Filing a Chapter 7 in Royal Oak, MI

You may begin a new chapter in your financial life by filing for bankruptcy, but only if you file for the sort of bankruptcy claim that is appropriate for your financial circumstances. Your assets and obligations will be assessed and the appropriate filing type determined by our team of experienced Royal Oak bankruptcy attorneys at Hammerschmidt Stickradt & Associates.  

The following is a comprehensive guide on Chapter 7 Bankruptcy in Royal Oak, Miami, for your reference. We will cover the following topics:

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What is Chapter 7 Bankruptcy?

There are several types of bankruptcy. Chapter 7 is often called the straight bankruptcy process and the most common among all bankruptcy chapters. It allows the debtors to eliminate most of their debts within three to six months from the date of the bankruptcy filing.  

This type of bankruptcy is commonly used by individuals who don’t have enough income to pay back what they owe to their creditors. It pays off most of their unsecured debts through liquidation of assets to help them gain a fresh start and rebuild their credit in six months. Chapter 7 bankruptcy also provides immediate bankruptcy protection to the debtor once all necessary paperwork has been filed in the United States Bankruptcy Court with the aid of a competent bankruptcy attorney.

Debt Amount Needed to File for Chapter 7 Bankruptcy

There is no minimum amount of debt that you should owe to be able to file for a Chapter 7 bankruptcy.

Does that mean anyone who wants to get out of debt is qualified for Chapter 7?

Short answer – No. 

Not everyone can qualify for a chapter 7 bankruptcy. The United States bankruptcy code would require you to take a two-part means test to determine eligibility.

The first part of the means test determines whether your total family income is lower than the median income. Suppose your monthly payment is higher than the state median. In that case, the court will then proceed to the second part of the test. They will consider your monthly living expenditures, secured debt payments, and allowances for three months to determine if there would be enough disposable income to pay all your debts. When the result of this test shows no disposable income, then you qualify for Chapter 7.

What to Do When You Qualify for Chapter 7

  • Pay bankruptcy fees, file the correct bankruptcy forms detailing your properties, debts, income, and expenses to begin the official bankruptcy proceedings.

  • Complete credit counseling from a court-approved nonprofit credit counselor.

  • Meet with a court-appointed United States bankruptcy trustee. The bankruptcy trustee handles and determines whether your assets can be liquidated and use the money to pay back your creditors. 

  • File for a bankruptcy exemption if there is personal property you want to save from being liquidated. 

  • Reaffirm your secured debts. A secured debt is a loan with collateral which the creditor can take when you default. Reaffirming your debt allows you to continue paying for the loan with the same terms or payment plans.

Once the court has determined your eligibility, the next thing you need to do would be to hire an exceptional bankruptcy lawyer from a respected bankruptcy law firm in Michigan. The bankruptcy attorney competent in bankruptcy laws will assist you in the steps of your bankruptcy proceeding, as mentioned above, to attain financial freedom. They can also attend the meetings on your behalf and guide you in filing for motions or objections when necessary.

Type of Debts Eligible for Dismissal After You File for Chapter 7

As mentioned earlier, bankruptcy will not eliminate all debts after a bankruptcy was filed and discharged. 

A bankruptcy petition will eliminate most of your debts except:

  • Alimony

  • Payment to an injury you have caused

  • Some fines and government debts

  • Student loans

Debts that can be discharged are your :

  • mortgage payment

  • car loan

  • unsettled medical debts due to large medical bills

  • credit card debts

  • personal loans

  • past due utility bills, and 

  • wage garnishments (legal withholding of paycheck to pay off a lender).

Benefits of Filing Chapter 7 in Royal Oak, MI

Can the Court Deny You from Filing for Chapter 7?  

There are several reasons for the court to deny a debtor from successfully filing chapter 7, and some of those reasons are:

  • You have enough income for debt repayment.
  • You  have a previous bankruptcy discharge – For you to qualify again, you need to wait eight years from the time the previous discharge was obtained.

  • The court has determined that you committed bankruptcy fraud. A fraudulent bankruptcy act happens when you conceal assets or lie about your income during a credit application.

Do You Need to Hire a Bankruptcy Lawyer? 

Absolutely! It is always advisable to seek legal help to protect the assets you wish to keep and not commit any grave mistakes while filing for bankruptcy. An experienced Royal Oak, Michigan bankruptcy lawyer who provides bankruptcy services can make your journey easier. Hammerschmidt Stickradt & Associates can help you with both Chapter 7 and Chapter 13 bankruptcy. If you think the attorney fees are too expensive, you can always ask first for a free legal consultation.