Bankruptcy is a legal procedure allowing a person or business to have their debts excused, in part or in whole. It is typically treated as a last resort, because, while it can prevent financial catastrophe, it has some influential long-term consequences. This warrants careful consideration of the costs and benefits. Since it's a product of federal law, bankruptcy is handled in federal courts. Therefore, the rules and procedures governing it in Michigan will be the same as anywhere else in the country. Distinct courts in Waterford, Michigan will have some unique rules, however, so you should consult with a local lawyer before you file.
Chapter 7 Bankruptcy in Waterford, Michigan
There are 2 typical types of consumer bankruptcies in Waterford, Michigan: Chapter 7 and Chapter 13 bankruptcy. Chapter 7 bankruptcy involves a liquidation of some of the debtor's assets, which pays off part of his or her debt. Once this is done, the remaining debt is excused. Fortunately for debtors, many types of property are exempt from liquidation, including homes, vehicles, necessary personal items, and retirement accounts.
Once the appropriate property is sold, and the funds transferred to the creditors, the dischargeable debt is absolved. Some types of debt, however, can't be excused in Chapter 7 Bankruptcy in Waterford, Michigan. These include student loans, criminal fines, and taxes, among others. If most of your debt can't be excused, Chapter 7 might not be the best choice for you.
Chapter 13 Bankruptcy in Waterford, Michigan
Chapter 13 Bankruptcy in Waterford, Michigan differs considerably from Chapter 7. It might be a better option than Chapter 7, depending on the facts of your case. Chapter 13 does not absolve any debt, but it creates a new payment plan that should give the debtor some breathing room. Usually, all of the debts are consolidated into 1 periodic payment. While this might make it take longer to pay off the debt, if the debtor is willing to make a few sacrifices, the plan should be manageable.
Which Type of Consumer Bankruptcy Should I File in Waterford, Michigan
The answer to this question depends heavily on your distinct situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.
Of course, you should always seek the counsel of an experienced local Waterford, Michigan bankruptcy attorney before you make the decision to file. He or she will be able to advise you of your options, and suggest the best possible course of action for your specific situation.