Bankruptcy is a word that often conjures up negative images of a hopeless financial future. While filing for bankruptcy is a humbling experience, it can be a crime to deal with when faced with crippling debt, sudden job loss, or debilitating injuries. .
With the state of Michigan having the highest unemployment rate in the country, you should know that if you are considering filing for bankruptcy, you are not alone.
Now, first things first. To be eligible to file, you must have lived in the state of Michigan for a period of more than 6 months. If this applies to you, you will have to consider which division of the federal bankruptcy court you want to pursue, Chapter 7 or Chapter 13.
Chapter 7 or Chapter 13?
It is important to know the difference between the two types of bankruptcy before you file for one. A traditional Chapter 7 bankruptcy is basically the liquidation of all your assets and property which is not exempt. An appointed bankruptcy trustee will turn your assets into cash, paying off creditors and letting you start over. If you have no assets, this approach usually wipes out most of your debt.
Chapter 13 bankruptcy is called reorganization. If you still have a job or a predictable income, Chapter 13 allows you to set up a long-term (3 to 5 year) debt payment schedule that allows you to keep assets and property while reducing some of your debt obligations. With recent law changes, it’s even more difficult to file for Chapter 7 because many people with serious debts are still employed, so it’s best to contact a bankruptcy attorney to help you determine which approach is best for you to take.
Once you’ve determined which bankruptcy divisions you can legally file for, follow the steps below to get on the right track to achieving relief from your financial burden.
Where To File In Michigan
For your convenience, there are two bankruptcy court districts in the state of Michigan, the Eastern District and the Western District. Each district also has an office serving a particular district. For example, if you live in the states of Jackson, Lenawee, Macomb, Monroe, Oakland, St. Clair, Sanilac, Washtenaw, or Wayne, your Eastern District court address is 211 West Fort Street in Detroit. If you live in the Genesee, Lapeer, Livingston, or Shiawassee areas, go to 226 West Second Street in Flint. Finally, if you live in upper northeastern Michigan, the office you should attend is at 111 First Street in Bay City. For more information about hours, rules or to download court forms, see the Eastern District Court’s official Web site.
The Western District of Michigan has five courtrooms located in Grand Rapids, Kalamazoo, Lansing, Marquette, and Traverse City. For the specific address of the court office in your country, see the Western District Court official Web site. Note that all the legal forms you need are also available online, so make sure you save time driving by printing and filling them out before going to the courtroom.
Steps Towards Bankruptcy
1. Visit your local bankruptcy court. Make a list of all your assets and liabilities, as well as your current schedule of income and expenses, including rotating ones such as house bills. Also be sure to make full disclosure of all your investment or retirement accounts. Not everything can legally be lost, but you must notify the federal government of any and all sources of wealth or income.
2. Provide court copies of the most recent years of your tax return, as well as, copies of all your bank account statements.
3. Attend a federally approved credit counseling session. Be sure to save the certificate of completion you will receive from the counselor, as you cannot file bankruptcy in Michigan without one.
4. Obtain all required bankruptcy forms from the court (or download them from their website) and fill them out with extreme care. Pay attention to the special instructions indicating which documents or copies you must include in your bankruptcy petition. Remember, if this part confuses you, you may want to hire a Michigan bankruptcy attorney to handle all the paperwork.
5. Bring your form to your local US Bankruptcy Court along with your payment. (At the time of writing, Chapters 7 and Chapter 13 in Michigan each cost under $300). If you don’t have the funds to pay the fee, the court may allow you to pay it in installments.
6. When you get a notification about your 341 hearing (a meeting of creditors that you owe money), make sure you attend. Creditors may try to deny your filing, but if you have been honest with the court from the start about your financial situation, the court must allow the bankruptcy to proceed.
7. Watch for other notices from the courthouse that may require your appearance at court. You may just have to go to court one more time to settle your bankruptcy, but you never know, so be sure to pay close attention to any paperwork you receive from the court.
Most importantly, keep your head up and understand that tens of thousands of people each year must go through this process to make a fresh start. Good luck!