BANKRUPTCY BASICS

The fundamental goal of  Bankruptcy is to help you reorganize your finances and give you a "fresh start."  Immediately upon filing your Bankruptcy Petition, the Automatic Stay stops any and all creditor actions to collect on any debts. If a creditor Violates the Automatic Stay, the will be held in Contempt of the Bankruptcy Court. The Automatic Stay allows you to take a breath and prepare for a Discharge Order in a Chapter 7 case or the prepartion of a Reorganization Plan in a Chapter 13. A Chapter 7 discharge order is entered 4 months after filing. At the conclusion of your Chapter 13 Plan, you receive your Discharge Order. In both cases, a Discharge releases you from certain debts and prohibits creditors from taking any action to collect those debts. 


Chapter 7 is a bankruptcy procedure where the Trustee oversees the administration of your assets and the discharge of your debts. In both a 7 and a 13 you can exempt (protect) your real and personal property. Exemptions are fixed by federal or state law and are based on the cash or equity value your property.  In a Chapter 7, you typically receive a Discharge 4 months after your petition is filed. 


In Chapter 13 you propose a plan to repay certain debts over a 3 to 5 year period. The Chapter 13 Trustee is much more involved with your case than in a 7.  A 13 Plan provides for the reorganization of home mortgage loans, auto loans and other secured claims and priority obligations. Priority claims include income tax obligations, payroll tax debt and child support.  You must make monthly payments to the Trustee who then makes the payments on mortage, auto and priority claims. As a general rule, your unsecured creditors do not get paid in full; sometimes you only pay 1 to 5 percent of your credit cards and medical bills and other unsecured debt.
 
The primary difference between Chapter 13 and Chapter 7 is that in a 13, you remain in possession of your property and make montly payments based on your anticipated income over the life of the 13 Plan.  Unlike Chapter 7, you do not receive an immediate discharge in a 13.  You must complete the term of your plan before a Discharge Order is entered. During the term of the plan the Automatic Stay protects you from lawsuits, garnishments and other creditor actions. 


The Bankruptcy Code and Bankruptcy Rules set forth the formal Legal Procedures for dealing with the Debt Resolution of Individuals and Small Businesses. The Bankruptcy process is governed by Federal Rules. The process is administered by a Trustee who conducts your First Meeting of Creditors; usually this is the only formal procedure which Requires your Attendance. In our area, the Bankruptcy Court the Trustee Hearing Room are located in Bay City at 101 First Street, Bay City MI 48708.

We serve North East Michigan which includes these Counties: Alcona, Alpena, Arenac, Bay, Cheboygan, Clare, Crawford, Gladwin, Gratiot, Huron, Iosco, Isabella, Midland, Ogemaw, Oscoda, Ostego, Presque Isle, Roscommon, Saginaw, and Tuscola.

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