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23843 Joy Rd
Dearborn Heights, MI 48127
Monday – Friday : 9:00 am – 5:00 pm
Saturdays : 9:30am – 11:30 in office or by phone
We offer late night appointments as late as 6:30 by phone or in person Mon-Thur.
If you are struggling with debt, you may be considering Chapter 7 bankruptcy to help alleviate your financial burden. Consult with one of our Sterling Heights Chapter 7 bankruptcy lawyers, and we will guide you through the process of filing Chapter 7. Contact us today for a free Chapter 7 consultation.
Chapter 7 bankruptcy, often called “liquidation bankruptcy,” is a legal proceeding overseen by the federal court system that allows you to eliminate most of your debts.
The goal of Chapter 7 bankruptcy is to provide you with a fresh start, relieve you of overwhelming financial burdens, and help you move forward with your life.
In 2023, 12,832 people filed for Chapter 7 bankruptcy in Michigan. Michigan is 28% above the national average. [1]
One of the key benefits of Chapter 7 bankruptcy is the opportunity to discharge various types of debts. This includes credit card debts, medical bills, personal loans, and certain types of unsecured debts. By wiping the slate clean, you can eliminate the constant stress and anxiety that comes with creditors relentlessly hounding you for payment.
Once you file, an automatic stay goes into effect, putting an immediate halt to all creditors’ collection actions. This means no more threatening letters, harassing phone calls, or wage garnishments. The automatic stay provides you with the breathing room needed to regroup and regain control of your financial situation.
While the entire process typically takes around three to six months, the discharge of debts can happen within a few months of filing. This means you can regain financial freedom and start rebuilding your credit sooner rather than later.
To determine your eligibility for Chapter 7 bankruptcy in Sterling Heights, you must pass the Means Test. This test evaluates your income and compares it to the median income in Michigan. If your income falls below the median income, you automatically qualify for Chapter 7 bankruptcy. If your income exceeds the median income, additional factors are considered to determine your eligibility. [2]
The Means Test examines your disposable income, which is calculated by subtracting allowable expenses from your current monthly income. These allowable expenses typically include rent or mortgage payments, utility bills, transportation costs, and medical expenses, among others.
If your disposable income is below a certain threshold, you may still qualify for Chapter 7 bankruptcy despite your gross income exceeding the median.
Chapter 7 bankruptcy also takes into account fraudulent or abusive behaviors in relation to debt repayment. If you have engaged in any fraudulent activities, such as hiding assets or illegally transferring property to others to avoid creditors, you may be disqualified from filing under Chapter 7 bankruptcy.
Certain debts, such as child support, alimony, student loans, and tax debts, cannot be discharged through Chapter 7 bankruptcy. These debts will still need to be addressed separately, and your bankruptcy attorney can guide you on the best course of action to manage them.
One of the most important exemptions for bankruptcy filers in Michigan is the homestead exemption. This exemption protects the equity in your primary residence up to a certain monetary limit. In Sterling Heights, Michigan, the homestead exemption allows you to protect equity in your home. This exemption is only available for your primary residence and not any additional properties you may own.
Individuals filing for Chapter 7 bankruptcy in Sterling Heights, Michigan, can also protect their vehicle(s). If you have more than one vehicle or the equity exceeds the exemption amount, the bankruptcy trustee may choose to sell it to satisfy your debts.
Michigan also provides exemptions for personal property, which includes items such as furniture, electronics, clothing, and household goods. The value of each individual item or category of personal property does not matter as long as the total value falls under the exemption amount.
Public benefits such as unemployment compensation, Social Security, and disability benefits are fully exempt from being used to pay off debts. Retirement accounts such as 401(k)s, IRAs, and pension plans are also protected during Chapter 7 bankruptcy proceedings.
Before taking the plunge, there are some steps you should take to ensure a smooth and successful bankruptcy process in Sterling Heights, Michigan. Including:
Here are some of the key benefits of hiring our Sterling Heights Chapter 7 lawyer:
Contact Frego Law in Sterling Heights, Michigan, today to schedule a free consultation and start your journey towards financial freedom.
FAQs
If you are current on your mortgage or car loan payments and can continue making those payments during and after bankruptcy, you may be able to keep your house and car. If you have significant equity in these assets that exceeds the applicable exemption limit, they may be subject to liquidation by the trustee to repay your creditors.
In Chapter 7 bankruptcy, most debts are discharged without partial repayment. If you wish to repay a specific creditor, you can enter into a reaffirmation agreement. This agreement allows you to exclude a particular debt from the bankruptcy discharge and continue making payments directly to that creditor. Reaffirmation agreements are voluntary and require court approval.
According to the Bankruptcy Code, you must wait at least eight years from the date of a previous Chapter 7 discharge before you can file for Chapter 7 bankruptcy again. This time restriction is in place to prevent individuals from abusing the bankruptcy system and to give them an opportunity to improve their financial situation before seeking bankruptcy relief again.
Sources:
[1] The American Bankruptcy Institute. (2024). Bankruptcy Filing Trends in Michigan. https://abi-org.s3.amazonaws.com/Newsroom/State_Filing_Trends/2024/Filing_Trends_Michigan.pdf
[2] Means Testing. (2022, March 11). https://www.justice.gov/ust/means-testing/20210515
Received Accolades:
206-2010, 2012, 2014-2021
American Bankruptcy Institute
Certified as a Bankruptcy Specialist by ABC
National Association of Consumer Bankruptcy Attorneys
Better Business Bureau
23843 Joy Rd
Dearborn Heights, MI 48127
Monday – Friday : 9:00 am – 5:00 pm
Saturdays : 9:30am – 11:30 in office or by phone
We offer late night appointments as late as 6:30 by phone or in person Mon-Thur.