It’s not easy to admit when your debts get ahead of you, but eventually, you can’t ignore the balance sheet. This is a known issue, and there exists an ecosystem of support designed to give people who have debt problems a way forward. When things reach a point where no restructuring or debt counseling will work, there’s also Chapter 7 bankruptcy. It’s not the only form, but it is the most complete form, and it is recommended when individuals can not make their debt commitment. If you can manage a structured repayment plan as long as the debt is reduced but not unless it’s reduced, you might consider Chapter 13 bankruptcy instead.
Qualifying for a Chapter 7 Filing
While the stigma around bankruptcy is not justifiable because there does need to be a legal mechanism for resolving debts that can’t be paid, it is also a very serious event. As such, Michigan courts require that people filing Chapter 7 paperwork prove they really can not afford their current debt based on their current income. If the financial test applied shows that you could manage a Chapter 13 repayment plan, the courts redirect you there to minimize the number of Chapter 7 filings. This is done for several reasons.
- Chapter 13 does not involve the liquidation of property, so you don’t lose what you have
- Chapter 7 is harder on your debtors than Chapter 13, and therefore less desirable to them as well
- Chapter 13 has a less profound impact on your credit score
If you qualify for chapter seven, then the process moves forward and takes three to six months to resolve. After that, the repercussions to one’s credit can last up to a decade. It is possible to rehabilitate credit faster if your finances will support it, though.
When to Use Chapter 7
In Michigan, the financial test that is generally applied is to examine your income and the total unsecured debt affected by the filing. If your dischargeable debt exceeds your income after cost of living expenses like rent and necessary utilities are subtracted, then Chapter 7 is appropriate. If you literally could not pay your debt even if you put all your grocery and transportation money into it, that’s when it is time for Chapter 7 for sure, but you might qualify well before that point. If you’re not sure, the best thing to do is to ask for help. Basic information about how to work out your expenses and which forms of financial resolution to use are available through debt counselors, and Michigan requires everyone who files for bankruptcy to attend educational classes about debt and about the process of filing. This can be your opportunity to learn more.
Another avenue of information is to seek confidential help from an attorney or accountant. If you move forward with a filing, the attorney will be the more useful of the two. An accountant can work out whether you can afford your debt or not in terms that will tell you if you should file, but an attorney will be needed to understand all the opportunities to discharge debt and the best options for the outcomes you are seeking. Legal advice can empower your negotiations to keep certain secured debt and help you know when to allow a property to be repossessed, too.
Finding Bankruptcy Attorneys
The best legal help is usually that which is closest to home, because local differences in the interpretation of the law and the nuances of judges’ approaches are just as important as a textbook knowledge of the ins and outs of bankruptcy filings. That means if you live in Flint, Michigan Chapter 7 Bankruptcy is best going to be handled by a Flint attorney. It not only means getting an attorney who understands the lay of the land in terms of the judges and clerks who handle these filings in your area, but it also means having access to someone who knows the people you can turn to for education and credit rehabilitation. The professional recommendations alone make the expense of an attorney worthwhile for many people.
If you want to understand how to strategize your bankruptcy filing to put yourself in the best position for a speedy financial recovery, you need to talk to professionals who know the industry. You need to get in touch with a bankruptcy attorney.