Timelines While Filing a Chapter 13 Bankruptcy in Michigan

A Chapter 13 Bankruptcy, simply put, is a court authorized debt consolidation program.  Because the Chapter 13 program provides court protection, the plan offers many unique benefits over traditional debt management programs.  Below are some of the benefits of consolidating debt under a Chapter 13 Bankruptcy:

• Legal protection from home foreclosure or vehicle repossession, as long as paperwork is filed prior to the sheriff's sale or vehicle auction;
• Debt reduction, such as:
  • Removal of a second mortgage or home equity loan;
  • Reduced interest rate on a vehicle loan and the ability to reduce principal owed on a vehicle after 2.5 years of ownership;
  • 0% interest repayment on unsecured debts, such as credit cards and medical bills.  Also, you only pay what you can reasonably afford over the course of the 36 - 60 month repayment timeline.  Whatever is not paid is legally eliminated at the completion of the program;
  • Court protection from your creditors for the full duration of the program.  No need to worry about judgments or garnishments derailing your debt management program.  This court oversight ensures that you can pay back your bills at a reasonable pace without harassment or legal actions from your creditors.
  • Improved credit due without any further late reporting to the credit bureaus and an improved debt-to-income ratio.

 As you can see, Chapter 13 offers many compelling reasons for consideration.  Our firm offers a free consultation to help you interpret how these concepts apply directly to your personal circumstances and also discuss other options you may have for debt resolution.  For over a decade, our firm has been dedicated to helping Michigan residents find lasting debt resolution through bankruptcy or debt settlement.  Call us today at 866-261-8282 toschedule a consultation over the phone or at any of our seven office locations in: Detroit, Ann Arbor, Flint, Dearborn, Warren, Lansing or Southfield.

Here is an overview of the various stages of filing Chapter 13 bankruptcy:

Pre-filing Bankruptcy Process

Before your case is electronically filed with the court, we take important steps to ensure everything is done properly.  Here are some of the items on that checklist:

• Credit Counseling:  This is done electronically or over the phone.  It is a short course that results in a certificate of completion that is filed with the court when we file your case.
• Documentation:  We will provide you a full checklist of documents we need to prepare your case.  Typical items we need are recent paystubs, last 2 years of federal and state income tax returns, recent statements for mortgages or vehicles, etc.
• Chapter 13 Plan Preparation:  We propose a budget based on your personal income and expenses.

Once the case is filed and a case number is established, legal protection is instantly in place and your creditors cannot take direct action against you.  

Court Confirmation Process

Once your case is filed, you are in the pre-confirmation process.  This allows your creditors and the Trustee to evaluate our proposed repayment plan before the bankruptcy judge confirms the plan.  Here is overview of some of the steps along the way:

• Paperwork to the Trustee:  The Trustee reviews paperwork
• 341 Hearing:  This is your first and only mandatory court appearance.  It is an administrative hearing with a Trustee, not a judge, and no rulings or opinions are issued.  It is simply an opportunity for creditors to ask any questions regarding the proposed repayment plan.  Our attorneys will be there to conduct the hearing for you.
• Creditor Proof of Claims:  Creditors are required to file a proof of claim within six months of the date of filing.  A proof of claim establishes the validity of debt and the amount that was owed at the time of filing.  If a creditor fails to file a proof of claim within this timeframe, the debt is legally eliminated (without any payment) at the completion (discharge) of the case.
• Objections:  It is common for creditors or even the Trustee to file objections to the confirmation of the Chapter 13 plan.  Many of the objections are often more procedural in nature and not obstacles to confirming the plan, it may be as simple as unanswered questions or a request for clarification of some element of the plan.  Either way, our job is to resolve any objections.
• Confirmation Hearing:  This is the final hearing before the case is officially confirmed with the court.  Often times, if all objections (if any) have been resolved in advance, we can attend the hearing without you or get the case "fast tracked" without the need for any further hearings.

Once your case is confirmed, you are required to maintain your payments for the duration of the plan, if a payment is missed our office will be there to assist you and get your case back on track .  

Post-Confirmation to Completion

Even though your case is confirmed, our firm still takes proactive measures to ensure that everything remains on track.  Here are some things that might occur after the confirmation process:

• Annual Reviews:  At least annually, the attorney assigned to your case will fully review the progress and take any steps necessary to correct issues.  We will send you a letter with the result of that audit.  You are always welcome to come and personally meet with your attorney to review your case or any issues that may arise.
• Creditor or Trustee Motions:  Throughout the case, your creditors and/or the Trustee has a right to file motions with the court if there are issues they want to address (i.e. missed plan payments or failure to maintain insurance on a vehicle being paid through the plan).  Again, our job is to work through these issues and defend the repayment plan.  We always work closely with you if additional information or documentation is necessary to respond to motions.
• Plan modifications:  If something changes with your circumstances (i.e. change in income or expenses) over the course of the 3 -5 year repayment plan we can make adjustments to the confirmed plan.  This is called a plan modification.
• Debtor Education Certificate of Completion:  When you case is approaching completion, we will notify you that it is time to complete the second half of credit counseling known as the Debtor Education Course.  Once complete, you will again be issued a certificate of completion that we file with the court.
• Discharge!   Once all plan requirements have been met and the Debtor Education Certificate has been filed, you are clear to discharge.  This signifies the legal elimination of:
  • Remaining portion of unsecured debts, such as credit cards, medical bills, etc.;
  • Unpaid balance of lien-stripped second mortgage or home equity loan;
  • Any debts associated with untimely filed Proof of Claims.

Less Debt, Improved Credit

Throughout the course of the program, you should expect your credit to improvethrough:

• Reduced debt-to-income ratio;
• Improved payment history through consistent and timely payments by the Trustee and no further late reports.

These two factors influence 65% of your credit score according to FICO. Call us today at 866-261-8282 to learn more about your options for debt resolution through the Chapter 13 program and other options for reducing or eliminating debt.   Our goal is always the same, find the best solution to provide lasting, long term financial security for our clients.  We offer same day phone or in-office consultations at any of our seven Michigan locations:  Detroit, Ann Arbor, Dearborn, Flint, Southfield, Lansing or Warren.