Bankruptcy FAQ Your Fight Is Our Fight

Bankruptcy FAQ

Answering Frequently Asked Questions About Ch. 7 & Ch. 13 Bankruptcy

Bankruptcy is intended to help individuals, spouses or corporations and other business entities seek relief from their debts. Chapter 7 and Chapter 13 bankruptcy are the most common methods used to help overcome financial burdens, and each option includes different procedures. Below are some frequently asked questions we get from clients who are wondering if bankruptcy is the best decision for them.

What is bankruptcy?

The US federal courts define bankruptcy as a means that helps people who can no longer pay their debts get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect financially troubled businesses. Simply put, bankruptcy helps you gain a fresh start by helping you overcome your financial debts.

What is the difference between Chapter 7 and Chapter 13 bankruptcy?

Chapter 7 bankruptcy allows most or all of your debt to be totally discharged so that you are no longer subject to creditors. Chapter 13 bankruptcy allows you to manage your debt on a schedule agreed upon by you and your creditors, thus putting a stop to harassing phone calls and debt notices.

Chapter 7 bankruptcy is the best option for those with little disposable income and typically takes less than 1 year to complete. Chapter 13 bankruptcy can give you a chance to catch up on your outstanding debts and typically takes 3 to 5 years to complete.

Will filing for bankruptcy affect my credit?

Yes, but not forever. Depending on the type of bankruptcy you file for, your credit score may be impacted for 7 to 10 years. Filing for bankruptcy will show up on your credit score, making it difficult to get loans, apply for a credit card and rebuild your credit.

Our experienced attorney can guide you and connect you to helpful resources to get you back on your feet after filing for bankruptcy. Even though filing for bankruptcy is commonly seen as a last-ditch resort for people, we see it as an opportunity to restore your financial health and will work to help you do such.

What are the requirements for filing for Chapter 7 and Chapter 13 bankruptcy?

To successfully file for Chapter 7 bankruptcy, you must satisfy these requirements:

  • Your debts total more than half your annual income
  • Your debt hinders your quality of life, such as your relationships and sleeping habits
  • You have little to no disposable income
  • Your monthly income is below Michigan’s average income level
  • You received credit counseling from an approved agency within 180 days of filing
  • You did not file for bankruptcy within the past 8 years

To successfully file for Chapter 13 bankruptcy, you must satisfy these requirements:

  • You must be current in your tax filings, and submit proof that you filed state and federal tax returns for the past 4 years
  • Your debt cannot exceed $1.25 million, and unsecured debt cannot exceed $419,000
  • You received credit counseling from an approved agency within 180 days of filing
  • You must have a regular income
  • You may not qualify if you’ve had a bankruptcy case dismissed within 180 days for a failure to appear in, or comply with, the bankruptcy court
  • You have not filed for Chapter 13 bankruptcy within the past 2 years, or for Chapter 7, Chapter 11 and Chapter 12 within the past 4 years

Will creditors keep harassing me after I file for Chapter 7 or Chapter 13 bankruptcy?

An automatic stay will go into effect immediately after you file for bankruptcy. The automatic stay prohibits creditors from contacting you with payment requests, lawsuits and wage garnishments, to name a few. Think of the automatic stay as a protective shield over your finances that lasts until you’ve financially recovered from your situation.

If creditors are not honoring your automatic stay and are still reaching out to you to collect payments, our bankruptcy lawyer can step in to re-inform them of your rights and protections.

How should I prepare for filing for bankruptcy?

  • Hire our dedicated bankruptcy attorney to represent you in your bankruptcy case
  • Stop automatic payments from your paycheck, credit cards and bills
  • Take a credit counseling course
  • Gather and organize documents, including, but not limited to:
    • Tax returns
    • Income statements
    • Vehicle registration
    • Social Security card
    • Legal actions filed against you
    • Retirement statements
    • Bank account statements
    • Proof of child support order
  • Don’t transfer money or property
  • Refrain from using credit cards
  • Refer any creditor calls to our bankruptcy lawyer to avoid any headache and potential damage

Why should I hire White Law PLLC to help me file for Chapter 7 or Chapter 13 bankruptcy?

Our team understands that choosing bankruptcy is a difficult decision, which is why we strive to serve clients with the utmost care and commitment. To do so, we utilize the latest technology, which allows clients to reach out to us with questions, comments and concerns at their convenience. From the moment you retain our knowledgeable bankruptcy lawyer, you will have full access to quality and thorough representation to help ensure you are prepared and informed every step of the way. You can feel confident that our bankruptcy attorney will keep your best interests in mind and do everything in our power to forge a brighter financial future on your behalf.

For more information, scroll through ourChapter 7 and Chapter 13 bankruptcy pages to read other FAQs.

If you are seeking a diligent bankruptcy attorney to help you overcome your financial burdens, contact White Law PLLC online or call (517) 316-1195 today for a free consultation!

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