The struggling economy has brought some unpleasant surprises for a lot of people, and many people are considering filing for bankruptcy that never expected to. Of course, if you find yourself in this situation, you want to make sure pursuing Chapter 7 is worth your time, and that you will not be required to give up anything essential to your life, such as your home or vehicle. As with anything, it’s important to find out what you can about Chapter 7 before making the decisions whether or not it is right for you. Here’s a few questions people often have about Chapter 7 bankruptcy.
Are there any viable alternatives to Chapter 7
For many people there are alternatives to filing Chapter 7 bankruptcy, and for those who can make these alternatives work, it is sometimes the better choice. Bankruptcy attorneys can help not only with filing bankruptcy, but negotiating debt settlements or consolidation with many creditors. Many creditors suddenly become much easier to work with if they hear you are considering Chapter 7, especially if they think that a settlement might be the only way to obtain some type of settlement.
Do I meet income limits for Chapter 7 in Michigan?
Chapter 7 bankruptcy consequences require those who file to live a fairly modest lifestyle. In Michigan, you must make less than the state’s median income, which is currently $3,755 per month for a single person, and $4,305 for a household of two. If you make more than this you might still qualify if you have qualifying deductions such as school expenses or payments to a retirement account.
What types of debts are included in Chapter 7 Bankruptcy?
If you file for Chapter 7 bankruptcy, chances are the “clean slate” you’re hoping for is still going to have a few crumbs. Your bankruptcy will cover credit card debt, medical bills, and secured loans such as house and car loans. For the immediate future, Chapter 7 can halt foreclosure, but ultimately, losing your home is a big possibility. However, there are times when mortgage and vehicle lenders will enter a reaffirmation agreement with customers in bankruptcy. If this is a concern, you’ll want to address it as soon as possible,
What’s not included?
Some debts cannot be exonerated through Chapter 7 bankruptcy, they are referred to as non-dischargeable debts. One of the main debts that are not included in Chapter 7 bankruptcy are student loans. Other debts include criminal fines, tax debts, child support and alimony and any loans you may have taken out with the purpose of paying these types of debts.
What assets can I keep when filing Chapter 7?
While Chapter 7 is commonly referred to as “liquidation” bankruptcy, you will not lose everything. Homesteads and vehicles that are valued under certain limits can be kept even after bankruptcy. You will also be able to hang onto a some household goods, limited personal property, and a computer. Also most retirement plans are exempt from inclusion in the liquidation process.
How do I rebuild my credit after chapter 7?
One of the biggest deterrents to filing for bankruptcy is that it damages your credit, but if you’re holding a lot of debt, are paying high interest, and are missing payments, your credit is likely already less than stellar. At first, it will be a struggle to obtain credit, but offers will come for secured credit cards, which require you to hold a balance on your card. While these are not ideal, secured credit card companies do report to credit bureaus and a good record can go a long way. Also, keeping up with bills such as rent and utilities can also show you are re-establishing a solid payment history and worthy of a new creditor’s trust.