There are a lot of misunderstandings out there about bankruptcy and how it can help people get the financial freedom that they desire. This week, this column will work to give a basic overview of Chapter 7 bankruptcy law. At the end of the day, it can be a great option for Michigan residents who literally cannot afford to pay their bills.
In order to qualify for a Chapter 7 filing, one's income level cannot be higher than the state's median income level -- with few exceptions. To figure out if an individual qualifies based on income, one takes the means test. All that is required to do this is a little bit of personal information and some data from the most recent census records.
A Chapter 7 bankruptcy is often known as a liquidation filing. This means that if a Chapter 7 is filed, one will be required to give up any assets that are not necessary to provide for one's basic needs. This does not mean that one will be left with nothing. The court will not leave one totally empty handed, and there are state exemptions under Michigan law that apply to residents filing for bankruptcy.
While it may be difficult to let some property go, a Chapter 7 bankruptcy filing can quickly release a person from his or her debt. From beginning to end, the process only takes a few months -- longer if any creditors file objections to the bankruptcy petition. Items that may not be discharged include child support, alimony, certain taxes and higher education loans, among others.
Those in Michigan who are not sure if a Chapter 7 filing will serve their needs best can turn to an experienced bankruptcy law attorney for a case review. By looking over one's economic situation, one's legal counsel will be able to offer guidance and support throughout the filing and court processes. If successful in achieving bankruptcy approval, monetary relief may be almost instant -- as eligible debts will usually be discharged by the court in fairly short order.
Source: uscourts.gov, "Chapter 7 - Bankruptcy Basics", Accessed on Sept. 21, 2017