Michigan residents who do not qualify for a Chapter 7 bankruptcy but who would still like to benefit from a bankruptcy filing may pursue a Chapter 13. Like Chapter 7, unsecured debts can be discharged with an approved Chapter 13 petition. The big difference is that with Chapter 13 bankruptcy law, filers are required to make payments to creditors for a set period of time before debt discharge will happen.

Knowing that there is a repayment schedule involved with this type of bankruptcy may be off-putting to some. They are afraid that it will not be affordable for them. Here is the thing — the terms of the repayment plan have to fit within one’s current budget. A bankruptcy court is not going to approve repayment terms that one has no way of sticking to. That totally defeats the purpose of seeking bankruptcy protection under Chapter 13.

Calculating one’s monthly payment amount can be a bit complicated. It is necessary to look at one’s debts — the specific type and how much is owed — one’s income level and reasonable expenses. After determining one’s disposable income, a payment amount will be determined. Debts that are considered priority debts will be paid first, then secured debts and, finally, unsecured debts. It is these unsecured debts that may be discharged at the end of the bankruptcy repayment period — which will either be three or five years, — while priority and secured debts should be paid in full or at least brought current by the end of the repayment period.

Michigan residents who want to know if they qualify for Chapter 13 bankruptcy and what their repayment schedule may be can turn to an experienced bankruptcy law attorney for guidance on the matter. Legal counsel will have the ability to review one’s financial state in detail and help one pursue this bankruptcy option if doing so is deemed appropriate. If other debt relief options would better suit one’s situation, legal counsel will not be shy about saying so.