Lawton, MI asked in Bankruptcy for Michigan

Q: I own a construction business and am recently divorced and have lots credit card debt which bankruptcy do I need?

most debt is personal debt, do I have to sell trailers and tools to cover my debt?

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2 Lawyer Answers
Trent Harris
Trent Harris
Answered
  • Bankruptcy Lawyer
  • Jackson, MI
  • Licensed in Michigan

A: Your options for personal bankruptcy come in basically two flavors: Chapter 7 liquidation or Chapter 13 repayment plan. If you are eligible for it, most bankruptcy lawyers will try to file you under a Chapter 7 case, unless there is a reason Chapter 7 wouldn't be best for you. So let's look at how some of that might play out:

You can file Chapter 7 bankruptcy if your household income from all sources is less than the state median. If it's above, you'll need to take a means test to find out if you can file Chapter 7. Assuming the means test qualifies you for Chapter 7 bankruptcy, then you would then look at whether you have any assets you would be forced to turn over in the Chapter 7 bankruptcy. For example, your trailers and your tools. Both federal and Michigan law give you allowances to keep a certain amount of property, known as exemptions. If you have property worth more than you're allowed to keep using your exemptions, you'll need to turn it over in a Chapter 7 bankruptcy. If you don't want to turn that property over, then off to Chapter 13 land we go.

You can file Chapter 13 bankruptcy if you have regular income and debts less than $419,275 unsecured, and $1,257,850 secured. In a Chapter 13 bankruptcy you pay your unsecured creditors as much as the law says you can afford to pay over a term of 36 to 60 months. In exchange for successfully making all of your payments, you can get a discharge regardless of whether your unsecured creditors are paid in full or not.

So the answer for you: it depends on your income, and it depends on whether you have property that would not be exempt in a Chapter 7 case. You should contact a bankruptcy lawyer in your area who can go over all the facts and circumstances in your case, and who can give you your options. He or she would review your eligibility for Chapter 7 or Chapter 13 bankruptcy, and would be able to discuss with you which route is right for your situation. Hope this helps. Good luck.

Timothy Denison
Timothy Denison
Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: You shoukd consult an attorney who can review your entire financial situation and help you decide between a 7 and 13.

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