In Utica, 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 obtain 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 Utica, 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 Utica bankruptcy attorney cannot be substituted.
Types of Bankruptcy in Utica, Michigan
In Utica, Michigan, there are 3 types of bankruptcy in common use: Chapter 7, Chapter 13, and Chapter 11. Because bankruptcy is a creation of federal law, the procedures governing bankruptcy in Utica, Michigan will be similar anywhere else in the U.S. Chapter 7 bankruptcy requires the debtor to liquidate some of his or her property, and use the proceeds to pay creditors. While this doesn't sound like much of a relief at first glance, the upshot is that once the qualifying property is sold, and the proceeds given to the creditors, all of the debtor's eligible debts are deemed paid in full, regardless of how much the creditors actually ended up getting. Not all of the debtor's property has to be sold off - the debtor will normally be allowed to keep things like a house, at least one car, some types of personal property, retirement accounts, and insurance policies. It should be noted that some debts are not dischargeable, and will have to be paid in full even if the debtor files for bankruptcy. This includes student loans, taxes, and criminal fines.
The other form of bankruptcy most often used in Utica is Chapter 13. It allows a person to pay off their debt over a prolonged period of time, often consolidating it into one periodic payment. In this system, the amount of money the debtor owes is not actually reduced, but the payment of the debt is made far more manageable. This gives the debtor some breathing room, allowing him to continue to earn a living while gradually paying down his debts, and gives some security to creditors that they will eventually collect all or most of what they're owed. Chapter 11 bankruptcy is usually used by businesses, though it can be used by individuals (which is quite rare). Chapter 11 bankruptcy requires that the debtor come up with a reorganization plan - basically telling the court how they propose to cut costs, streamline their operations, and pay their debts. This plan must be approved by the participating creditors through a simple majority vote.
During the Chapter 11 process, a business can normally continue its operations, and the stock can be traded, even if it is de-listed from a major stock exchange.
How Can a Utica Bankruptcy Lawyer Help?
Filing for bankruptcy in Utica is a very important decision, and should not be made lightly. Before filing, one should consult with a good Utica bankruptcy attorney for help.