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How does Michigan Chapter 7 and Chapter 13 bankruptcy differ?

Folks in Michigan have probably heard that most consumer bankruptcy filings are done under one of two chapters of the bankruptcy code. Chapter 7 and Chapter 13 are the two chapters in question. What are the differences between these two? From a consumer's point of view, is one more desirable than the other?

Chapter 7 bankruptcy is also called liquidation bankruptcy. Consumers who are eligible for Chapter 7 bankruptcy will have most of their eligible debts erased after the bankruptcy process is complete. In exchange, some of the consumer's assets may be subject to liquidation to pay-off part of the debts owed.

Not everyone is eligible for Chapter 7 bankruptcy. Those whose income is higher than that of the median similarly sized family are not eligible for Chapter 7 bankruptcy. These consumers may be eligible for Chapter 13 bankruptcy, however.

Chapter 13 bankruptcy is also called reorganization bankruptcy. Chapter 13 bankruptcy allows consumers to reorganize their debt repayments into manageable payments. This allows consumers to pay back what they can without getting grief from creditors.

Many people not eligible for Chapter 7 bankruptcy may be eligible for Chapter 13 bankruptcy. Nonetheless, there are maximum debt limits on the debt that can be handled with a Chapter 13 bankruptcy. If a consumer's debt exceeds these limits, Chapter 13 may not be an option.

Because the Chapter 7 process is quicker and may involve paying less to creditors, many consumers would prefer to use that option. Other consumers would prefer not to go through the liquidation process. These folks might prefer Chapter 13. A bankruptcy attorney can help Michigan residents determine what bankruptcy rights they may have based on their individual circumstances.

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    Posted by MaryDecember 11, 2015

    "I am overwhelmed by your response to my call, even 10 years after my bankruptcy was discharged. You have more knowledge and expertise than I could have imagined. Because of you, my fears have been put to rest. For that, I'm so very grateful. Thank you many times over. "

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    Posted by ClientOctober 26, 2010

    "... I was extremely impressed with Charles' understanding of the bankruptcy laws to the extent that I felt certain that my best interests were always at the forefront. "

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    Posted by MarleneJanuary 8, 2014

    He helped me thru my 1st bankruptcy and now the second. I had no idea what to expect , but they kept me informed and answered all my questions. Mr. Schneider is the most experienced and knowledgeable lawyer I have ever met. If you have to file call this attorney first!

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