Because we couldn’t include everything in one article, you’ll want to check out its companion, What You Need to Know to File for Bankruptcy. You’ll find lots more details there.

How Does Bankruptcy Work in Michigan?

In most respects, filing for bankruptcy in Michigan isn’t different from filing in another state. The bankruptcy process falls under federal law, not Michigan state law, and works by unwinding the contracts between you and your creditors. That’s what gives you a fresh start.

But Michigan’s laws come into play in a significant way because they determine the property you can keep in your bankruptcy case. You’ll also need to know other filing information, which we explain after reviewing some basics.

How Do I Choose the Right Bankruptcy Chapter in Michigan?

Most people file either Chapter 7 or Chapter 13, and you’re not alone if you don’t know how the two differ. The short explanation below and our handy Chapter 7 versus 13 chart will help clarify things.

Filing for Chapter 7 in Michigan

Chapter 7 is often a bankruptcy filer’s first choice for several reasons. It’s quick, taking only a few months to complete. And it’s cheap. You don’t pay anything to creditors.

Chapter 7 bankruptcy works well for people who own mainly the essential items needed to live and work and not much else. People with more assets could lose them in Chapter 7 because the Chapter 7 trustee, the official responsible for the case, sells unnecessary luxury items and distributes the proceeds to creditors. For instance, you might have to give up your RV, baseball card collection, or timeshare in the Bahamas, even your house or vehicle if you have more equity than you’re allowed to keep.

Also, unlike Chapter 13, Chapter 7 has no payment plan option for catching up on late mortgage or car payments. So you could lose your home or car if you’re behind on the loan when you file.

Filing for Chapter 13 in Michigan

Chapter 13 involves repaying creditors some or all of what’s owed using a three- to five-year repayment plan. Chapter 13 filers keep everything they own, and the payment plan provides ways to improve sticky financial situations.

For instance, you can catch up on late payments and save your home from foreclosure or your car from repossession. Also, if you need time to repay a debt you can’t eliminate or “discharge” in bankruptcy, you can use Chapter 13 to force a creditor into a payment plan and repay your balance over time. Learn more about when filing for Chapter 13 is better than Chapter 7.

The biggest downside to this chapter? It can be expensive. Many people can’t afford the monthly payment. Also, businesses can’t file a Chapter 13 case. If you’re a business owner, it’s a good idea to learn about the ins and outs of small business bankruptcies before choosing the bankruptcy right for you.

Not Sure What to Expect in Bankruptcy?

Will Filing for Bankruptcy in Michigan Erase My Debts?

Bankruptcy wipes out many bills, like credit card balances, overdue utility payments, medical bills, personal loans, and more. You can even get rid of a mortgage or car payment if you’re willing to give up the house or car that secures the debt. (Putting property up as collateral creates a “secured debt.” If you don’t pay what you owe, the lender recovers the property.)

But you can’t discharge all debts. You’ll want to be sure that bankruptcy will discharge (get rid of) enough bills to make it worthwhile.

For instance, nondischargeable debts, like domestic support arrearages and recent tax debt, won’t go away in bankruptcy. Also, student loans aren’t easy to wipe out because you’d have to win a separate lawsuit (however, in 2024, steps have been taken to ease the student loan discharge process with a new student loan bankruptcy form).

How Do I Qualify for Chapter 7 or Chapter 13 Bankruptcy in Michigan?

You won’t be surprised to learn that qualifying for bankruptcy involves meeting several requirements. Because you’re only entitled to a discharge every few years, if you’ve filed before, you’ll want to check whether enough time has passed to allow you to file again. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. Learn more about multiple bankruptcy filings.

You’ll also need to meet specific chapter requirements. Here are the qualification basics for Chapters 7 and 13.

Chapter 7 Bankruptcy Qualifications

You’ll qualify for Chapter 7 bankruptcy if your family’s gross income is lower than the median income for the same size family in your state. Add all gross income earned during the last six months and multiply it by two. Compare the figure to the income charts on the U.S. Trustee’s website (select “Means Testing Information”).

Want an easy way to do this online? Use the Quick Median Income Test. If you make too much, you still might qualify after taking the second part of the “means test.” If, after subtracting expenses, you don’t have enough remaining to pay into a Chapter 13 plan, you’ll qualify for Chapter 7.

Chapter 13 Bankruptcy Qualifications

Qualifying for Chapter 13 can be expensive because the extra benefits come at a hefty price, and many people can’t afford the monthly payment. To qualify, you’ll pay the larger of:

• your priority nondischargeable debt
• the value of nonexempt property, or
• your disposable income.

How Do I Keep Property in Michigan Using Bankruptcy Exemptions?

You won’t lose everything in bankruptcy. You’ll use bankruptcy exemption laws to protect your property. We list the significant exemptions below, but first, understanding the following will help you maximize what you’ll keep in your case.

• Exempt and nonexempt property. You can keep property protected by an exemption or “exempt” property. When a bankruptcy exemption doesn’t cover the property, you’ll either lose it in Chapter 7 or have to pay for it in the Chapter 13 repayment plan.
• Choosing state or federal exemptions. You can choose whether you use the state exemption list or the list of federal bankruptcy exemptions, but you can’t mix and match exemptions from both sets. Filers who use state exemptions can also use the federal nonbankruptcy exemptions.
• Doubling exemptions. In many instances, spouses filing together can double the exemption amount if both own the property.
• Retirement accounts all filers can protect. Federal law allows all filers to keep tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, defined benefit plans, and traditional and Roth IRAs to $1,512,350 per person (for cases filed between April 1, 2022, and March 31, 2025). (11 U.S.C. 522(b)(3)(C); (n).) Learn more about retirement accounts in bankruptcy.

What Are the Bankruptcy Exemptions in Michigan?

Filers can protect some home and vehicle equity, personal possessions, retirement accounts, and more. Below is a list of commonly used Michigan bankruptcy exemptions.

Caution: The state exemptions have not been updated and should not be relied on, but used as a general guide only. Some state exemption amounts could be higher and your state could have changed the law by adding new or deleting old exemptions. You must verify exemption availability through independent research or by consulting with a local bankruptcy attorney.

Michigan Homestead Exemption

You’ll be able to protect up to $46,125 in equity in your residence. If you are over 65 or disabled, the limit increases to $69,200. Spouses filing together cannot double these amounts. (Mich. Comp. Laws §§ 600.5451(1)(m).)

Learn more about the homestead exemption in bankruptcy.

How Do I Use the Michigan Homestead Exemption?

Michigan lets filers use either the federal exemption system or Michigan’s state exemption system, so you’ll have two homestead amounts to choose between. A unique aspect of the Michigan homestead exemption is a surviving spouse of the owner can claim the homestead exemption.

The homestead exemption applies to your principal residence only. It could include your house, condominium, co-op unit, mobile home, motor home, boat or other watercraft, or manufactured home. The homestead exemption also applies to appurtenances to the property. If the property is outside a city, village, or recorded plat, the homestead can include up to 40 acres. If the property is inside a city, village, or recorded plat, the exemption applies to one lot or parcel.

If you hold property as tenancy by entirety with your spouse: If one spouse files for bankruptcy—not both—the bankruptcy trustee might be prevented from using the property equity to pay off debts. (Mich. Comp. Laws §§ 600.5451(1)(n),(o).) However, this is a tricky area of law. Because your home is likely your most valuable asset, consider consulting with a bankruptcy lawyer to ensure you can protect it in bankruptcy.

Michigan Motor Vehicle Exemption

Filers can protect up to $4,250 of equity in a motor vehicle. (Mich. Comp. Laws § 600.5451(1)(g).) Find out how the motor vehicle exemption works in a Chapter 7 case.

Michigan Pension and Retirement Account Exemptions

Most pension and retirement accounts are completely protected. Most individual retirement accounts and annuities, as well as ERISA-qualified pension, profit-sharing, and stock bonus plans, are fully protected except for amounts contributed within the 120 days before filing for bankruptcy. (Mich. Comp. Laws §§ 600.5451(1)(j)(k).)

Here are some specific protections:

• Firefighter and police officer benefits. (Mich. Comp. Laws §§ 38.559, 38.1683.)
• Legislative member retirement benefits. (Mich. Comp. Laws §§ 38.1057, 38.1683.)
• Public school employee retirement benefits. (Mich. Comp. Laws §§ 38.1346, 38.1683.)
• State police retirement benefits. (Mich. Comp. Laws §§ 38.1346, 38.1683.)
• State employees’ retirement benefits. (Mich. Comp. Laws § 38.1683.)
• Judges’ retirement benefits. (Mich. Comp. Laws §§ 38.2308, 38.1683.)

Michigan Personal Property Exemptions

• Burial grounds. (Mich. Comp. Laws § 128.112.)
• Milk or cream sales proceeds. (Mich. Comp. Laws § 600.4031.)
• Wages up to 60% of earned but unpaid wages for the head of household or $15 per week plus $2 per week for each dependent other than the spouse; others can protect up to 40% or $10 per week. (Mich. Comp. Laws § 600.5311.)
• Family pictures. (Mich. Comp. Laws § 600.5451(1)(a)(i).)
• Arms and accouterments required to be kept by law. (Mich. Comp. Laws § 600.5451(1)(a)(ii).)
• Clothing other than furs. (Mich. Comp. Laws § 600.5451(1)(a)(iii).)
• Family cemetery lot, tombs, and burial rights. (Mich. Comp. Laws § 600.5451(1)(a)(iv).)
• Professionally prescribed health aids. (Mich. Comp. Laws § 600.5451(1)(a)(v).)
• Six-month supply of provisions and fuel. (Mich. Comp. Laws § 600.5451(1)(b).)
• Household goods such as furniture, utensils, books, appliances, and jewelry valued at up to $4,625. ($700 per item limit) (Mich. Comp. Laws § 600.5451(1)(c).)
• Seat, pew, or slip to $800. (Mich. Comp. Laws § 600.5451(1)(d).)
• Farm animals, feed, and crops to $3,075. (Mich. Comp. Laws § 600.5451(1)(e).)
• Household pets to $800. (Mich. Comp. Laws § 600.5451(1)(f).)
• Computer and accessories to $800. (Mich. Comp. Laws § 600.5451(1)(h).)
• Tools, implements, materials, and other items necessary to carry on your profession, trade, occupation, or business to $3,075. (Mich. Comp. Laws § 600.5451(1)(i)).

Michigan Public Benefit Exemptions

• Crime victims’ compensation. (Mich. Comp. Laws § 18.362.)
• Veterans’ benefits. (Mich. Comp. Laws §§ 35.977, 35.1027.)
• Welfare benefits. (Mich. Comp. Laws § 400.63.)
• Worker’s compensation benefits. (Mich. Comp. Laws § 418.821.)
• Unemployment compensation. (Mich. Comp. Laws § 421.30.)

Michigan Insurance Exemptions

• Fraternal benefit society benefits. (Mich. Comp. Laws § 500.8181.)
• Insurance benefits fully protected regardless of the amount. (Mich. Comp. Laws § 500.2207.)
• Insurance benefits paid on behalf of an employer. (Mich. Comp. Laws § 500.2210.)
• Insurance benefits paid by any stock, mutual life, health, or casualty insurance. (Mich. Comp. Laws § 600.5451(1)(j).)

State exemption amounts are adjusted periodically and are not being updated in this article. You’ll find the Michigan exemption statutes on the Michigan Legislature website. Check for updates with the Michigan Department of Treasury in the Economic Reports section.

When Can I Use Michigan Bankruptcy Exemptions?

You can file for bankruptcy in Michigan after living there for over 180 days. However, you must live in Michigan for at least 730 days before filing. Otherwise, you’d use the previous state’s exemptions.

If you lived in multiple states during the two years before filing for bankruptcy, you’d use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)

How Do I Prevent Bankruptcy Exemption Problems in Michigan?

Exempt your property carefully. The bankruptcy trustee, the court-appointed official assigned to manage your case, will review the exemptions. A trustee who disagrees with your exemptions will likely try to resolve the issue informally. If unsuccessful, the trustee will file an objection with the bankruptcy court, and the judge will decide whether you can keep the property.

Example. Mason owns a rare, classic car worth $15,000, but the state vehicle exemption doesn’t cover it entirely. Believing that the car qualifies as art, at least in his mind, Mason exempts it using his state’s unlimited artwork exemption. The trustee disagrees with Mason’s characterization and files an objection with the court. The judge will likely decide the vehicle doesn’t qualify as art.

Purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Should I Hire a Bankruptcy Lawyer in Michigan?

Most people find it worthwhile to get counsel. A bankruptcy attorney will help you:

• qualify for the chapter of your choice
• determine when it’s time to file
• help you keep the property you want
• make sure you don’t run afoul of fraud or other issues, and
• explain when you can stop paying the bills you’ll erase in your case.

You can expect creditors to call until you file. It’s usually best to ignore them because telling creditors about your bankruptcy can encourage them to take more drastic collection steps before losing the right to collect altogether. However, if you hire counsel and refer creditors to your lawyer, they’ll have to stop calling you.

How Do I File for Bankruptcy in Michigan Without a Lawyer?

You’ll complete the steps listed below in “What Steps Are Involved in a Michigan Bankruptcy?” But not everyone should file their own bankruptcy case.

The best candidate is a Chapter 7 debtor who meets qualification requirements, can eliminate all debts, and can protect all property with bankruptcy exemptions. People filing for Chapter 13 or Chapter 7 filers with complicated cases should seek representation.

Are you curious whether your case is simple enough to file yourself? Our quiz will help you identify potential complications while educating you about bankruptcy. You’ll find it here: Do I Need a Lawyer to File for Bankruptcy?

How Much Does It Cost to File for Bankruptcy in Michigan?

All filers pay a $338 filing fee in Chapter 7 unless the court grants a fee waiver and a $313 filing fee in Chapter 13 (amounts current as of August 2023). You’ll also pay approximately $50 to $75 for credit counseling and debt management courses.

If you hire a bankruptcy lawyer to represent you, you can expect to pay from $1,500 to $2,500 upfront for most Chapter 7 cases, although the price will depend on the going rates in your area and case complexity. Chapter 13 legal fees run about $1,000 to $1,500 more, but you can pay them in installments through the Chapter 13 payment plan.

Learn about your options if you can’t afford to hire a bankruptcy attorney. Call Firebaugh & Andrews for your free consultation. 734-722-2999

What Steps Are Involved in a Michigan Bankruptcy?

We all know that seeing the forest helps us recognize the trees. Similarly, understanding the significant steps you’ll take during your bankruptcy journey. will help you understand the bankruptcy process. Think of this checklist as a roadmap, but you can also use it to track your progress.

Bankruptcy Steps Checklist

 learn about Chapters 7 and 13

 check whether bankruptcy will erase debt

 find out if you can keep property

 determine whether you qualify

 consider hiring a bankruptcy lawyer

 stop paying qualifying debts

 gather necessary financial documents

 take a credit counseling course

 fill out and file paperwork

 turn over financial documents

 attend the 341 creditor’s meeting

 attend the confirmation hearing and make plan payments (Chapter 13 only)

 file a debtor’s education course certificate

 receive your debt discharge

What Do I Need to File for Bankruptcy in Michigan?

Once you decide to file, the fun begins! Well, not really. You’ll start by gathering your financial information, which can take time. But our bankruptcy document checklist should help you organize what you or your attorney will need.

Bankruptcy Document Checklist

Tax returns, unless you’re exempt:

 Two years for Chapter 7 bankruptcy (You’ll need both years to complete the paperwork and the most recent year for the bankruptcy trustee.)

 Four years for Chapter 13 bankruptcy

 Tax transcripts (Order transcripts from https://www.irs.gov/individuals/get-transcript if you don’t have copies of your returns)

Six months of the following:

 Proof of Income From Employer (paycheck stubs)

 Other Proof of Income (unemployment benefits stubs, proof of alimony or maintenance payments, income from any other source)

 Bank Statements (The bankruptcy trustee will want the most recent two months.)

 Investment and Retirement Statements (The bankruptcy trustee will want the most recent two months.)

Copies of the following (take original to court):

 Driver’s License, I.D. Card, Government I.D., or Passport (The name on the petition should match your identification exactly.)

 Social Security Card or proof of Social Security number

Things the trustee might ask for (current):

 Mortgage and Car Loan Statements (The trustee will check the balance owed.)

 Home Valuation (Realtor.com; Zillow)

 Car Valuation (Nada.com; Kelley Blue Book)

 Valuation of Antiques and Unusual Items (eBay)

 Photographs of Rare, Antique, and Collectable Items

 Photographs of Damaged Property

 Repair Estimates for Damaged Property

If you own a business, the trustee will likely want:

 Twelve monthly profit and loss statements

 Two yearly profit and loss statements

 Copies of any liability insurance policies

Things you’ll need to prepare your bankruptcy petition:

 Household Property List With Values (Group small items together, such as clothing, cookware, and bedding.)

 Credit Card and Other Billing Statements

 Credit Report (Get a free copy at annualcreditreport.com)

 Credit Counseling Completion Certificate

More things you might need at the creditors’ meeting:

 Bank statements showing the balance on the filing date (You’ll need to have exempted the entire balance.)

 Other Documents Reasonably Related to Your Financial Affairs

After the creditors’ meeting:

 Debtor’s Education Course Completion Certificate

Where Do I Find the Michigan Bankruptcy Court Websites and Locations?

Michigan has two bankruptcy districts—Eastern and Western. Each has multiple locations serving various geographical areas. Clicking on the district name will take you to the court homepage.

• Eastern District of Michigan
• Western District of Michigan

On the Michigan bankruptcy court website, you can access the district’s local rules and instructions for filing your paperwork on the navbar under “Filing Without an Attorney” or “For Debtors.”

What Happens After Filing for Bankruptcy in Michigan?

Your creditors will stop bothering you soon after you file. It takes a few days because the court mails your creditors notice of the “automatic stay” order that prevents most creditors from continuing to ask you to pay them. Here’s what will happen next:

• You’ll turn over financial documents proving the statements in your bankruptcy paperwork.
• You’ll attend the 341 meeting of creditors—the one appearance all filers must attend.
• You’ll complete a debtor education course and file the completion certificate.

These things must happen before you get a Chapter 7 bankruptcy discharge. Chapter 13 filers will also attend a repayment plan confirmation hearing and complete the three- to five-year payment plan.

Need More Bankruptcy Help?

It is often thought that pushing bankruptcy off until later is a better financial move, but there are many factors to consider before making a decision.

Discharge process

Filing for bankruptcy after the holidays may seem like a way of starting the new year with a clean slate. However, even if some debts are dischargeable, the process can take some time to go through. Another component to think about is potential year-end rewards such as bonuses, which can make the debtor’s income look higher than it is. If the court decides to change the chapter of the Bankruptcy Code due to a falsely represented income, a discharge can take several years.

Shopping debt

Some people file for bankruptcy after holiday shopping in hopes that their debt will go away. Unfortunately, large cash advances and credit purchases can be non-dischargeable if they accrued within three months before the bankruptcy filing. On top of this, the court may find the debtor guilty of fraud and reject the case. Understanding the terms and conditions of bankruptcy can help a person avoid owing a great deal of money later.

For many people, spring, summer and early fall are the most helpful seasons to file for bankruptcy. This way, a person is more likely to already have a discharge by the end of the year. The right timing can ensure peace of mind for the holiday season.

Are you considering filing for bankruptcy but feeling hesitant? In this video, we’ll explore six positive reasons why filing for bankruptcy may be the right decision for you.

Call Firebaugh & Andrews for your free evaluation 734-722-2999

Washington, D.C. – Today, United States Senator Elizabeth Warren (D-Mass.) and House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) reintroduced the Consumer Bankruptcy Reform Act, bicameral legislation that would simplify and modernize the consumer bankruptcy system and make it easier for individuals and families forced into bankruptcy to get back on their feet. 

Originally introduced in 2020, this legislation would replace the two separate consumer bankruptcy chapters known as Chapters 7 and 13 with a single system available to all consumers, streamlining the filing process and reducing filing fees. The bill would also ensure that families can care for themselves, their children, and their elderly parents during the bankruptcy process by helping renters with back rent avoid eviction, giving people a path to protect their homes and cars, and letting filers discharge local government fines. 

“The Consumer Bankruptcy Reform Act takes long overdue steps to make it a little easier and a little less expensive for people who are in deep financial trouble to get meaningful bankruptcy relief,” said Senator Elizabeth Warren. “I’m grateful to be working with Chairman Nadler on this important legislation to give struggling families a better chance to get back on their feet.”

“Bankruptcy is an option of last resort, but it also promises a fresh start so that people can get back up and keep working and providing for their families,” said Chairman Jerrold Nadler.  “Today that promise rings hollow for many people because the bankruptcy system has become complex, unfair, and even punitive for ordinary consumers. The Consumer Bankruptcy Reform Act ensures that the bankruptcy system works for the American people and not just big corporate creditors. Senator Warren and I have worked on this issue for many years, and I look forward to continuing our fight for consumers with this new legislation.”

“For too many, bankruptcy relief is out of reach due to significant burdens and high costs but this relief is a lifeline to hardworking Americans in need,” said Representative David Cicilline. “The Consumer Bankruptcy Reform Act will remove undue barriers and bring much-needed reforms that will provide all Americans with a fair shot and a second chance at economic opportunity. I thank Senator Warren and Chairman Nadler for their leadership in this effort.”

On Thursday, September 29, 2022, Chairman Nadler will hold a hearing of the House Judiciary Committee on our current bankruptcy system and how the Consumer Bankruptcy Reform Act can help close loopholes that allow the wealthy to exploit the bankruptcy system, crack down on predatory practices, and hold corporate wrongdoers accountable.

This legislation is co-sponsored by Senator Sheldon Whitehouse (D-R.I.) and Representative David Cicilline (D-R.I.).

The bill is also supported by: the Action Center on Race and the Economy, the American Federation of State, Country, and Municipal Employees (AFSCME), Americans for Financial Reform, AFL-CIO, Association of Young Americans, the National Association of Consumer Advocates, the Consumer Federation of America, Demos, the National Alliance for Partnerships in Equality, the National Association for Equal Opportunity in Higher Education (NAFEO), the National Consumer Law Center, the Progressive Change Campaign Committee, Public Citizen, Service Employees International (SIEU), UnidosUS, U.S. PIRG, Young Invincibles, Tzedek DC, the Center for LGBTQ Economic Advancement and Research (CLEAR), the Asian Pacific American Labor Alliance, and the Center for Responsible Lending. A group of 86 law professors who specialize in bankruptcy and consumer law have also sent a letter in support of this legislation.

“The Association of Young Americans is proud to endorse the Consumer Bankruptcy Reform Act, reintroduced today,” said Lisa Giordano, Executive Director of the Association of Young Americans (AYA). “From student debt to skyrocketing rents nationwide, young Americans today face unique financial challenges. Senator Warren’s and Chairman Nadler’s legislation would be a lifesaver for young people forced into bankruptcy, with its notable provisions to streamline the bankruptcy filing process, ensure rent protections, make student loans dischargeable in bankruptcy, and protect filers from predatory practices and exploitation. AYA is grateful for Senator Warren’s and Chairman Nadler’s leadership and care for young consumers, and strongly advocates for the passage of this bill into law.”

“Senator Warren’s bill would keep those who must declare bankruptcy — disproportionately women and people of color; even more so post-pandemic — from losing everything, including their families’ homes and the cars they need to drive to work to make the money needed to keep a roof over their head,” said Brittany Brady, CEO of National Partnerships for Equity. “There is no reason for a bankruptcy filing to lead to more hardship. Senator Warren’s commonsense bill would establish some much-needed equity by streamlining the difficult, emotionally-fraught process of bankruptcy so that folks can move forward with their lives, their educations, and their careers, and reach financial stability and a place of peace.”

“The Consumer Bankruptcy Reform Act would ensure a financial safety net and allow for sustainable paths of recovery for families struggling with burdensome debt,” said Christine Hines, legislative director for National Association of Consumer Advocates. “We applaud Sen. Warren and Rep. Nadler for their commitment to help Americans get a fresh start, particularly in these perilous financial times.”

“Public Citizen enthusiastically supports this critical set of reforms from Senator Warren and Chairman Nadler,” said Lisa Gilbert, Executive Vice President, Public Citizen. “Modernizing and clarifying the consumer bankruptcy system is long overdue, and in this time of national economic crisis, making it easier for individuals and families forced into bankruptcy to get back on their feet is just the right thing to do.”

“U.S. PIRG supports the Consumer Bankruptcy Reform Act, which will re-balance consumer rights to a fairer bankruptcy process and will give them a better chance to reorganize their finances, especially during a pandemic,” said Ed Mierzwinski, Senior Director for Federal Consumer Programs, U.S. PIRG. “Importantly, the proposal includes protections for both homeowners and renters, prohibits and punishes illegal practices by debt collectors and others, addresses racial and gender disparities in the bankruptcy system and eliminates loopholes exploited by the wealthy. Finally, it also eliminates one of the cruelest provisions in U.S. law by removing the provision that makes private and federal student loans non-dischargeable.”

“Young people have struggled to obtain solid financial footing since the Great Recession and the challenges of the Covid-19 pandemic,” said Mervyn Jones, Senior Director of External Affairs at Young Invincibles. “We applaud Senator Warren’s and Chairman Nadler’s introduction of the Consumer Bankruptcy Reform Act, which would provide a more straightforward path for economically distressed Americans to move forward. In particular, the bill’s provision to make student loan debt dischargeable would be a much-needed change in law to help struggling student borrowers. This bill’s focus on racial and gender disparities in the bankruptcy system would also foster greater equity and strengthen the strained social safety net.

All of these rumors have some basis in fact. It’s true that declaring bankruptcy can hurt your credit score for a significant length of time. It’s also true that a bankruptcy declaration is a matter of public record. If you file for Chapter 7 liquidation or Chapter 13 reorganization, there’s a good chance that your future employers, landlords and creditors will find out about it.

However, critics of the bankruptcy process tend to overemphasize these negative points. If you’re struggling to repay your debts, none of your debt-fighting options are going to be easy or stress-free. While there are several proven methods of debt relief that might be able to improve your financial situation over time, there’s no magic switch that you can flip to rebuild your credit.

In this light, the reorganization process has some attractive qualities. For starters, it’s useful for reducing or eliminating certain forms of unsecured debt. While you won’t be able to get rid of your mortgage or auto-loan obligations by declaring Chapter 13 bankruptcy, you may be able to reduce the number of credit card bills and personal loans that you have on your debt docket.

This can free up substantial reserves of income and ensure that you remain current on your secured obligations. As long as you can prove to your mortgage and auto lenders that you’re serious about repaying your loans, the bankruptcy process won’t necessarily expose you to foreclosure or repossession. In fact, reorganization can increase the likelihood that you’ll remain in your home during a period of financial turmoil.

Filing for a Chapter 7 bankruptcy can reduce your unsecured debts even more quickly than a Chapter 13 reorganization plan. Also known as “liquidation,” Chapter 7 permits you to discharge many of your outstanding debts without repaying your creditors. Although every step of this process must be approved by a bankruptcy judge, it can take far less time than a reorganization plan. It can also take less time than other methods of debt relief.

In fact, a Chapter 7 filing can eliminate the bulk of your unsecured debt load in just a few months. While many folks who file for Chapter 7 end up losing their homes to foreclosure, you may be able to hold onto your house by “reaffirming” your mortgage and continuing to make payments on it.

Even if you aren’t able to do this, the benefits of a clean debt slate may outweigh the inconvenience of losing your home. As you begin to rebuild your credit in the years that follow your bankruptcy declaration, you’ll eventually be able to purchase another home. If your debt situation is clearly unmanageable, filing for Chapter 7 bankruptcy may be your fastest route back to solvency.

In either case, your bankruptcy declaration will affect your credit score. However, it won’t damage it forever. Furthermore, you may have some control over the process’s ultimate outcome. By taking steps to rebuild your credit score after emerging from bankruptcy, you could find yourself commanding prime interest rates and securing high-limit credit cards within a few years. You’ll simply need to pay off your remaining obligations in a diligent fashion and avoid taking on too many new loans.

The bankruptcy process can also serve as a means for you to reorder your household’s budget on a permanent basis. After you declare bankruptcy, you’ll need to present a repayment plan to the bankruptcy judge as well as your creditors. As part of this plan, you’ll need to provide detailed information about your income and expenses.

You’ll also need to provide evidence that your household budget permits you to make your agreed-upon repayments in a timely fashion. If you can show financial “progress” by pointing to reduced or eliminated budgetary expenses, your creditors may be willing to cut you some slack during the reorganization process. In the long run, this may improve your credit profile and increase your chances of emerging from bankruptcy with a manageable load of debt.

In short, declaring bankruptcy may not lead to financial ruin. In certain circumstances, reorganization can actually be a powerful tool that reduces your unsecured obligations and sets you back on the path to solvency within a few short years.

Call us for your free consultation 734-722-2999

Income Tax

For the current year, you aren’t legally required to pay off
income tax debt until the first day of the next year. Many people turn to
Chapter 13 bankruptcy in order to pay off large tax debts. If you’re planning on doing so,
you should wait until the first day of January so that the tax debt from
the previous year is counted as a pre-petition debt.

Purge Debt from the Holidays

It’s currently estimated that Americans
spend nearly $10 more on average each day in the month of December than they do in any other month of the year.
When added up, this creates a $300 increase in spending that is likely
done with a credit card. This is why it makes sense to file for bankruptcy
at the beginning of the New Year.

Credit Card Debt Specifications

As you would assume, there are some stipulations that come along with purging
credit card debt. Credit card companies are savvy when it comes to borrower
deception, and many will notice unusually frequent use of credit just
before a borrower files bankruptcy. Some purchases made just prior to
bankruptcy
may be legitimate. The Courts look at your intent, which means when you incurred the debt
did you have the intention and means to pay it back.

We always advise our clients that when they decide to file for bankruptcy
they should
stop using their credit cards and also stop paying on them. This way the funds that were being paid to the credit cards can be used
to cover the attorney and Court fees to get the bankruptcy case filed.

It is further detailed in the Bankruptcy Code that goods and services are
not labeled under “luxury” if they are absolutely necessary
to the borrower or a dependent of theirs. For example, gas for work travel
that is charged to a credit card doesn’t qualify as being a luxury
expense. However, $1,000 spent on a new computer would qualify as an unnecessary
luxury expense.

If you carried a credit card balance of over $650 for goods such as groceries,
gas, and home necessities, you would be in the clear. Not carrying a debt
over $650 will prevent you from having to even explain any charges in
the first place.

Something to Think About Before Your File Bankruptcy

Once you make the decision to work with an attorney on a bankruptcy case,
cease use of your credit cards at once. Using credit while you are openly
filing for bankruptcy is a direct indication that you likely have no intentions
of paying it back. This is known as fraud, and you could easily be charged
in a court of law for doing this.

Call Firebaugh & Andrews for a free consultation 734-722-2999

Filing for Chapter 7 bankruptcy gives you a fresh start by discharging (wiping out) many types of debts. With a few exceptions, you can get rid of qualifying “pre-petition” debts incurred before filing for bankruptcy. However, you can’t discharge “pre-petition” debts incurred after your bankruptcy filing date.

In most instances, it’s easy to identify debts incurred before versus after the bankruptcy filing date. But not always. Keep reading to learn about some of the trickier debts you might encounter.

Which Debts Can You Discharge in Chapter 7 Bankruptcy?

Most debts, such as medical bills, credit cards, and payday loans, can be discharged in a Chapter 7 bankruptcy. However, this is not true for all obligations. You can’t discharge some debts like child support, student loans, recent tax debt, and fines or penalties for violations of the law. Chapter 7 also doesn’t discharge post-petition debts. So if you incur a new debt after filing for bankruptcy, you’ll be on the hook for it after you receive your bankruptcy discharge.

Pre-Petition v. Post-Petition Debts in Chapter 7 Bankruptcy

When determining whether a debt is a pre-petition or post-petition debt, you’ll start by looking at the date you filed your bankruptcy petition. If you had the debt before the date of your bankruptcy filing, the debt is a pre-petition debt. If you took out a loan or incurred some other debt after filing for bankruptcy, it will be a post-petition debt. For instance, if you use a credit card before filing for bankruptcy, the debt is a pre-petition debt. Utility and phone charges incurred before the bankruptcy filing date are also pre-petition debts, but utility and phone charges incurred after the bankruptcy filing date are post-petition debts.

Car Loans, Mortgages, and Installment Debts in Chapter 7 Bankruptcy

Many kinds of debt require monthly payments that you must continue to pay throughout your bankruptcy if you want to keep the property. For instance, car loans or mortgages are debts that are guaranteed (secured) by the property purchased. If you don’t pay, the lender can take the property.

If you incurred the monthly obligations on these debts before you filed for bankruptcy, they are pre-petition debts. The bankruptcy will discharge your liability to pay. But the bankruptcy discharge will not eliminate the lien you gave the lender allowing the lender to reclaim the property if you stop making payments. So if you fall behind, the creditor has the right to repossess or foreclose the property, even after you receive your discharge. To keep the property, you must keep up with the payments.

You can learn more about secured debt in Chapter 7 bankruptcy by reading Understanding Secured, Unsecured, and Priority Debts in Bankruptcy.

Homeowner’s and Condominium Association Fees in Chapter 7 Bankruptcy

Whether your bankruptcy will discharge HOA or COA dues and assessments (collectively called assessments) will also depend on when you incurred them. But there’s a twist. Relinquishing the property in the bankruptcy case won’t automatically stop your responsibility to pay.

Pre-petition assessments. You can discharge your liability for HOA or COA assessments if they became due before filing your bankruptcy petition.

Post-petition assessments. You’ll remain personally liable for any dues or assessments that become due after filing the petition, even if you end up giving up your condo, townhome, or home as part of your bankruptcy case. You’ll remain responsible as long as you remain on title as the owner. Because of this, some people wait to file for bankruptcy until after a lender repossesses the property.

Reaffirming a Debt in Chapter 7 Bankruptcy

Sometimes after you file a Chapter 7 bankruptcy, a creditor will want you to reaffirm the debt. When you reaffirm a debt, you enter into a new contract with the creditor. Reaffirmation agreements commonly occur when you’ve financed a car that you’d like to keep after your bankruptcy case.

Because you are creating a new contract and a new obligation to pay after filing your bankruptcy case, reaffirmed debts are post-petition debts. Your bankruptcy will not discharge your responsibility to pay these debts after your bankruptcy is over. If you fail to make payments, the creditor has the right to sue you for the money you owe and repossess or foreclose on the property.

Assuming a Lease in Chapter 7 Bankruptcy

A lease agreement signed before you filed a Chapter 7 bankruptcy is a pre-petition debt that can be discharge in bankruptcy. But if you assume the lease by entering into a new contract, and then fail to make payments, you’ll likely be responsible for the payments due after you signed a new agreement. If you simply continue making lease payments without entering into a new agreement, you might not be responsible for any payments you fail to make after you receive your bankruptcy discharge, however. Check with a local bankruptcy attorney to determine the approach used by your local court.

Looming unpaid debt can be stressful, and the IRS can be aggressive in its efforts to collect back taxes. As a public entity, the IRS is the world’s largest debt collector, and it has many tools that private debt collectors can only dream of. Fortunately, filing Chapter 7 bankruptcy is a straightforward way to stop IRS harassment. In many cases, as outlined below, bankruptcy might end IRS harassment for good.

Tax Debt: Bankruptcy and the Automatic Stay

Most IRS collections start with a notice of past-due taxes. Then, every few months, the IRS sends another letter. Each is slightly more threatening than the last. Eventually, these letters become legal notices. They also sometimes involve filing a lien, seizing a bank account, or garnishing wages. The automatic stay acts as a pause button. It prevents creditors from contacting you to collect their debts. As soon as you file your voluntary petition, the automatic stay usually takes effect. When that happens, IRS agents can’t even send you a letter about your back taxes. They are forbidden from trying to collect the debt.

The automatic stay extends to property as well. Although most of your personal property is exempt — or protected — during Chapter 7, the IRS and other debt collectors can’t touch any of the more valuable assets you happen to own.

An automatic stay is a powerful tool for protecting individuals. No matter what stage IRS collection efforts are in, the automatic stay stops them cold. With few exceptions, the stay applies to all forms of communication between debtors and creditors. Creditors who violate the stay can face serious consequences. And, although the stay prevents creditors from contacting you, it does not prevent you from beginning conversations with them. This puts you in control of negotiations with your creditors during bankruptcy.

Tax Debt Discharge in Chapter 7: A Timeline

All these rules apply to the bankruptcy process as well. If you have past-due tax debt, things will be a little different.

• Filing: On your paperwork, you will list the tax debt as priority unsecured debt in Part 1 of Schedule E/F.
• Trustee meeting: At this meeting, the trustee will review your paperwork, confirm your identity, and ask questions about any red flags in the paperwork.
• Discharge: The court has the power to discharge both secured and unsecured debts. If your debts meet all requirements, you should receive a notification of a discharge within about 60 days.

In special circumstances, you’ll have to meet additional qualifications to discharge some types of debt. This may be true in cases involving tax liens. It’s also true in student loan cases. If you want to discharge student loan debt, you must convince the court that there is an undue hardship preventing you from repaying the loan.

What Determines Whether Your Taxes Can Be Erased?

The IRS is very big on rules. There is a regulation for pretty much everything. So, it should be no surprise that there are specific rules for bankruptcy discharge and that the IRS will object to discharge if it has any reason to do so.

• Chapter 7 bankruptcy only discharges income tax debt. Beyond that, the space is not very well defined. 1040 taxes are definitely income taxes. But property taxes and trust fund taxes are definitely not income taxes. To ensure that Chapter 7 can erase your debts, you’ll need to know what kind of taxes you owe.
• You must have filed your tax returns for the past two years if you’re required to file. Your tax returns for the debt you want to discharge must have been on file for at least two years at the time you file for bankruptcy. The two-year waiting period applies even if the returns were filed on time. If the taxpayer fails to file, the IRS often prepares substitute returns and uses them to calculate the taxpayer’s arrearage. Substitute returns do not count as taxpayer-filed returns.
• The income tax debt must be at least three years old. Note that Tax Day is not always April 15. Some years, it’s April 16th, 17th, or even 18th. IRS lawyers have been known to object to discharge over one or two days. So, make sure you file the petition on the correct day or else you’ll have to start over.
• Your tax assessment can’t be more than eight months old. If the IRS has not assessed the debt within the last 240 days, the income tax debt is not dischargeable. It’s almost impossible to tell if the IRS has assessed the debt or not because this is done internally. But generally, if the taxpayer has not received a bill that breaks down the amount due by tax years, the IRS has probably not assessed the debt.

Special Rules for Student Loans

Special rules apply to other types of government debt as well. For example, student loan debt isn’t usually dischargeable during Chapter 7. Debtors must usually show undue hardship to discharge their education debt. Undue hardship means different things in different parts of the country because the Supreme Court has not ruled on this issue.

What Happens if I Have Tax Debt That Can’t Be Erased Yet?

Plenty of taxpayers are in this boat, and they all have several legal options. An attorney can advise you on the best course of action, but ultimately, the decision is yours.

Pay in installments. Some people talk to the IRS about a payment plan. The IRS usually backs off once the taxpayer starts an installment agreement. After all, the IRS just wants the money. It doesn’t really want to garnish your wages. Keep in mind that installment agreements are only a good idea if you have the money. If that’s not the case, you need another option.

Participate in the Offer in Compromise program. The IRS has many programs to help taxpayers pay their tax debt when they have little or no money. The main example is the Offer in Compromise program where taxpayers pay what they can, and the IRS forgives the rest. This program can be extremely complex, and few people qualify. Also, if the taxpayer has any assets whatsoever the IRS will force the taxpayer to sell them. Finally, while the taxpayer negotiates, the IRS’s harassing collections techniques continue.

File for bankruptcy. Some people file for bankruptcy to take advantage of the automatic stay. That’s especially true if the IRS is already threatening to garnish your wages or levy your bank account. The big drawback here is that you’ll have to wait eight years before you can receive another Chapter 7 discharge. While filing bankruptcy before you’re eligible to discharge your tax debt may bring immediate relief, it also creates a long-term headache. So, waiting until you are eligible might be the best approach. That’s especially true if you only need to wait a few months.

What About My Tax Refund?

This question comes up quite a bit. If you anticipate a large refund, talk about this issue with your attorney. It may be a good idea to delay filing until after you receive your tax year refund for the past year. Technically, when consumers file for bankruptcy, all their non-exempt property goes to the trustee. That includes tax refunds. Since the policies vary depending on where you live, you may be able to use the wildcard exemption to exempt the tax return.

Let’s Summarize…

Owing past-due income taxes can be stressful. These bills are often so high that, even if you fall behind a little, you could end up owing a lot of money. Fortunately, if your debts meet certain requirements, filing Chapter 7 bankruptcy can erase past-due income tax debt in one fell swoop.

Call Firebaugh & Andrews for your free consultation 734-722-2999

While the majority of taxes cannot be eliminated through bankruptcy, some can. The bankruptcy experts at Burr Law Office can examine your case to see if your tax debt can be eliminated. Though not simple, filing for Chapter 7 bankruptcy and finding out if your debts qualify for discharge may eliminate some tax debt..

You can wipe out or discharge tax debt by filing Chapter 7 bankruptcy only if all of the following conditions are met:

• The debt is federal or state income tax debt. Other taxes, such as fraud penalties or payroll taxes, cannot be eliminated through bankruptcy. In other words, the debt needs to be a regular tax payment that you owed either the State of Wisconsin or the federal government.
• You did not willfully evade paying your taxes or file a fraudulent return. Bankruptcy will not help in these circumstances. Your actions need to have been lawful.
• Your tax debt is at least three years old. The original tax return must have been due at least three years prior in order to effectively file for bankruptcy. So if you were to file for bankruptcy in April 2020, for instance, this would apply to your 2017 taxes that were due April 15, 2018.
• You filed a tax return at least two years before filing for bankruptcy. To eliminate a tax debt, a return for that debt must have been filed. Generally, if your extensions expired and you filed late, you have not filed a true return and will not be able to eliminate the tax debt.
• The tax debt must have been assessed by the IRS 240 or more days before you file for bankruptcy, or must not have been assessed yet. This is called the “240 day rule.” If the IRS suspended collection efforts due to a compromise or previous filing, this deadline may be extended.

Tax Liens & Bankruptcy

Tax debt and tax liens are different things. Tax debt is simply money that you owe either the State of Michigan or the IRS. A tax lien is a legal judgment secured against your property to satisfy a tax obligation that you owe the state or federal government. Should you qualify for Chapter 7 bankruptcy, and meet all of the above criteria, unfortunately bankruptcy will not eliminate prior tax liens.

Your obligation to pay off the debt will be discharged, but not eliminated. However, the IRS will no longer be able to go after your income or bank account.

However if a tax lien was filed before you filed for bankruptcy, the lien will remain on the property. If you ever want to sell your property, you will have to pay off the lien before you can do so.

Do you have other tax related, or bankruptcy questions?  Let us know. We’re happy to help.

The experienced attorneys of Firebaugh & Andrews  are here to answer your bankruptcy questions. Give us a call at 734-299-7222  today for your free evaluation.

Why would I file for bankruptcy without an attorney?
Filing for bankruptcy without a lawyer can help save you money. Lawyers generally charge between $500-3,750 for Chapter 7 and $2,500 and $6,000 to file Chapter 13. These numbers exclude the $335 filing fee for Chapter 7 or the $310 filing fee for Chapter 13 bankruptcy. So putting in some research and extra effort by filing the Chapter 7 yourself can go a long way in helping you get debt-free without taking on more debt in the process just to get some legal assistance. However, the U.S. Government strongly recommends you seek out an attorney’s advice in every Chapter 7 and 13 case, since bankruptcy can have long-term financial and legal ramifications.

When does it make sense to file for Bankruptcy without a lawyer?
You may not need a lawyer to successfully declare bankruptcy in a simple Chapter 7 bankruptcy case (Chapter bankruptcy 7 is the fastest route to completely wipe out most kinds of debt). The bankruptcy laws are relatively easy to apply to a simple Chapter 7 bankruptcy case, so you can get your debts discharged (debt wiped out) if you are willing to put in a bit of research and work, as we’ll outline below. We’d recommend only filing by yourself in Chapter 7 cases that meet the following conditions:

1. You pass the means test
   You need to make under the average yearly income in your state to qualify for Chapter 7 or Chapter 13 bankruptcy. You need to be making less money to file for Chapter 7 than you do for Chapter 13. To file for Chapter 7 in Detroit, your household income has to be equal to or lower than $51,411 per year for a household of one, equal to or lower than $62,000 for a household of two, equal to or lower than $75,951 for household of three, equal to or below $92,720 for a household of four, and equal to or below $101,742 for a household of five. You can access the means test forms on the U.S. Government’s website.
2. You own few to no assets
   The court defines property as an asset, since they can sell it and use the money to pay back your creditors (people you owe money). The court considers all of your property as part of your bankruptcy estate (objects they can sell to pay back your creditors) once you’ve filed. But don’t worry, you can still keep your house before, during, and after you file for Chapter 7 bankruptcy as long as you stay current on your mortgage payments. In Michigan, you can protect your home from creditors, so be sure to declare this when you fill out these files for bankruptcy. Chapter 7 bankruptcy enables you to continue paying your mortgage instead of using that money to pay off other debts, including debt on credit cards
3. You own few priority debts
   Bankruptcy really helps give you a “fresh-start” by wiping out many kinds of debt. But it does not wipe out priority debt. Priority debt refers to debts that get paid first as soon as money is available to creditors. Priority debts do not get wiped out when you file for bankruptcy.

Below are the main forms of priority debt that bankruptcy does not wipe away:

Fines, penalties, and money owed for violating the law
Taxes
Spousal support, child support or other support obligations
Intoxicated driving debts
Homeowners’ association dues after you file for bankruptcy
Loans for retirement plans
Money borrowed to pay off a bill that bankruptcy does not discharge (get rid of), such as taxes
Debts that weren’t discharged (wiped away) from a previous bankruptcy
Student loans (unless you can prove in court that keeping the loan will really hurt your financial situation)
Looking for a bankruptcy lawyer in the Detroit metro area?
Call 734-722-2999

4. Your creditors (people you owe money) do not claim fraud (that you tried to lie to or hurt them) against you
5. You’re willing to go through the filing process yourself
   Filing for bankruptcy is a lot of work: you’ll need to figure out if you qualify, determine the legal and financial long-term results of filing on your finances, declare property you’d like to keep, take a debtor and creditor course, fill out files, submit them to court, and attend a meeting in court without professional guidance.
6. You are ready to learn bankruptcy law
   In order to file for bankruptcy, you will need to become comfortable with the laws and procedures that govern Chapter 7 bankruptcy and the filing process. It’s important that you read through the laws when filing by yourself to ensure you file correctly.

Anyone can file there own bankruptcy
Yes, you can successfully file for bankruptcy without an attorney. However, it may still be worth it to hire a qualified attorney in a simple Chapter 7 bankruptcy filing, since you still need to spend a great deal of time researching bankruptcy laws, deciding how they apply to you, gather your financial information, and attend court. An attorney can easily and quickly guide you through this entire process, answering your questions when needed, and guaranteeing that your debts get successfully discharged (wiped out). An attorney will also make certain you will not need to declare bankruptcy again by providing you with specific guidance before, during, and after you file.

When You Definitely should NOT File On Your Own
Chapter 13 bankruptcy
You most likely need an attorney when filing Chapter 13, since it involves complex processes that are really difficult to navigate on your own. Declaring Chapter 13 involves creating a plan of how you will pay back the money you owe the debtors which the court will then approve. It’s very time-consuming to make this plan unless you have expensive financial software that many attorneys own to make creating this payment plan much faster and easier.

Chapter 13 cases filed without an attorney often get dismissed by the court. Chapter 13 cases are so difficult to file properly that the court may not even look at filings that were not prepared by a lawyer. Many attorneys avoid taking on Chapter 13 cases as the laws and procedures are so nuanced and challenging to apply. Be sure to check your attorney’s track record in Chapter 13 cases to determine whether they’ll help get your case discharged. Therefore, paying for a qualified attorney can help you get out of debt in these complex scenarios by actually ensuring your case gets discharged.

How will your lawyer help you file for Chapter 7 or Chapter 13 bankruptcy:
Before filing, your lawyer will:
Help decide whether you should file for bankruptcy altogether. Many qualified attorneys will meet with you for an initial meeting which is often free. During this meeting, they will explain the bankruptcy process and laws to you in an easily understandable way. They’ll ask you specific questions about your financial situation, your debts, and other factors to determine whether and for what kind of bankruptcy you should file.
Help decide if you should file for Chapter 7 or Chapter 13 bankruptcy
Inform you whether you can discharge (get rid of) your debt. A good lawyer will discuss this information in the meeting before you hire them as well. This will help you decide whether filing for bankruptcy makes sense for you and your family.
Answer any of your questions before you actually file–from where to take the debtor and creditor course, how filing for bankruptcy will affect your spouse or children, to what property you can and can’t keep after bankruptcy based on your specific situation. An attorney will also discuss the legal and tax consequences of filing in the initial meeting.
When you file, your lawyer will:
Help you fill out and submit all the forms. There are many forms that you will need to fill out throughout the process. Your attorney will help you understand what you need to fill out and make the process as easy as possible to complete.
Assist with almost every aspect of your bankruptcy case. This includes preparing your case, filling out and filing the forms, preparing for and attending the meeting with the creditors, as well as appealing the court’s ruling if necessary.
Prepare you for what life will be like after you’ve successfully declared Chapter 7 or 13 bankruptcy.
After you file, your lawyer will:
Check-in with you after the process to ensure you’re doing well and you are on the road to a debt-free future.
In summary
Yes, you can file and declare bankruptcy without a lawyer. However, it may only be worth it to file without a qualified attorney in a Chapter 7 bankruptcy case where it’s relatively easy to apply the bankruptcy laws on your own if you research the rules and learn what to expect. It’s very unlikely to successfully file for Chapter 13 or complex Chapter 7 cases without a lawyer, as navigating the laws can be very challenging. A qualified attorney should provide you with sound advice and guidance before, during, and after the filing process, affording you the ability to successfully get out of debt and receive your fresh start.

Give Firebaugh & Andrews a call for your free consultation 734-722-2999

However, it is important to know what the moratorium actually means and to plan ahead for when it ends.

The words “moratorium” or “ban” can be somewhat misleading, as it makes it seem as if everyone is protected — but really, not everyone is covered and there are steps you need to take to be protected. The CDC has produced a form that you have to fill out and provide to your landlord. If your landlord has filed an eviction suit against you, you should provide a copy of the form to the court as well.

On the form, you will have to explain that you:

1. Make a certain amount of money, or received certain benefits
2. Cannot make your rent payments and why
3. Have done your best to make partial payments as you can
4. Have done your best to get government assistance for rent
5. You will have to move in with others if evicted

It is also important to know that the moratorium does not cancel your rent; it only prevents you from being evicted if you meet the criteria. Once the moratorium ends, you will still owe any rent that has not been paid.

At that point, state law will determine whether your landlord can evict you. If you will be past due in rent, or can no longer afford your rent, bankruptcy can provide you relief.

While bankruptcy does not prevent evictions, it does allow a renter to reject an unaffordable lease, including the past due rent, and provides a good way to wipe out other debts and get a fresh start. So, if you have decided to move and are concerned about the remaining term on the lease, a bankruptcy will keep your landlord from pursuing any past-due rent. If you can afford ongoing payments and want to keep your lease but cannot afford the past due rent, a Chapter 13 bankruptcy can be used to pay the past due debt over a period of time, with the consent of the landlord.

Call Firebaugh & Andrews for your free consultation 734-722-2999