What is a Chapter 7 bankruptcy?

Will I lose everything that I own? No, this is a popular myth. In the vast majority of cases, you can keep your home and your car along with all your other assets.

What does a Chapter 7 bankruptcy do? It will eliminate all unsecured debt such as credit cards, medical bills, personal loans, deficiency balances, lawsuits, and garnishments.

What about my credit? In most cases, your credit will rebound quickly. Most people find their credit scores improving 30 to 100 points in the first year following a bankruptcy discharge.

Contact Hammerschmidt Stickradt & Associates now to talk to an experienced Chapter 7 Bankruptcy Lawyer who has helped other people like to get a fresh start..

Seeking Financial Freedom?

How would you like to wake up not worrying about your creditors or loan balances? Our Michigan Bankruptcy Attorneys can help you attain new financial freedom! Worried about the cost? We offer payment plans for all budgets and a free credit rebuilding program!

Chapter 7 Bankruptcy in Royal Oak, MI

Filing a Chapter 7 bankruptcy can help you wipe out many kinds of debt. When debts are discharged, debtors no longer have the legal obligation to pay them back. In addition, declaring bankruptcy helps borrowers get relief from creditor harassment. Should lenders continue collecting payment from you, they can face penalties under bankruptcy laws.

In a Chapter 7 bankruptcy, also called consumer liquidation bankruptcy, your non-exempt assets shall be placed in an estate and managed by a trustee who will be responsible for selling the properties and distributing the proceeds to your creditors. If you want to keep secured debts under this type of bankruptcy, you will need to sign a “Reaffirmation Agreement.”

Dischargeable debts include your credit card balance, unpaid medical bills, personal loans, business-related debts, civil court judgment, utility bills, and many more. On the other hand, nondischargeable debts in Michigan include child support, alimony, debts that are fraudulent, student loans, and taxes. 

Who Files for Chapter 7?

The majority of bankruptcy applicants file under this chapter, but not all are eligible. To determine if you qualify for this kind of bankruptcy with your circumstances considered, speak with one of our Michigan bankruptcy lawyers. We will carefully explain the nuances of each type to help you arrive at an informed choice, and guide you through the bankruptcy process. 

You must pass a “means test” to qualify for Chapter 7 if you have mostly consumer debt. If your monthly income (based on the previous 6-month average) is less than the typical household income for your size, you will most likely qualify for Chapter 7. There is a second test called the “totality of the circumstances” that may disqualify you, although most persons who pass the means test will also pass the second exam. Even if your income is higher than the median, you can still defeat the means test and qualify for Chapter 7 bankruptcy – it simply requires a little more effort to look at your income and spending and see if there are any unusual circumstances we can exploit to get you through a Chapter 7 bankruptcy.

Should I File a Chapter 7 Bankruptcy?

Many families in Michigan face overwhelming debt and struggle to attain financial freedom. Chapter 7  is one of the most viable methods of bankruptcy to fix your debt problems. To check your eligibility, you will need to take the bankruptcy means test which will examine all your assets, income, and expenses. You must not have filed a Chapter 7 bankruptcy case in the past 8 years, or a Chapter 13 case in the past 6 years to remain eligible. 

Advantages of Chapter 7

  • Stop house foreclosures and vehicle repossessions for the time being.
  • Put an end to the garnishments.
  • Stop making unwanted phone calls.
  • Credit card debt as well as personal and payday loans will be paid off.
  • Medical costs will be discharged.
  • Resolve any issues with auto repossessions.
  • Resolve any outstanding tax bills or overpayments of government benefits.

In most situations, the procedure takes 3 to 4 months.

If you’ve fallen behind on your mortgage or auto payments, Chapter 7 will stop foreclosures and repossessions for the time being. However, since Chapter 7 does not include a repayment plan, if you want to preserve your house or automobile by catching up on payments, you’ll need to file a reorganization under Chapter 13 (or even Chapter 11 in certain situations).

How Chapter 7 Works in Michigan

There are several steps involved when filing for a Chapter 7 bankruptcy in Michigan and you can check the bankruptcy process overview to get the general picture. Before filing your bankruptcy application, you will need to undergo credit counseling as mandated by the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act. The BAPCPA also requires a filer to take a bankruptcy means test to check if your income exceeds Michigan’s median income standard. If you go above the limit, you will be declared ineligible for Chapter 7 bankruptcy. Once you go through these steps, you should consult with your legal representative to know which of your properties fall under Michigan’s exemption rules and help prepare your paperwork.

Prepare your bankruptcy documents

You will need several personal and financial documents including a list of all your debts during your first meeting with an HS&A, P.C. Law bankruptcy lawyer. Setting up an interview with our Michigan bankruptcy attorneys will help clients like you determine the best course of action to attain financial freedom.

File your bankruptcy petition

Our bankruptcy lawyers will be signing and filing your bankruptcy documents with utmost care. Over the years, our clients have trusted HS&A, P.C. Law and we have helped over 10,000 debtors attain the fresh financial start they’ve been wanting to have. 

Wait for the bankruptcy decision

It can take up to 4 months to finalize your bankruptcy case. Once the date and time of your bankruptcy application are set, your creditors can no longer make any attempts at collecting debts that are discharged by the bankruptcy court. Should any lender demand payment after your bankruptcy is resolved, your Michigan bankruptcy attorney will sue the creditor. 

What Assets will be Protected From Creditors?

To determine which of your assets and properties can be protected from collecting creditors in a Chapter 7 bankruptcy, the state of Michigan has a bankruptcy exemption chart for reference. This chart shows property exemption limits which are calculated by getting the difference between your debt on an asset and its current value. 

There are general guidelines followed when deciding which property will or will not be protected. 

  • Secured loans can be kept as long as payments are up-to-date and the equity is covered by state exemptions. 
  • If you are currently on payments but the equity is not covered by exemptions, the trustee has the right to liquidate that property.
  • If you’re married, you can file bankruptcy with your spouse or as an individual. The former is preferred as you can claim more sets of exemptions.
  • You must pay to the trustee the equivalent value of a non-exempt property if you want to keep it. 

Get Help From our Compassionate Michigan Bankruptcy Attorneys

The HS&A, P.C. Law has served over 10,000 clients in Michigan. Our team of bankruptcy attorneys personally and fully evaluates each of our client’s cases to make sure they get a favorable outcome. We will help get you on the road to financial freedom.

Speak with one of our Michigan bankruptcy attorneys today to get a free case review. Call us if you wish to find out more about a Chapter 7 bankruptcy and how it can be the best-fit debt relief option for you.