In Harper Woods, Michigan, bankruptcy is a legal proceeding in which a person or business has some or all of their debts legally absolved, when they are unable to pay them. This hopefully allows them to start over with a clean slate and move on, after having learned to better manage their use of credit in the process. Bankruptcy should be treated as an option of last resort, and should not be viewed as a proper way to get out of debt that you just don't feel like paying. Bankruptcy can have severe consequences, including but not limited to damage to your credit rating. A bad credit score can impact your ability to receive loans in the future, to rent an apartment, and possibly even your ability to get hired at some jobs (as some employers now run credit checks on prospective employees).
Therefore, it is prudent to consult with an experienced Harper Woods, Michigan bankruptcy attorney, who can advise you of the costs and benefits of bankruptcy. Because the decision to file for bankruptcy depends very heavily on the facts of each individual case, the advice of a Harper Woods bankruptcy attorney cannot be substituted.
Types of Bankruptcy in Harper Woods, Michigan
There are three basic bankruptcy schemes that are most commonly used in Harper Woods: Chapters 7, 13, and 11. Bankruptcy is a creation of federal law, so the procedure for filing for bankruptcy in Harper Woods, Michigan will be roughly the same as it would be anywhere else in the U.S. Chapter 7 bankruptcy involves liquidation of many of the debtor's assets in order to pay off as much of the debt as possible. This sounds harsh, but there is an upside: once the liquidation is complete, the debts are legally viewed as having been paid in full, whether or not the full amount was covered by the liquidation. Liquidation involves selling some personal property, and using the proceeds to pay off debt. Varied types of property are exempt from liqudiation, and therefore may not need to be sold. They include homes, cars, and insurance policies, among others. You should know that some types of debt cannot be discharged in Chapter 7 bankruptcy, including taxes, student loans, and child support.
The other popular bankruptcy system in Harper Woods is Chapter 13 bankruptcy. Under this system, the debtor's debts are restructured, instead of discharged. This involves creating a new repayment plan that the debtor will find manageable, given his or her income, and that will result in the creditors being paid in a reasonable amount of time. When a repayment plan is approved by a court, creditors are legally barred from attempting to collect under the original terms of their contract with the debtor. Though accessible to individuals, Chapter 11 bankruptcy is generally used by businesses. Like Chapter 13, Chapter 11 requires the restructuring of debts. Under this system, the debtor must come up with a plan to reduce debt, cut costs, and improve operations. Once this plan is presented, it is submitted to the participating creditors, who must approve it by a majority vote before it can be implemented.
While going through Chapter 11 bankruptcy, a business can continue operations, and its stock can continue to be traded.
How Can a Harper Woods Bankruptcy Lawyer Help?
One should not make the decision to file for bankruptcy in Harper Woods lightly. Before making any such decision, it would be highly advisable to contact an accomplished Harper Woods bankruptcy attorney.