Is Bankruptcy The Right Option For You?
Bankruptcy is a legal option for businesses and individuals who are unable to work through their financial difficulties. Bankruptcy provides relief to individuals and businesses, as well as provides some protection to their creditors within certain boundaries. For an individual, the bankruptcy process involves disclosing your assets and liabilities, and provides limitations that mostly allow you to retain your property. If you exceed the limitations of property you are allowed to retain, the remainder is used to satisfy outstanding debts. Remaining debts not satisfied by unprotected assets – if any – are discharged. However, some debts such as most state and federal tax debt, most student loans, court-ordered judgments, child support or alimony payments will not be dischargeable in bankruptcy.
There Are Many Reasons To File Bankruptcy For Debt Relief
Some of the reasons people seek debt relief by filing include job loss, unexpected medical illnesses, divorce, or business failure. Bankruptcy is available for individuals to obtain a fresh start and to move forward without being shackled by overwhelming debt. Consult with our team at USADebt to learn whether bankruptcy is the right choice for relief from your burden of debt.
Federal laws govern bankruptcy; however, Michigan’s consumer and commercial laws may have an impact in certain bankruptcy issues. Most bankruptcies are either categorized as either a liquidation or reorganization bankruptcy. Almost any entity or person can file for bankruptcy from municipalities, businesses, farmers and individuals. Many of our clients who file for a liquidation bankruptcy are allowed to keep their property after their eligible debt is discharged in bankruptcy. There are strict limitations to these types of no-asset cases.
Understanding The Different Types Of Bankruptcy Options
One of the most common forms of bankruptcy for individual consumers and businesses is Chapter 7 or liquidation bankruptcy. Filing for bankruptcy protection is a complex process. It starts the process known as the automatic stay where the bankruptcy court halts collections actions that may have begun against a debtor.
A bankruptcy trustee will be assigned with the filing of the bankruptcy petition. The bankruptcy trustee is responsible for selling assets that are not protected under the exemptions (or limitations imposed by the law on the amounts of property you can protect) and distributing the proceeds to your creditors. Generally, creditors are not paid in full or anything at all. For individuals, most debts – except for court orders, judgments, most taxes, some loans – are discharged from any further obligations. Bankruptcy provisions do not permit a business debtor to hold on to a liquidated business.
If you or your business has income to pay creditors, we can help you explore the options available under a reorganization bankruptcy. This type of bankruptcy comes under Chapter 11, Chapter 12, Chapter 13 or Chapter 9 laws. Most consumer debtors will file Chapter 13 to reorganize. Chapter 12 is for farmers, Chapter 9 is for municipalities, and Chapter 11 is for larger business entities and individuals with high debt.
An automatic stay of most collection activity is generated upon the filing for reorganization bankruptcy. A suitable repayment plan is created to satisfy debts over three to five years through a bankruptcy trustee. When the payment plan is completed, the remaining debt is discharged and forgiven. If payment plans are not made, the court dismisses the case or converts it to a liquidation case.
Involuntary Bankruptcy Filings Are Uncommon
Creditors sometimes initiate bankruptcy petitions against debtors to ensure assets are distributed fairly among creditors. “Involuntary bankruptcy” petitions filed under Chapters 7 or 11 are subject to high fines if not properly done. This is uncommon as there are many pitfalls to creditors doing this.
Contact Our Certified Bankruptcy Lawyers At USADebt
Bankruptcy primarily benefits the debtor, but sometimes there are advantages to creditors as well. If you have questions about bankruptcy in Michigan, you should schedule a free appointment with an experienced bankruptcy attorney at USADebt.