Bankruptcy is typically an option of last resort for debtors in Michigan who can’t afford to continue making payments to creditors. While it may harm a person’s credit score, this isn’t always true. Furthermore, creditors may have to stop contacting individuals who have filed for bankruptcy. Filing for protection from creditors can also put a temporary stop to lawsuits and wage garnishment.
Those who file for Chapter 7 protection may see medical bills, credit card balances and other unsecured debts discharged in a matter of weeks or months. It’s also possible to eliminate past due rent or utility bills eliminated by filing for a liquidation bankruptcy.
Individuals are encouraged to file for bankruptcy as soon as they feel that it won’t be possible to pay their debts in a timely manner. Doing so may prevent them from liquidating retirement or other assets that may be shielded from creditors in a bankruptcy proceeding. It may also ensure that money is available to pay for an attorney and cover other costs related to seeking Chapter 7 or 13 protection. Those who are looking to raise money to cover those costs may want to borrow money from friends or family members or look into selling their personal property.
Individuals who file for bankruptcy protection may be able to have debts discharged without giving up property. In some cases, they can eliminate medical bills or other debt balances without making payments to creditors. Even if a debt cannot be discharged in a bankruptcy proceeding, filing may provide debtors with leverage to negotiate new payment terms. An attorney could help a client learn more about the potential benefits of bankruptcy and how to file a case.