A Helping Hand For Michigan Families

How Filing the Wrong Bankruptcy Chapter in Michigan Can Be a Costly Mistake:  Why Choosing the Right Bankruptcy Attorney Matters From Day One

When financial stress builds, it can feel like you’re carrying the weight of the world on your shoulders. Sleepless nights, constant calls from creditors, and the fear of losing your home or car make it hard to know where to turn. In these moments, the decision of who you trust to guide you through bankruptcy becomes one of the most important decisions for protecting your future.

The truth is, bankruptcy offers powerful relief — but it’s also a highly technical legal process. One innocent mistake, like filing under the wrong chapter, can snowball into devastating consequences: lost property, denied discharges, family members being sued, or thousands in unexpected costs.

At Acclaim Legal Services, we’ve seen firsthand how the wrong chapter choice or a procedural misstep can derail someone’s fresh start. The good news? With the right Michigan bankruptcy attorney by your side from the beginning, you can avoid these costly pitfalls, protect your property, and move forward with confidence.  Trust our experience and call us today at 866-261-8282 for a free consultation, we offer same day advice and legal protection. 

Filing the Wrong Chapter Can Cost You Thousands

In Michigan, most individuals file either Chapter 7 (liquidation) or Chapter 13 (reorganization). Each has strict eligibility rules, benefits, and risks. Filing the wrong one can lead to serious — and often very expensive — consequences:

Real Estate Risks That Can Derail Your Chapter 7 Case

For homeowners, bankruptcy decisions are especially critical. In Chapter 7, your house isn’t automatically protected — only a certain amount of equity is covered under Michigan’s homestead exemption. If your equity is over that limit, the trustee may view your home as a source of repayment for creditors and move to sell it, even against your will. A trustee can even keep your case open for months or years, waiting for the housing market to rise or for more equity to build. During that time, you’re stuck in limbo — unable to refinance, sell, or move forward with confidence.

On top of that, any interest in real estate must be disclosed, even if you inherited a small share of property or your name is listed on a deed “for estate purposes” that you barely knew about. For many Michigan families, the home is their most important asset — and the wrong filing decision can put it at risk.

By contrast, Chapter 13 allows you to protect your home and any real estate interest. If you are behind on payments, we can help you catch up on past-due mortgage payments within a structured repayment plan. For many families, this approach provides not only financial relief, but also peace of mind knowing their home is safe.

• Key takeaway: Filing the wrong chapter can put your home on the line — but the right attorney can help you protect it and keep your peace of mind.

Loss of Property

A Detroit-area client once filed Chapter 7 on their own, unaware that their annual tax refund counted as an asset. The trustee claimed it, and the debtor lost several thousand dollars they had counted on for bills. An attorney could have structured the filing differently and used available exemptions to protect that refund for necessary living expenses.

• Key takeaway: Without guidance, you could lose money or property — but with the right attorney, exemptions can help protect what matters most.

Why Paying Back Family Before Bankruptcy Can Hurt Everyone

It’s natural to want to repay a debt to a friend or family member before filing for bankruptcy — especially if they loaned you money when times were tough. But under bankruptcy law, these payments are considered preferential transfers and must be disclosed. If you file under the wrong chapter, the trustee can claw back that money, suing your loved one to force repayment.

Similarly, transferring assets like a car or home deed to a relative “to keep it safe” won’t work. Michigan trustees can unwind these transactions, pulling your family directly into your financial difficulties.

In Chapter 13, however, these issues can usually be resolved without added stress. Payments to family can be accounted for inside your repayment plan, and you keep control of your assets. The right attorney will help you address debts fairly while protecting your relationships.

• Key takeaway: Family and friends don’t need to get dragged into your bankruptcy — with the right plan, you can resolve debts without involving loved ones.

Denied Discharge

Bankruptcy relief depends on honesty and accuracy. If mistakes look like concealment or fraud, the court can deny your discharge entirely. In a landmark Supreme Court case (Marrama v. Citizens Bank, 2007), the Court ruled that debtors who misrepresent assets may lose the right to convert their case or obtain relief. The takeaway? Even innocent mistakes can carry harsh penalties.

• Key takeaway: Mistakes can jeopardize your discharge — but an experienced attorney ensures your case is filed correctly and in good faith.

Extra Costs for Trustees and Attorneys

We recently assisted a Michigan client who first filed Chapter 7 without an attorney, then later needed to convert to Chapter 13. Because of the misfile, the court allowed a $5,000 administrative claim for the Chapter 7 trustee’s attorney — a cost that could have been avoided had the correct chapter been filed from the start.

What began as an attempt to save money ended up costing far more — not just in dollars, but in months of added stress. Choosing the right chapter, with the right attorney, can prevent this from happening to you.

• Key takeaway: Filing the wrong chapter can create costly delays — but the right legal guidance helps you avoid extra fees and stress.

The good news is that these risks are completely avoidable. When you understand the differences between Chapter 7 and Chapter 13 — and have the right Michigan bankruptcy attorney guiding you — bankruptcy becomes a safe and powerful tool to protect your property and give you a true fresh start. Let’s look at how each chapter works.

How Chapter 7 and Chapter 13 Work in Michigan

Many people wonder: What’s the difference between Chapter 7 and Chapter 13? Here’s a side-by-side look, tailored to Michigan residents:

Choosing the right chapter is not just about filling out forms. It requires analyzing your income, assets, debts, and goals under Michigan’s exemption laws and bankruptcy court practices.

Understanding the difference between Chapter 7 and Chapter 13 is just one part of the equation. The next — and equally critical — step is making sure you have the right guidance when you file.

Why DIY Bankruptcy and Inexperienced Attorneys in Michigan Often Cost More Than Hiring the Right Lawyer

When you’re overwhelmed by debt, it’s tempting to look for the quickest or cheapest way out. Some people try filing bankruptcy on their own using online forms or “DIY kits.” Others hire the first attorney they find — sometimes a lawyer who only dabbles in bankruptcy rather than focusing their practice on it.

Here’s the problem: bankruptcy is one of the most technical areas of law. Every case requires careful analysis of your income, assets, debts, exemptions, and long-term goals. A simple error — whether by a debtor filing pro se or by an inexperienced lawyer — can create consequences that last for years: lost property, delayed discharges, extra trustee fees, or even a dismissed case.

At Acclaim Legal Services, we’ve seen both scenarios firsthand: clients who started out filing on their own, and clients who came to us after another attorney mishandled their case. In both situations, fixing mistakes was far more expensive and stressful than doing it right the first time. The truth is, DIY bankruptcy and inexperienced representation rarely save money — they usually cost more.

Red Flags of Inexperienced Bankruptcy Attorneys

If you’re considering bankruptcy in Michigan, watch out for these warning signs that an attorney may not have the experience you need:

• Bankruptcy isn’t their main focus. If the attorney handles “a little bit of everything” — divorce one week, personal injury the next — they may not know the unique local rules and trustee practices that make all the difference in a bankruptcy case.
• They don’t take the time to review your full financial picture. A strong attorney will carefully examine your income, assets, debts, and goals before recommending a chapter. A rushed “one-size-fits-all” approach is a recipe for mistakes.
• They promise quick fixes without explaining risks. Be cautious of lawyers who only talk about how fast you’ll get relief, but don’t explain exemptions, trustee powers, or potential pitfalls.
• They miss deadlines or court requirements. Bankruptcy is deadline-driven. One missed filing can mean dismissal of your case — forcing you to start over and pay more.
• They aren’t familiar with Michigan trustees or courts. Local knowledge matters. Each trustee has their own approach, and experienced attorneys know how to prepare clients for those meetings and hearings.

The good news? These risks are completely avoidable. An experienced Michigan bankruptcy attorney will do the opposite: focus solely on bankruptcy, take the time to review your full financial picture, and guide you through every step with confidence.

Why “Fixing It Later” Is Risky and Costly

Many people think they can correct a bankruptcy mistake down the road — for example, by converting from Chapter 7 to Chapter 13 or refiling after a dismissal. While it’s sometimes possible, the process is rarely smooth. What could have been a straightforward path to relief often becomes more complicated, stressful, and expensive than if the case had been filed correctly the first time.

Here are a few of the risks:

• Objections – Trustees or creditors can challenge your attempt to change chapters or restart your case, creating delays and added hearings.
• Eligibility hurdles – Not everyone qualifies for Chapter 13 repayment plans, and discovering this late in the process can leave you without options.
• Extra costs – Conversions often involve additional attorney fees, trustee claims, and court expenses that quickly add up.
• Delays – Instead of resolving in a few months, your case could drag on for years — keeping you in financial limbo.

Key takeaway: Fixing mistakes later is stressful, costly, and uncertain — but filing correctly with the right attorney from the start gives you peace of mind.

Why Choose Acclaim Legal Services?

At Acclaim, we’ve helped over 20,000 Michigan families find financial freedom through bankruptcy and debt resolution. Here’s why people trust us:

• Focused experience: Bankruptcy is all we do — Chapter 7 and Chapter 13 cases across Michigan.
• Local knowledge: We know the judges, trustees, and court procedures in Detroit, Flint, Lansing, Grand Rapids, Ann Arbor, and beyond.
• Personalized strategy: We sit down with you to evaluate your full financial picture and choose the chapter that truly fits.
• Empathy and respect: We understand the stress you’re under. Our role is to guide you, not judge you.
• Proven results: We’ve protected homes, stopped garnishments, saved vehicles, and helped clients eliminate millions in unsecured debt.
• Flexible options: We offer free consultations and payment plans so legal help is accessible.

Frequently Asked Questions (FAQs)

1. What’s the difference between Chapter 7 and Chapter 13 in Michigan?
Chapter 7 eliminates most unsecured debts quickly, but not everyone qualifies, and some assets may be at risk. Chapter 13 reorganizes debts into a payment plan while protecting assets like your home and car.

2. Can I file bankruptcy in Michigan without a lawyer?
Technically yes, but it’s extremely risky. Even one mistake can result in losing property, your case being dismissed, or your discharge being denied. Courts hold you to the same standard as attorneys.

3. Can I switch from Chapter 7 to Chapter 13 in Michigan?
Yes, but it’s not automatic. Creditors or trustees can object, and you must meet Chapter 13 eligibility requirements. Judges can also deny conversion if they find bad faith.

4. What happens if my bankruptcy case is dismissed in Michigan?
If your case is dismissed, creditor protections (like the automatic stay) end. You may also lose the ability to refile immediately. Hiring the right attorney may prevent dismissals from occurring.

5. How long does bankruptcy stay on my credit report?
A Chapter 7 bankruptcy typically stays for 10 years; Chapter 13 for 7 years. But many clients see improved credit scores within 12–24 months after discharge.

6. How much does a Michigan bankruptcy attorney cost?
Fees vary, but are usually less than the cost of losing assets or paying administrative claims. At Acclaim, we offer affordable payment plans.

7. What should I do before filing bankruptcy in Michigan?

• Gather pay stubs, tax returns, and bank statements
• Avoid transferring property or repaying friends/family before filing
• Don’t ignore lawsuits or garnishments — bankruptcy may stop them
• Schedule a free consultation to discuss your options

8. Will bankruptcy stop creditor harassment and wage garnishments in Michigan?
Yes. Filing bankruptcy triggers the automatic stay immediately, stopping lawsuits, collection calls, garnishments, foreclosures, and repossessions.

Take the First Step Toward Relief

If you’re considering bankruptcy in Michigan, don’t leave it to chance or an online program. Talk to a team that knows the law, knows the courts, and knows how to protect what matters most to you.

Call Acclaim Legal Services today at 866-261-8282 to schedule your free, confidential consultation.

A fresh start begins with filing the right case, the right way, the first time. Don’t wait — relief and peace of mind are only a phone call away.

Take the first step toward peace of mind.

We’ll connect you with a debt relief attorney for a free, no-pressure consultation.