If you’re struggling with debt and considering bankruptcy, Chapter 13 might be a solution to help you keep your property while paying back what you owe over time. This article explains the basic rules for Chapter 13 bankruptcy in Michigan and provides a checklist to help you get started.
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is a debt repayment plan where you repay all or part of your debts over a period of 3 to 5 years. Unlike Chapter 7 bankruptcy, which involves the liquidation of your property to pay off debts, Chapter 13 allows you to keep your assets, like your house or car, as long as you stick to the court-approved payment plan. The goal is to help you manage your debt in a way that you can afford.
Who Can File for Chapter 13 Bankruptcy?
In Michigan, you can file for Chapter 13 bankruptcy if:
- You have a steady income (job, self-employed, etc.).
- Your unsecured debts (like credit cards or medical bills) are less than $419,275.
- Your secured debts (like mortgages or car loans) are less than $1,257,850.
- You haven’t filed for Chapter 13 bankruptcy in the last two years or Chapter 7 in the last four years.
- You will also need to show that you have enough income to meet the monthly payment obligations set by the court.
Make sure you take a look at the links at the end of this article to learn more about bankruptcy
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Steps to File for Chapter 13 Bankruptcy in Michigan
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Credit Counseling: Before filing, you must complete a credit counseling session with an approved agency. This session helps you understand your options and whether bankruptcy is right for you.
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File Your Petition: You’ll need to fill out a petition with the U.S. Bankruptcy Court. The petition includes details about your debts, income, expenses, and assets.
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Submit Your Plan: You’ll propose a repayment plan to the court that outlines how you intend to repay your creditors over the next 3-5 years. The court must approve this plan.
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Meeting of Creditors: After filing, you will attend a meeting where the bankruptcy trustee and creditors can ask questions about your financial situation.
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Confirmation Hearing: The court will review your repayment plan and decide if it should be confirmed. If approved, you will start making payments according to the plan.
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Pay Your Plan: You’ll make monthly payments to the trustee, who will distribute the money to your creditors.
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Completion: Once you have completed your payment plan, any remaining eligible debts are discharged, and you are free from those debts.
Filing Chapter 7 or Chapter 13 Bankruptcy?
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Michigan Bankruptcy Laws
Chapter 13 bankruptcy in Michigan follows federal bankruptcy laws but is also governed by specific rules and regulations. You can find more information on Michigan’s bankruptcy rules and guidelines below:
Chapter 13 Bankruptcy Checklist
Here’s a simple checklist of what you need to get started with Chapter 13 bankruptcy in Michigan:
- Complete Credit Counseling: Get a certificate from an approved credit counseling agency.
- Gather Financial Documents: Include your income, tax returns, bills, and proof of assets.
- Hire a Bankruptcy Attorney: It’s highly recommended to have legal help to navigate the process.
- Fill Out the Bankruptcy Petition: Complete the forms for the U.S. Bankruptcy Court.
- Propose a Repayment Plan: Create a plan for repaying your debts.
- Attend the Meeting of Creditors: Be prepared to discuss your finances with the bankruptcy trustee and creditors.