Understand What Chapter 7 Bankruptcy Can Do.

Many individuals end up with too much debt due to medical bills, losing their job, or other unexpected problems. If you’re in Royal Oak, MI, and searching for assistance with bankruptcy Chapter 7 near you, you’re not alone. This legal process can offer relief by liquidating certain assets to discharge debts.

Quick Summary:

  • Chapter 7 bankruptcy wipes out most of your regular debts, like credit cards, medical bills, and personal loans. This gives you a clean slate to start over financially.
  • When you file for Chapter 7, it stops creditor collection efforts due to automatic stay. This means no more harassing phone calls or taking money from your paycheck.
  • Chapter 7 simplifies finances by discharging debt, allowing you to focus on rebuilding your credit score.
  • Michigan’s exemption laws shield essential assets from liquidation during Chapter 7.

What Is Chapter 7 Bankruptcy

Bankruptcy Chapter 7 is often referred to as “liquidation bankruptcy.” It is a legal process designed to provide individuals with a fresh financial start. It eliminates most unsecured debts. These may include:

  • Credit card debt
  • Medical bills
  • Personal loans
  • Payday loans
  • Unpaid rent (with limitations)
  • Utility bills
  • Past-due phone bills

In a Chapter 7 case, a court-appointed trustee gathers your non-exempt assets and sells them to pay back your creditors to the extent possible.  However, most people don’t have enough assets to cover all their debts, and the remaining unsecured debts are discharged by the court.

Chapter 7 typically doesn’t remove secured debts or certain priority debts. Secured debts like car loans and mortgages are collateral, so you may be able to keep the property by continuing your payments.

Child support, alimony, and recent tax debts remain your responsibility even after filing for Chapter 7.

Why Should You Apply For Chapter 7 Bankruptcy? 

Chapter 7 bankruptcy offers a powerful tool for individuals struggling with overwhelming debt. Understanding its benefits, you can make an informed decision about your financial future.

  • Debt Elimination: The benefit of Chapter 7 is the discharge of most unsecured debts.   Imagine the weight lifted from your shoulders – a clean slate allowing you to breathe.
  • Stop Creditor Harassment:  When you file for Chapter 7, an automatic stay goes into effect. This legal protection immediately halts collection efforts from creditors. No more harassing phone calls, threatening letters, or wage garnishments. You can finally achieve peace of mind.
  • Financial Simplification: Managing many debts and creditors can be overwhelming. Chapter 7 simplifies your finances by eliminating these complexities. You can focus on creating a manageable budget and rebuilding your credit score, one step at a time.
  • Fresh Start for Your Future:  Debt can feel like a prison, holding you back from your financial goals. Chapter 7 offers a chance to break free and start fresh.  With your discharged debts, you can plan for a secure future.
  • Asset Protection: Michigan has laws that protect assets from being sold for the case.  Your attorney can ensure you maximize these exemptions and protect your belongings.

In summary, Chapter 7 bankruptcy offers significant benefits for individuals struggling with debt. Chapter 7 bankruptcy can provide a way to financial stability and a fresh start. But, it is important for people who want to pursue bankruptcy to contact an attorney to assist them. 

How Do You Apply For Chapter 7 Bankruptcy?

While the benefits of Chapter 7 bankruptcy can be great, knowing the process is essential. Here is a breakdown of the general steps involved:

Pre-Filing Preparation:

  • Consultation: The first step is to schedule a consultation with a bankruptcy attorney. They will check your financial situation, and check if bankruptcy is the best action for you.
  • Debt and Income Gathering: Put together documents about your income and debts. This information is important for completing the bankruptcy petition.

The Petition and Means Test:

  • Petition Filing: You file the petition with the court. This document details your financial situation, including assets, liabilities, income, and expenses.
  • Means Test: The means test is a tool used by the court to assess your eligibility for Chapter 7. It checks if your income, after basic needs, is low enough to justify wiping out your debts through Chapter 7. An attorney can guide you through the means test and ensure its accuracy.

The Automatic Stay and Creditor Meeting:

  • Automatic Stay: Once you file, an automatic stay goes into effect. This stops collection efforts from creditors, giving you a much-needed break from harassment.
  • Creditor Meeting: A court-ordered meeting with your creditors will be scheduled. Your attorney will represent you and ensure the meeting proceeds smoothly.

Debtor Education and Case Administration:

  • Debtor Education Course: You are required to complete a financial management course by the U.S. Trustee program.
  • Case Administration: Your bankruptcy trustee will oversee the administration of your case. This includes asset liquidation (if applicable) and debt discharge.

Debt Discharge and Moving Forward:

  • Debt Discharge: If the judge approves your bankruptcy, all viable debts are gone.
  • Rebuilding Your Credit: Yes, it will hurt your credit score, but by using your money well, you can fix it over time.

What Are The Limitations Of Chapter 7 Bankruptcy?

While Chapter 7 bankruptcy is a tool for dealing with debt, it is important to know what it can’t do.

  • Doesn’t End All Debts: Chapter 7 only discharges unsecured debts. Secured debts are not included, so you may need to keep making payments or surrender the property.  Some priority debts, like child support, also generally remain your responsibility.
  • Impact on Credit Score: Filing for bankruptcy will impact your credit score. But, with smart credit management practices, you can rebuild your score over time.
  • Potential Asset Loss:  In some cases, the court may order the sale of some assets to pay back creditors.
  • Long-Term Repercussions: Bankruptcy stays on your credit report for up to 10 years. This can prevent you from getting loans in the future.
  • Ineligibility for Future Chapter 7 Filings: There are limitations on how often you can file for Chapter 7 bankruptcy.  In general, you must wait eight years from your previous Chapter 7 filing to be eligible again.

Get In Touch With Our Bankruptcy Attorneys Now!

Considering bankruptcy can be overwhelming. You’re likely facing:

  • Mounting Debt: Medical bills, credit cards, and other debts can spiral out of control, causing sleepless nights and constant worry.
  • Harassment from Creditors: Dealing with relentless calls and collection notices can be stressful and affect your daily life.
  • Loss of Control: Feeling powerless over your finances can take a toll on your mental and emotional well-being.

At Hammerschmidt Stickradt & Associates, we have extensive experience helping clients in Royal Oak and surrounding areas navigate the complexities of bankruptcy. Our team possesses the following qualifications to effectively address your situation:

  • Deep Knowledge of Bankruptcy Laws: We stay up-to-date on Michigan bankruptcy laws to ensure you receive the best possible outcome.
  • Compassionate Representation: We understand the emotional strain of debt and will guide you through the process with empathy and respect.
  • Proven Track Record of Success: We have a strong history of helping clients achieve financial relief.

Don’t wait any longer. Contact Hammerschmidt Stickradt & Associates today for a free consultation. Let’s discuss your options and explore a path towards a brighter financial future.