Michigan Chapter 7 Bankruptcy: Not a Lose-All Proposition
November 14, 2014
A Skilled Lawyer Knows How to Help Retain Many Assets
Sometimes the terms used in bankruptcy are more frightening than their actual meanings. “Liquidation,” the term used to represent Chapter 7 bankruptcy, emits a picture of a person emerging from bankruptcy holding nothing but a toothbrush. The reality is that typical Michigan Chapter 7 filers can walk away with nearly everything they own. The secret is to understand the rules and know how to make the right choices. This is where an experienced lawyer can make a dramatic difference to the outcome of your case.
“Fresh Start” is the Most Important Term
Even though the bankruptcy laws changed significantly in 2005, their overall purpose is the same: to provide individuals and businesses with the chance for a fresh start. The law recognizes that you cannot start over with little or no possessions. This is why the bankruptcy process provides a number of opportunities to retain much of what you own.
Not All Assets are Created Equal
The overall concept behind liquidation is that Chapter 7 bankruptcy takes an individual’s assets and sells them, distributing the proceeds of the sale to creditors. In fact, the rules make certain property exempt from liquidation in most cases. Here are the two most common examples:
- Unsecured debt: When you buy a home or a car, your loan is backed by the asset. This is known as “secured debt,” meaning the lender can potentially take it back (but there may be ways to retain them, as well). This is not true with “unsecured debt” — most notably, credit card balances — which may be written off without repayment to creditors. According to the U.S. Courts Bankruptcy Basics publication, “Because there is usually little or no nonexempt property in most Chapter 7 cases, there may not be an actual liquidation of the debtor’s assets.”
- Exempt property: The Bankruptcy Code considers a wide range of assets as exempt from liquidation. These items include everything from household goods to many retirement accounts. Michigan also offers its own list of exempt items, and individuals can choose between federal and state exemptions, depending on which list is most advantageous to their Chapter 7 A dedicated lawyer can help individuals select the right list based on their unique financial circumstances.
Michigan Chapter 7 Should Not Be a Do-it-Yourself Project
It is not uncommon to find many web pages that advise you to handle your own Chapter 7 filing. On the surface, this form of bankruptcy appears relatively straightforward, so why not save a little money? While it may be technically possible to handle the process on your own and emerge debt-free, you may not have as many assets available for the best chance at a fresh start. This is where a knowledgeable Michigan Chapter 7 lawyer can make a notable difference.
It costs nothing to schedule an initial consultation at the Law Office of Jeffrey J. Randa to learn about your options and how we can help you get the best possible results from your bankruptcy filing. You can reach us at 586-228-6523, or use our convenient contact form to get the process started.