Bankruptcy is a word that often conjures up negative images of a hopeless financial future, Although filing for bankruptcy is a humbling experience, it can be a necessary evil that one must come to terms with when faced with crippling debt, a sudden job loss, or a debilitating injury.
With the state of Michigan having the highest unemployment rate in the nation, you should know that if you are considering filing for bankruptcy, you are not alone.
Now, first things first. In order to be eligible to file, you must have resided in the state of Michigan for a period of more than 6 months. If this applies to you, then you should consider which division of federal bankruptcy court you will want to pursue, Chapter 7 or Chapter 13.
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Chapter 7 or Chapter 13?
It is important to know the differences between the two types of bankruptcy before you file. The traditional Chapter 7 bankruptcy is essentially a liquidation of all your non-exempt assets and property. The appointed bankruptcy trustee will convert your assets to cash, pay off the creditors and let you start off fresh. If you have no assets, this approach usually forgives most of your debts.
Chapter 13 bankruptcy is called a reorganization. If you still have a job or predictable income, Chapter 13 lets you work out a longer term debt payment schedule (3 to 5 years) that will allow you to keep your assets and property while reducing some of your debt obligations. With recent changes in the law, it has become more difficult to file Chapter 7 as many people in serious debt are still gainfully employed, so it is best to contact a bankruptcy attorney to help you determine which approach would be best for you to take.
Once you've determined which division of bankruptcy you can file for legally, follow the steps below to be on the right path toward achieving relief from your financial burdens.
Where To File In Michigan
For your convenience, there are two distrincts of bankruptcy court in the state of Michigan, the Eastern District and Western District. Each district also has offices that serve specific counties. For example, if you live in Jackson, Lenawee, Macomb, Monroe, Oakland, St. Clair, Sanilac, Washtenaw, or Wayne country, your Eastern District court address is 211 West Fort Street in Detroit. If you live in Genesee, Lapeer, Livingston, or Shiawassee county, you go to 226 West Second Street in Flint. Finally, if you live in the upper north east of Michigan, the office you will need to attend is at 111 First Street in Bay City. For more information about hours, rules or to download court forms, check out the official Eastern District Court Website.
The Western District of Michigan has five courtrooms located in Grand Rapids, Kalamazoo, Lansing, Marquette, and Traverse City respectively. For the specific address of the court office in your county, check out the official Western District Court Website. Take note that all the legal forms you will need are also available online, so be sure to save yourself some driving time by printing and filling these out before going to the courtroom.
Steps Toward Bankruptcy
1. Visit your local bankruptcy court. Make a list of all your assets and liabilities, as well as a schedule of your current income and expenditures, including those that are revolving like house bills. Be sure to make a full disclosure of all your investment or retirement accounts, as well. Not everything is legally subject to being lost, but you must let the federal government know of any and all sources of wealth or income.
2. Give the court copies of your last few years of tax returns, as well as, a copy of all your bank account statements.
3. Attend a federally approved credit counseling session. Be sure to retain the certificate of completion that you will receive from the counsellor, as you cannot file for bankruptcy in Michigan without it.
4. Get all the required bankruptcy forms from the court (or download them from their website) and fill them out very carefully. Take note of any special instructions that indicate which documents or copies you'll need to put into your bankruptcy petition. Remember, if this part is confusing to you, it may behoove you to employ the services of a Michigan bankruptcy lawyer to handle all the paperwork.
5. Bring your forms to your local U.S. Bankruptcy Court along with your payment. (As of writing, Chapter 7 and Chapter 13 in Michigan cost under $300, respectively). If you do not have the funds to pay the fee, the court may allow you to pay this in installments.
6. When you get notice of your 341 hearing (a meeting of the creditors that you owe money), make certain that you attend it. The creditors may try to object to your filing, but if you have been truthful to the court from the beginning about your financial circumstances, the court should allow the bankruptcy to proceed.
7. Watch for any other notices from the courthouse that could require your presence at a hearing. You will likely only need to go to the court one more time for your bankruptcy completion, but you never know, so be sure to pay attention to all letters you receive from the court.
Above all, hold you head up high and understand that tens of thousands of people each year need to go through this process to get a fresh start. Good luck!
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