Chapter 13 Bankruptcy in Michigan: Understanding Your Dismissal Rights and Discharge Options

We know why you're here.

You've probably spent weeks — maybe months — lying awake at night:

• Running through the numbers over and over
• Wondering how you got here
• Trying to figure out if there's a way forward that doesn't involve losing everything you've worked for

Maybe you're dealing with one of these situations right now:

• Foreclosure notices have started arriving in the mail
• Your paycheck is being garnished and you're not sure how you'll cover groceries
• You're exhausted from the constant anxiety of waiting for the next collection call
• Creditors won't stop calling, and you feel trapped with no way out

Here's what we want you to know right now, before you read another word:

You're not alone, and you're not out of options.

The fact that you're researching Chapter 13 bankruptcy in Michigan means you're taking the hardest step — acknowledging you need help and looking for real solutions. That takes courage, even when it doesn't feel like it.

What Our Clients Tell Us

We've walked hundreds of families across Metro Detroit and mid-Michigan through this exact moment. And one of the first things they tell us — once they finally pick up the phone — is how much time they spent worrying about the wrong things.

Most people come to us afraid they're going to:

• Get locked into something they can't change if life gets worse (or better)
• Lose control over their financial decisions
• Make things even harder for their family

Here's the Truth That Surprises Almost Everyone

Chapter 13 bankruptcy isn't about trapping you — it's about giving you breathing room and a clear path forward. And unlike other options, it actually gives you more control, not less.

Before calling a bankruptcy attorney, our clients share the same specific concerns:

• "Can I dismiss my Chapter 13 if my situation changes?"
• "What if my income goes up or down during the repayment plan?"
• "What if I start the process and realize it's not right for me?"

These concerns are completely valid. And they deserve honest, detailed answers — which is exactly what you'll find in this guide about Chapter 13 bankruptcy dismissal rights in Michigan.

Can You Dismiss a Chapter 13 Bankruptcy in Michigan?

Yes — and understanding this right gives you more control than you might think.

Unlike Chapter 7 bankruptcy, which doesn't allow voluntary dismissal once filed, Chapter 13 bankruptcy gives you the flexibility to dismiss your case if circumstances change. You're not locked in.

Federal bankruptcy courts have consistently held that a Chapter 13 debtor's right to dismiss is "absolute" under 11 U.S.C. §1307(b) as long as the case hasn't been converted from Chapter 7. The 2025 In re Youngjae Sun decision reaffirmed this right, even when creditors object to the dismissal.

Important: Courts only restrict dismissal rights when debtors have acted in bad faith — such as hiding assets, falsifying documents, or filing to stall foreclosure with no genuine intent to repay debts. For honest filers working with a qualified Michigan bankruptcy attorney, this is rarely an issue.

While you can dismiss your Chapter 13 case, completing your repayment plan and obtaining a discharge typically provides the greatest financial benefit — especially if you're trying to stop foreclosure in Michigan, protect your vehicle, or eliminate unsecured debt.

Chapter 13 vs Chapter 7 Bankruptcy: Which Offers More Flexibility?

When comparing Chapter 13 vs Chapter 7 bankruptcy, dismissal rights are a key difference:

Chapter 13 Bankruptcy

• Voluntary dismissal allowed if case hasn't been converted
• Can modify your Chapter 13 plan if income changes
• Allows you to catch up on mortgage arrears and stop foreclosure
• Protects assets that might be at risk in Chapter 7
• Repayment plan typically lasts 3-5 years

Chapter 7 Bankruptcy

• No voluntary dismissal once filed
• Faster process (3-4 months typically)
• No repayment plan required
• May require liquidation of non-exempt assets
• Doesn't allow you to catch up on secured debts like mortgages

For Michigan residents facing foreclosure or vehicle repossession, Chapter 13 bankruptcy often provides more protection and flexibility.

What Happens If You Dismiss Your Chapter 13 Bankruptcy?

Understanding the consequences of Chapter 13 dismissal helps you make informed decisions about your bankruptcy case.

Financial Consequences of Dismissal

Unsecured Debt Interest Resumes

During your Chapter 13 bankruptcy plan, credit cards, medical bills, and personal loans don't accumulate interest. After dismissal, creditors can immediately add:

• Interest charges
• Late fees
• Collection costs

Mortgage Arrears Return With Added Costs

If you were using Chapter 13 to stop foreclosure in Michigan by catching up on past-due mortgage payments at 0% interest, dismissal resets everything. Lenders can:

• Add default interest and late charges
• Demand full reinstatement payment
• Resume foreclosure proceedings

Secured Debts Revert to Original Terms
Auto loans being repaid at reduced rates through your Chapter 13 plan go back to original interest rates and payment amounts.

Automatic Stay Protection Ends
The automatic stay — federal bankruptcy protection that stops creditor actions — ends immediately upon dismissal. Creditors can resume:

• Wage garnishments
• Lawsuits
• Repossession
• Foreclosure

Tax Debt Collections Resume
Chapter 13 bankruptcy often pauses interest and penalties on tax debt. Dismissal restarts these immediately.

Limited Protection If You Refile
If you dismiss and later need to file bankruptcy again, the automatic stay may only last 30 days unless you get court approval for an extension.

Real-World Example: The Cost of Dismissal

Sarah, a Metro Detroit resident, was three years into her Chapter 13 bankruptcy plan. She'd been catching up on $18,000 in mortgage arrears with no interest while paying down credit card debt at frozen balances.

When she received a job offer out of state, she considered dismissing her case. Here's what would have happened:

• $18,000 mortgage arrears would have added approximately $4,500 in interest and fees
• Credit cards would resume charging 24% interest
• Car loan payment would increase $200/month to original terms

Instead, her Michigan bankruptcy attorney helped her modify her Chapter 13 plan to account for her move and higher income. She completed the plan, received her discharge, and moved with a clean financial slate.

The Benefits of Completing Your Chapter 13 Bankruptcy Plan

What Chapter 13 Discharge Means for Michigan Residents

When you complete your Chapter 13 bankruptcy repayment plan and receive your discharge:

• Unsecured Debts Are Eliminated Permanently
  • Credit cards, medical bills, and personal loans included in your plan are wiped out — not just paused.
• Mortgage Arrears Stay Resolved
  • The past-due payments you caught up on remain settled permanently. No retroactive charges. No foreclosure risk.
• Legal Protection Continues
  • Your Chapter 13 discharge is a permanent court order. Creditors can't reverse it or attempt to collect on discharged debts.
• You Can Rebuild Credit With Confidence
  • No more collection calls, lawsuits, or wage garnishments for discharged debts.

Can You Modify a Chapter 13 Plan in Michigan?

Yes — and this is a key advantage of Chapter 13 bankruptcy.

If your financial situation changes during your repayment plan, you don't have to choose between dismissal and an unmanageable payment. A qualified Michigan bankruptcy attorney can help you:

• Reduce monthly payments if income decreases
• Adjust the plan if expenses increase
• Request hardship modifications for temporary financial setbacks
• Extend the plan if you need more time to catch up

This flexibility means your Chapter 13 bankruptcy plan can adapt to life changes rather than forcing you to dismiss and lose all the progress you've made.

When Chapter 13 Bankruptcy Makes Sense in Michigan

You should seriously consider Chapter 13 over Chapter 7 bankruptcy if you need to:

• Stop foreclosure and catch up on mortgage payments
• Prevent vehicle repossession
• Consolidate multiple debts into one manageable payment
• Protect assets that might be at risk in Chapter 7
• Pay off tax debt over time
• Keep secured property while reorganizing debt

Chapter 13 bankruptcy provides protection and flexibility that Chapter 7 simply can't offer.

Why Choose Acclaim Legal Services for Chapter 13 Bankruptcy in Michigan

As an experienced Michigan bankruptcy law firm, we help clients across Metro Detroit and mid-Michigan navigate Chapter 13 bankruptcy with confidence.

Our Chapter 13 Bankruptcy Services Include:

• Qualification and Plan Development
  • We help you build a Chapter 13 repayment plan you can actually complete.
• Plan Modifications
  • When life changes, we adjust your plan so you stay protected without having to dismiss.
• Legally Stop a Foreclosure Sale
  • We use Chapter 13 bankruptcy to stop foreclosure and help you keep your home.
• Creditor Negotiations
  • We handle communications with creditors so you can focus on moving forward.
• Discharge Guidance
  • We guide you through completion to ensure you get the full benefits of your Chapter 13 discharge.

FAQ: Chapter 13 Bankruptcy in Michigan

Can I dismiss my Chapter 13 bankruptcy in Michigan at any time?

Yes, as long as your case hasn't been converted from a Chapter 7. Federal law gives you the right to dismiss under 11 U.S.C. §1307(b). Courts only restrict this right in rare cases involving fraud or bad faith.

What happens to my mortgage if I dismiss my Chapter 13?

Your mortgage arrears return to collectible status, with interest and late fees added. Your lender can resume foreclosure proceedings immediately.

Can I modify my Chapter 13 plan if my income changes?

Yes. You can work with your Michigan bankruptcy attorney to modify your plan based on changes in income or expenses. This is often better than dismissing.

How long does Chapter 13 bankruptcy last in Michigan?

Most Chapter 13 bankruptcy plans last 3-5 years, depending on your income and debt situation.

Is Chapter 7 or Chapter 13 better for stopping foreclosure in Michigan?

Chapter 13 bankruptcy is typically better for stopping foreclosure because it allows you to catch up on missed mortgage payments over time while keeping your home. Chapter 7 doesn't provide this option.

What debts can be discharged in Chapter 13 bankruptcy?

Unsecured debts like credit cards, medical bills, and personal loans can be discharged. Some tax debts may also qualify. Student loans generally cannot be discharged except in cases of undue hardship.

Will I lose my car in Chapter 13 bankruptcy?

No. Chapter 13 bankruptcy typically allows you to keep your vehicle while catching up on payments or restructuring your auto loan.

How much does Chapter 13 bankruptcy cost in Michigan?

Filing fees and attorney costs vary. During your free consultation, we'll provide transparent pricing and discuss payment options.

Contact a Michigan Chapter 13 Bankruptcy Attorney Today

Don't navigate Chapter 13 bankruptcy alone. Get expert guidance from experienced Michigan bankruptcy attorneys who understand your situation and prioritize your financial recovery.

Free Consultation: Call 866-261-8282

Acclaim Legal Services serves clients throughout Metro Detroit and mid-Michigan. We'll help you:

• Understand whether Chapter 13 or Chapter 7 bankruptcy fits your situation
• Protect your home, income, and assets
• Create a repayment plan you can complete
• Achieve the Chapter 13 discharge and fresh start you deserve

Call today: 866-261-8282 for your free, confidential consultation with a qualified Michigan bankruptcy attorney.

Service Areas:
Metro Detroit | Ann Arbor | Lansing | Grand Rapids | Flint | Dearborn | Livonia | Warren | Sterling Heights | Troy | Westland | Farmington Hills | Southfield | Rochester Hills | Pontiac | Royal Oak

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