Chapter 7 Bankruptcy
Flint bankruptcy lawyers help get you a fresh start
The goals of the Flint Bankruptcy Law Office of George E. Jacobs & Associates are to get you past your difficulties as soon as possible and to set you on course for a healthy financial future. Our experienced attorneys can determine if Chapter 7 is the right solution for you or if another course of action, such as Chapter 13 reorganization, is better suited to your needs.
What is Chapter 7 bankruptcy?
Chapter 7 bankruptcy is designed to allow a fresh start for individuals, partnerships and corporations with no other hope of repairing their financial health. The process calls for a bankruptcy trustee to sell most or all of a debtor’s property in order to satisfy part of the debt due. Some of your assets, including your car and home, may be declared at least partially exempt from the sale. At the end of the Chapter 7 process, most qualifying debts are discharged, meaning they do not have to be repaid.
The Chapter 7 means test
The first step in filing for Chapter 7 bankruptcy involves a means test: a set of formulas that helps the court determine whether debtors truly need to declare bankruptcy and whether they have the means to pay back a portion of what they owe to their creditors. The means test considers your income, expenses, assets, and tax information, in relation to Michigan’s median family income. If you are found to have the means to pay your outstanding debts — even partially — you may not qualify for Chapter 7.
How do you file for Chapter 7?
If you are eligible for Chapter 7 under the means test, an experienced bankruptcy attorney can help you evaluate whether your property and assets, such as your home, vehicle and bank accounts, can be considered exempt from sale by the bankruptcy trustee.
Prior to filing in Chapter 7, you are required to take a course with a nonprofit credit-counseling agency to educate you on the potential for handling your current debts without bankruptcy protection.
The Chapter 7 filing process begins with submitting a petition to the court, disclosing your income, debts, assets, creditors, property exemptions and history of large purchases, such as real estate, for the past decade. The same information also needs to be submitted to the bankruptcy trustee, along with proof that your financial status is as claimed. Debtors can provide bank statements, tax filings, paycheck stubs and other documents to provide a fuller picture of their financial situation.
When you file your bankruptcy petition with the court, a filing fee of about $335 is due, but you can request a payment plan or apply for a fee waiver if you can demonstrate hardship to the court.
Discharge of debts
Understanding which debts can be wiped out by Chapter 7 is the key to deciding whether this type of bankruptcy is right for you. Debts that can be discharged include medical bills, credit card charges and late fees, revolving charge accounts , older unpaid taxes and penalties, collection agency accounts, business debts, past due utility bills, past-due rent and civil court judgments. Some types of debts, like student loans, back child support owed, and recent tax arrears, are not typically considered dischargeable and will remain due, even after the Chapter 7 bankruptcy process is complete.
You can learn more about how Chapter 7 bankruptcy can discharge certain debts on our Bankruptcy FAQ page.
Michigan bankruptcy attorney counsels on Chapter 7 advantages and drawbacks
If you need help deciding whether a Chapter 7 bankruptcy is right for you, call the Flint Bankruptcy Law Office of George E. Jacobs & Associates at 810-275-0608 or contact us online to set up a free initial consultation.