Chapter 13 bankruptcy is a reorganization bankruptcy, which means that you create a plan to repay your debts over time. In Michigan, Chapter 13 bankruptcy is a common option for people who have a regular income and want to keep their assets.
To qualify for Chapter 13 bankruptcy in Michigan, you must meet certain requirements, including:
- You must have a regular income.
- You must have unsecured debt of less than $419,275.
- You must have secured debt of less than $1,282,350.
- You must be able to make a monthly payment of at least $100 to your creditors.
If you qualify for Chapter 13 bankruptcy, you will file a petition with the bankruptcy court. The court will then approve your repayment plan, which will usually last for three to five years. You will make monthly payments to a trustee, who will distribute the money to your creditors.
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Once you have completed your repayment plan, your remaining debts will be discharged. However, there are some debts that cannot be discharged in Chapter 13 bankruptcy, such as child support, alimony, and student loans.
Chapter 13 bankruptcy can have a less significant impact on your credit score than Chapter 7 bankruptcy. It will appear on your credit report for up to seven years, but it will not lower your score as much. However, your credit score will start to recover after you file for bankruptcy. The exact amount of time it takes will vary, but it can take several years to reach your pre-bankruptcy credit score.
If you are considering filing for bankruptcy, it is important to speak with an experienced bankruptcy attorney to discuss your options and how bankruptcy will affect your credit score.
Here are some of the pros and cons of Chapter 13 bankruptcy in Michigan:
Pros:
- Keeps your assets.
- Stops collection efforts.
- Provides a fresh start.
- Can be less expensive than Chapter 7 bankruptcy.
Cons:
- Requires you to make monthly payments for 3-5 years.
- Affects credit score for 7 years.
- May have to pay filing fee.
- May have to attend credit counseling classes.
Ultimately, the decision of whether or not to file for Chapter 13 bankruptcy is a personal one. There are many factors to consider, such as your financial situation, your assets, and your future goals. If you are considering filing for bankruptcy, it is important to speak with an experienced bankruptcy attorney to get personalized advice.
