Being overwhelmed by unmanageable debt can be an incredibly nerve-racking and terrifying experience. It is definitely a time when you should reach out for help. Thankfully, it’s not difficult to find a seasoned bankruptcy attorney in Eastpointe, Michigan. Engaging the services of one could be just the answer you need to climb your way out of your current financial troubles.
Documents to File for Bankruptcy in Michigan
In order to evaluate your specific situation and come up with the best solution, your bankruptcy lawyer needs access to all information that relates to your current financial position. Generally, these are the documents you need not only for your evaluation but also to file for bankruptcy in Michigan:
- Identification – A valid government-issued photo ID, like a state identification card or driver’s license. You’ll need to present that along with your Social Security card. Your Form W-2 reflecting your social security number is also acceptable.
- Tax Returns – Your federal tax returns from the last two years will help your Eastpointe bankruptcy lawyer determine whether bankruptcy is the best option for you. If so, these documents will also determine which chapter you qualify for.
- Proof of Income – Any income documents from at least the last 60 days. If possible, prepare up to 6 months’ worth. If you’re employed, this might include pay stubs and social security deposits. If you’re self-employed, prepare income statements from your business or professional endeavor. If you’re unemployed, show any unemployment confirmation you may have received.
- Bank Statements – It’s common for bankruptcy trustees in Michigan to examine bank statements covering the 6-month period prior to filing. Apart from using these to evaluate your case, your bankruptcy attorney in Eastpointe should help you prepare your explanations for any extraordinary activities like large withdrawals or deposits. Additionally, they should help protect whatever funds you might have remaining in your possession.
- Property Ownership – If you own your Eastpointe home or any other real estate outside or within Michigan, prepare your deed, state equalized valuation (SEV), and all documents pertaining to your mortgage. You’ll also need to provide ownership documents of any vehicles (including recreational vehicles) under your name.
- Retirement Plans – Present the most recent statements for any pension plans you may have. That includes your 401(k) plan, 403(b) account, annuity, or any other retirement plan in your name Generally, these accounts are safe from creditors but must still be documented and evaluated by your trustee.
- Miscellaneous Investments – If you have any investments that hold cash value, you’ll need to present documentation. Ideally, that would include the latest valuation of each. This might involve bonds, stock certificates, and life insurance policies in your name.
- Divorce Judgments – If you happen to be divorced, you’ll need to present all divorce papers relevant to your financial position. That includes your divorce judgment and property settlements. If your divorce took place over 5 years ago, these may not be required.
Bankruptcy in Eastpointe, Michigan: Chapter 7 vs. Chapter 13
Filing for bankruptcy in Michigan is the same as everywhere else in the country. Although the exemptions and income limits vary per state, those are details your Eastpointe bankruptcy attorney should be knowledgeable about. Regardless, you’re generally limited to these two types:
Chapter 7 Bankruptcy: Liquidation
Also called Straight Bankruptcy, Chapter 7 is a legal process that allows you to clear your debt completely. This is usually the type filed for unsecured debt like credit card arrears and personal loans. Although this might seem ideal, not everyone can qualify for this program. You’ll need to pass what’s called a “means test,” which is based on your income and determines whether you’re actually incapable of repaying your debt.
If your Eastpointe bankruptcy attorney determines that you’re qualified for this type, the next step is to examine your properties. Once you’ve filed, a trustee will be assigned by the court to determine whether you have any properties that could be liquidated and distributed to your creditors. Your lawyer should be prepared to defend your right to retain any properties under federal or Michigan law.
Chapter 13 Bankruptcy: Debt Adjustment
Unlike a straight bankruptcy, chapter 13 doesn’t immediately discharge debt. Also called Debt Reorganization, this process seeks to give wage-earners a means to reorganize their arrears into monthly payments they can manage over the course of three to five years. This is most useful for secured debt—like the mortgage on your Eastpointe home—because it gives you a better chance of keeping your property.
You can qualify for this type of bankruptcy even if your income exceeds Michigan’s thresholds. But, you’ll need to prove that you have a steady income that will guarantee your ability to follow your new repayment plan. If your income is irregular, your Eastpointe bankruptcy lawyer will need to convince the appointed trustee that you can meet your obligations.
The Process of Bankruptcy in Michigan
Before the actual filing, you and your bankruptcy attorney will meet several times to discuss your options, decide on a strategy, and prepare all the requirements. Once everything is in place, your lawyer will proceed with the filing. Since you’re based in Eastpointe, your case will most likely be filed at the Eastern District Bankruptcy Court in Detroit.
When your paperwork has been filed, the court will inform your creditors and assign a trustee for your case. Then, a meeting will be scheduled to examine your case. In that meeting, your trustee will ask you questions about your debt, income, properties, and anything that relates to your finances. Your creditors are allowed to attend this meeting, but they rarely do.
This meeting is very likely the only time you need to face your trustee. Although rare, your trustee can discharge your debt based on this meeting alone. Most often, however, they will continue to communicate with your lawyer to settle disagreements on properties for liquidation or to gather additional documents. Typically, it takes a few months before your case is closed and your discharge is released.
Hiring a bankruptcy attorney in Eastpointe, Michigan could be your best chance of eliminating all your distressing financial problems. Through the bankruptcy process, you might be able to walk away with zero debt. But even if you don’t, you’ll surely end up with more manageable financial responsibilities and less anxiety overall.