Considering that Michigan has the highest unemployment rate in the country, you are not alone if you are contemplating filing for bankruptcy.
First things first, then. To be eligible to petition, you must have lived in Michigan for longer than six months. If this is the case, you should consider whether you wish to file under Chapter 7 or Chapter 13 of the federal bankruptcy code.
Chapter Seven or Thirteen?
Prior to filing, it is essential to understand the differences between the two forms of bankruptcy. Chapter 7 bankruptcy typically involves the liquidation of all non-exempt assets and property. The trustee will convert your assets into cash, pay off your creditors, and allow you to start over. If you have no assets, this strategy typically discharges the majority of your debts.
Chapter 13 bankruptcy is often referred to as reorganization. If you still have a job or a predictable source of income, Chapter 13 allows you to establish a longer-term (3 to 5 years) debt payment plan that allows you to retain your assets and property while reducing some of your debt obligations. Due to recent changes in the law, it has become more difficult to file Chapter 7 bankruptcy, as many people with substantial debts are still gainfully employed. Therefore, it is best to consult with a bankruptcy attorney to determine the best course of action.
Once you've determined which type of bankruptcy you can legally file for, the steps below will put you on the correct path to obtaining financial relief.
Location of Filing in Michigan
Eastern District and Western District bankruptcy courts are available in the state of Michigan for your convenience. Additionally, each district has offices that serve particular counties. For instance, if you reside in the counties of Jackson, Lenawee, Macomb, Monroe, Oakland, St. Clair, Sanilac, Washtenaw, or Wayne, your Eastern District court address is 211 West Fort Street in Detroit. If you are a resident of Genesee, Lapeer, Livingston, or Shiawassee county, you should go to 226 West Second Street in Flint. If you reside in the upper north east of Michigan, you must visit the Bay City office located at 111 First Street. Visit the official website of the Eastern District Court for more information on court hours, rules, and to download court forms.
Five courtrooms are located in Grand Rapids, Kalamazoo, Lansing, Marquette, and Traverse City for the Western District of Michigan. For the exact address of the court facility in your county, please visit the Western District Court's official website. Note that all the legal forms you will need are also available online; therefore, you can save time by printing and completing them prior to your court appearance.
Steps Toward Bankruptcy
1. Visit the bankruptcy court in your area. Create a list of your assets and liabilities, as well as a schedule of your current income and expenses, including recurring expenses such as your mortgage. Additionally, you must disclose all of your investment and retirement accounts. Not everything is legally subject to loss, but you must report all sources of wealth or income to the federal government.
2. Provide the court with copies of your most recent tax returns and all of your bank account statements.
Attend a session of federally-approved credit counseling. You cannot file for bankruptcy in Michigan without the certificate of completion that you will receive from the credit counselor.
4. Obtain all of the necessary bankruptcy forms from the court (or download them from their website) and meticulously complete them. Notate any special instructions that specify which documents or copies you must include with your bankruptcy petition. If you find this section confusing, it may be in your best interest to hire a Michigan bankruptcy attorney to manage all the paperwork.
Bring your completed forms and payment to your local U.S. Bankruptcy Court. (As of writing, Chapter 7 and Chapter 13 in Michigan cost under $300, respectively). If you cannot pay the fee in full, the court may permit you to pay it in installments.
6. Upon receiving notice of your 341 hearing (a meeting of the creditors to whom you owe money), you must attend. Creditors may attempt to object to your petition, but if you have been honest with the court about your financial situation from the start, the court should allow the bankruptcy to proceed.
7. Keep an eye out for any additional courthouse notices that may necessitate your presence at a hearing. You will likely only need to visit the court once more to complete your bankruptcy, but you never know, so pay close attention to all court correspondence.
Above all, keep your head held high and realize that tens of thousands of people go through this process every year in order to start over. Best of success!
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