Westland Bankruptcy Attorney

Livonia Chapter 7 and 13 Bankruptcy Lawyer

The number of people filing Chapter 7 or Chapter 13 bankruptcy has skyrocketed during these difficult economic times. Those who consider bankruptcy as a solution to their financial challenges need to know they are not alone; they need a skilled bankruptcy attorney who can professionally navigate the intricacies of the law while being sensitive to the emotional toll it can take on an individual. Congress enacted the Bankruptcy Code as a safety net for people who get overrun by debt. Filing for bankruptcy is the first step in a client's journey to a fresh financial future. These clients need Clos, Russell & Wirth, P.C. to navigate this intricate process.

The two most common types of bankruptcies are Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy is a liquidation of the debtor's assets. Upon filing, the bankruptcy court will appoint a trustee who will review the debtor's assets to determine if they can be sold to pay creditors. The debtor is allowed to exempt certain assets from being sold by the trustee. In most Chapter 7 cases, the debtor is able to retain most, if not all, of his or her assets by utilizing the proper exemptions.

A Chapter 7 takes approximately 120 days from start to finish. In order to file for Chapter 7, a debtor must first qualify. Qualification is based primarily upon the debtor's household income. If the household income is less than the median income in his/her state, (approximately $43,456 for a single-person household in Michigan based on 2011 statistics), a person automatically qualifies for a Chapter 7. If the household income is above the median income, the debtor must satisfy the Means Test. The Means Test is a mathematical formula the courts use to determine if the debtor is insolvent. At the completion of the Chapter 7, the debtor's unsecured debt (credit card debt, medical bills, personal loans, etc.) will be discharged.

Chapter 13 Bankruptcy

A Chapter 13 bankruptcy, unlike a Chapter 7 liquidation, is a repayment plan. The debtor proposes a repayment plan based upon two factors. The first factor is the debtor's ability to pay a portion of his/her unsecured debt. The second factor is the amount of secured debt the debtor possesses. This "repayment plan" must be approved by the court. The Court determines whether or not it is feasible for the debtor to make the payments as proposed by the plan. If the plan is accepted, the trustee will automatically deduct payments from the debtor's paycheck over the life of the plan. The repayment term in a chapter 13 plan ranges from 36 to 60 months. At the end of the repayment plan, if all payments have been made, any unsecured debt that has not been paid off will be discharged.

General Facts

It is important to note that certain debts are excluded from either type of bankruptcy. These debts include income and other tax indebtedness and student loans. Regardless of the type of bankruptcy that is filed, all debtors are required to take two credit counseling classes, one before the filing and another prior to bankruptcy discharge. Generally, each of these classes takes about an hour and costs approximately $50.

Contact Our Firm

If you have questions regarding personal bankruptcy, contact the office of Clos, Russell & Wirth, P.C., to schedule a free consultation. We offer evening and weekend appointments based on the needs of our clients. We accept all major credit cards as payment for services.