial negative impact on your credit score, but with healthy financial habits, you can rebuild quickly.
Chapter 13
This is a good option if you have a steady income — especially if it’s higher than the limit for Chapter 7 bankruptcy — and can realistically pay off most debts over time. For Chapter 13 bankruptcy, you’ll want to keep the following in mind:
- Debts are generally “restructured” instead of discharged, meaning you create a detailed repayment plan
- You can keep even non-exempt assets like boats, but you must pay creditors of unsecured debts at least as much as each asset is worth
- You generally aren’t required to sell your assets
One of the best features of Chapter 13 bankruptcy is that it’s the only way to keep your home or car if you have fallen so far behind on payments that you can’t catch up immediately.
Deciding which type of bankruptcy is best for you is a difficult decision, but you don’t have to make it alone. When you set up a consultation with us, we can help you determine whether Chapter 7 bankruptcy, Chapter 13 bankruptcy, or another solution is right for you.
What Happens to My Debts and Assets During Bankruptcy in Spring Arbor?
You might be uncertain about what may happen to your assets and debts during the bankruptcy process. Each case can be a little different, but in general, you can expect your assets and debts to be handled in certain key ways in Michigan.
Credit Card Debt, Medical Debt, and Other Unsecured Debts
In Chapter 7 bankruptcy, your unsecured debts are almost always discharged. In Chapter 13 bankruptcy, you’re usually required to make payments toward unsecured debts over the repayment period. If you still owe money on these debts by the end of that period, the remaining amount will usually be discharged.
Priority Debts Like Child Support and Spousal Support
Some debts can’t be discharged in bankruptcy. If you declare Chapter 7 bankruptcy, you won’t be able to discharge child support, spousal support, and other kinds of “priority” debts. In Chapter 13 bankruptcy, you usually must prioritize these kinds of debts over unsecured debts.
Homes and Mortgages
Whether your home is nestled among the quaint green lawns of King Road or you prefer to live closer to the bustle of Village Crossing Mall, you don’t want to lose your place of residence in the process of getting your finances together.
With either Chapter 7 or Chapter 13 bankruptcy, you may or may not be able to keep your home if you have a mortgage. Generally, if you are paying a mortgage for a primary residence, you can keep the home — provided you can keep paying the mortgage. While Michigan law doesn’t require you to sell your home during bankruptcy, it doesn’t stop your lender from foreclosing if you don’t pay.
Essentially, in many cases, you can keep your home while still repaying your mortgage. You also can stop paying your mortgage if you give up your home. But you cannot have your mortgage debt discharged and continue to own your home.
Our bankruptcy attorneys can help you explore options for keeping your home and navigating the process if you have a mortgage.
Cars and Car Loans
Often, you can keep your primary vehicle if you go through Chapter 7 bankruptcy. This is because a portion of your equity in the car is exempt, or not required to be liquidated. Michigan’s motor vehicle exemption for bankruptcy is $4,250. So if your vehicle is worth $4,250 (or your equity in the vehicle is worth $4,250) or lower, you can keep it.
However, if you declare bankruptcy but own a luxury car, you may be required to sell the car to pay your debts and then take the exemption amount in cash. For example, imagine you have a car worth $40,000, but you declare Chapter 7 bankruptcy. Because your car is so far above the exempt value, you would need to sell it. You could then take $4,250 from the sale, and the rest would go toward paying your debts.
In some cases, you may be able to keep a car worth more than the exempt value. If you want to keep your car when you go through bankruptcy, let us know — our team will see if there’s any way we can help you do so.
Other Assets
Your assets aren’t collected and sold in Chapter 13 bankruptcy, but in Chapter 7 bankruptcy, they may be. You can usually keep the kinds of items that are essential to everyday living, but you might lose assets like these:
- Valuable electronics
- Any rental properties you own
- Most kinds of investment accounts
- Valuable artwork
- Jewelry
- Antiques
- Additional cars
Forfeiting assets can be an especially difficult part of declaring bankruptcy. However, our team can help you create a strategy to make this process as stress-free as possible.
Considering Bankruptcy in Spring Arbor?
At Marrs & Terry, PLLC, we take pride in guiding people like you through the challenges of bankruptcy. We understand that bankruptcy can be a harrowing experience for anyone, but in almost every case, the financial freedom you feel by the end makes the whole experience worthwhile.
Each person’s financial situation is different, so before we help you get started filing for bankruptcy, we take the time to discuss your circumstances with you and ensure you understand all of your options. We can guide you through the process and help you select a path to financial wellness and peace of mind.
If you have questions or you’re ready to get started, please don’t hesitate to get in touch with us. Give us a call, chat with us online, or fill out our online contact form to begin your journey today.