Individuals in Michigan who are interested in reorganizing their debts may want to do so by filing for Chapter 13 bankruptcy. Chapter 13 allows a filer to make payments to creditors over a period of three or five years. In exchange for making those payments, the debtor is unlikely to lose any of their assets. To qualify for a Chapter 13 proceeding, an individual must have consistent wage income or some other source of reliable income.

Seasonal workers or others who have irregular incomes throughout the year may be able to create flexible payment plans. This will allow them to make higher payments during their prime earning months while paying less when their paychecks are smaller. The amount a debtor must pay each month relates to how much disposable income they have. Disposable income is what is left over after accounting for rent, utility or other payments.

How payments are distributed depends on what types of debts the filer owes. Priority debtors are paid first, secured debtors are paid next and unsecured creditors are paid whatever is left over. Priority debts include some unpaid taxes, back child support and wages owed to employees; these balances must generally be paid in full during a repayment period.

While filing for Chapter 13 bankruptcy may offer many benefits, there may be negative consequences to doing so as well. Those who wish to file for bankruptcy may want to discuss their options with an attorney. Legal counsel could explain how to file for Chapter 13 protection, how much the debtor will pay per month and how long it may be before their case is discharged.