Chapter 13 Bankruptcy in Michigan

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What is Chapter 13 Bankruptcy?

Chapter 13 Bankruptcy is for individuals with regular income to pay back their creditors based on how much they can actually afford. The debtor proposes a plan to the court detailing how much will be paid to each of the creditors. Once that plan gets approved by the judge, the debtor makes one monthly payment to the trustee for either 3 or 5 years and that payment will be distributed to the creditors.

How is a Chapter 13 different than a Chapter 7 bankruptcy?

The main difference between chapter 7 and chapter 13 is that under chapter 7, the debtor’s nonexempt property (if any exists) is liquidated to pay off any of the debtor’s debts, while in most chapter 13 cases a portion of the debtor’s future income is used to pay off as much debt as possible considering the circumstances.

Practically speaking, under chapter 7 the debtor loses all or most of his or her nonexempt property and receives a chapter 7 discharge, which completely removes most of the debts. Under chapter 13, the debtor usually gets to keep their nonexempt property, and must pay off as much of their debts as the court deems feasible. Afterwards, they receive a chapter 13 discharge, which is broader than a chapter 7 discharge and releases the debtor from liability for several types of debts that are not dischargeable under Chapter 7.

However, a chapter 13 plan normally lasts 3 to 5 years while a normal chapter 7 only lasts around 3 months. Additionally, a chapter 13 is almost always more expensive for the debtor.

How long will my repayment plan last under a Chapter 13 bankruptcy?

This all depends on your income. If your monthly income is greater than the median income for a family of your size in Michigan then your plan will last 5 years. If your monthly income is less than the median income for your household size then your plan may only last 3 years.

What are some of the advantages of filing a Chapter 13 in Michigan?

  • One of the greatest advantages of filing a chapter 13 is that you can save your house from foreclosure.
  • Chapter 13 allows you to pay back your delinquent mortgage payments over the course of the bankruptcy.
  • You will have no more direct contact with the creditors. You will make one lump sum payment to the trustee and that will be distributed to each of the creditors. This will give you some peace of mind and not have to deal with annoying collection phone calls anymore.

Have a Michigan Bankruptcy Attorney Evaluate Your Chapter 13 Eligibility

The Adler Law Firm PLLC in Detroit, Michigan offers FREE consultations to help people in need decide if bankruptcy is right for them. If you’re even considering bankruptcy in or near Detroit, MI, The Adler Law Firm can help show you the various options, such as Chapter 7 bankruptcy and Chapter 13 bankruptcy, and help you navigate the complexities and ramifications of each. We also offer some of the most affordable prices in the Detroit Metro area without compromising on quality. Contact Us today!

Are you interested in a free consultation? At Adler Law Firm, we guarantee a successful Chapter 13 bankruptcy in Michigan or your money back* (*Guarantee is only valid if disapproval is based on our performance).

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