According to statistics released by the Administrative Office of the U.S. Courts, the more than 772,646 bankruptcy filings occurred in 2019. While filing for bankruptcy is an important decision to consider, know that it is a common practice.
The first step in filing for bankruptcy is to meet with a qualified bankruptcy attorney to determine which program best resolves your financial situation. An attorney that specializes in bankruptcy law and have the experience to evaluate your circumstances and advise you on:
The type of bankruptcy that will help you to accomplish your long-term financial goals
A general overview of Chapter 7 and Chapter 13 bankruptcy processes and benefits.
Your role in the process and necessary documentation to begin the process
Chapter 7 bankruptcy is a very effective tool for eliminating credit card debt, medical debt and most other unsecured debt. But you can only use it once every 8 years.
Chapter 13 Bankruptcy is another type of bankruptcy available to consumers. The main difference between Chapter 7 and Chapter 13 is that you pay a partial debt to the Chapter 13 trustee every month. You only need to pay as much as possible based on the economic status survey and actual income and expenditure, without having to consider the interest rate of unsecured debt.
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Collect Your Documents
The next step involves preparing all of the documents necessary to file a bankruptcy petition. These are extensive documents required by the court.
First, you need to obtain a copy of the credit report from Experian, TransUnion or Equifax to understand how much debt you owe. You can get credit reports from these three for free once a year.
Some of your debts may not be listed in the credit report, such as medical expenses, personal loans or tax debts. List all missing debts because you need to list all debts on the bankruptcy form.
The main difference between the Chapter 7 bankruptcy paperwork and the Chapter 13 bankruptcy petition is the proposed repayment plan that exists when you file a Chapter 13 reorganization. Other common documents that are filed with the court are:
Voluntary Petition, statement of which Chapter you are electing and personal information for filer(s)
Schedules disclosing your income, debt obligations and assets
Statement of Financial Affairs, financial background information for flier(s) to aid the Trustee
Creditor matrix listing contact information for all of your creditors
Bankruptcy Means Test
Submitting to the U.S. District Courts
Once you and your attorney have reviewed and signed all of the necessary paperwork, the attorney will electronically file all of the paperwork with the U.S. District Court, Bankruptcy Division. This electronic case filing automatically yields a case number, which establishes court protection from your creditors.
After your bankruptcy case is filed, you will need to provide additional information and documentation to the court-appointed bankruptcy Trustee. Examples of such documentation are:
Attend Credit Counseling
An important first step in bankruptcy proceedings is credit counseling. Everyone who applies for bankruptcy must attend a credit counseling course approved by the courts.
In many cases, this exercise only confirms that you have no practical options for debt settlement other than bankruptcy. But this is still a valuable exercise.
The course requires at least one hour and can be completed online or over the phone. Course fees range from $10 to $50, depending on the provider. However, if your household income is below 150% of the federal poverty line, you should be exempt from this fee.
Why You Should Hire a Lawyer
While the above is a simplified summary of how to file for bankruptcy, the actual steps needed to take is much more complicated than it seems. You will want to make sure that you are filing your bankruptcy correctly and that you understand the laws so you don’t end up owning even more in unpaid bills.
Here are some reasons to hire a bankruptcy lawyer:
1. Guidance – Working with an attorney who specializes in bankruptcy will help you navigate through all of the federal and state regulations, including exemptions. A lawyer also will be able to help assess your financial situation and provide the best solution.
2. Protection – A bankruptcy attorney will guide your through bad creditor behavior and instruct you how to proceed with debt collectors.
3. Alternatives – Bankruptcy may not be the best choice for you and an experience lawyer will determine the best course of action for your personal situation.
Let Our Lawyers Guide Your Bankruptcy
Bankruptcy may be the answer you have been looking for to regain financial control. Acclaim Legal Services has experienced bankruptcy attorneys who are available same day to speak to you over the phone or to meet with you in Detroit, Southfield, Warren, Dearborn, Ann Arbor or Flint. We offer same day legal protection and free consultations. Because the bankruptcy laws are complex, we specialize just in Chapter 7 and Chapter 13 bankruptcy cases.
Call today to find out if filing bankruptcy in Michigan is the right choice for you or schedule a free consultation.