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Michigan Bankruptcy Laws

Michigan Bankruptcy Laws should be known by every resident of the state of Michigan. In 2005, a law was passed that made minute changes to the United States bankruptcy code that, although at that time didn’t merit much publicity, has just been recently noticed to have greatly altered the criteria for availing the rights to declare for bankruptcy. Michigan bankruptcy laws are affected by these changes too, but this did not stop debtors from filing for bankruptcy. Together with the growing credit card bills and other monthly obligations the percentage of debtors who filed for bankruptcy has increased.

Keeping informed is one way to make your bankruptcy protection application easier. For starters, you should know that the court mandates every debtor to attend a credit counseling program 6 months prior to the application. The organization administering the program should be recognized by the court, and upon filing the paperwork for bankruptcy declaration you should also enclose the counseling certification to prove that you have completed it. After the counseling if you still want to pursue a bankruptcy option, then we proceed to the next important step.

Although you may not know it, the laws are full of intricacies that it would take an ordinary citizen to understand all of it in a long time. A lawyer, on the other hand, has studied this for years and can explain everything you need to know. A competent lawyer and one who is knowledgeable about the bankruptcy laws of the state can help make the application easier and less tedious.

Chapter 7 bankruptcy protection program or also called debt liquidation is by far the most common program that most citizens apply for. However, not even average borrowers who are up to their necks with credit card bills and mortgages can apply for this form. To qualify, a debtor should have a monthly income lower than the median income level of the state of Michigan. The median income is based on the latest data of the US Census Bureau. The court-appointed trustee will determine this through a series of evaluations. If you do not pass on the first criteria, you can request the trustee to compute if you have extra cash amounting to $100 per month to pay for your creditors. This is computed by subtracting all your expenses and obligations from your monthly income.

If you fail to pass on the two criteria for Chapter 7, then the only choice left is to file for Chapter 13. This bankruptcy program is aptly called debt restructuring program because the court-appointed trustee helps you realign the terms of your debts. It is then your responsibility as a debtor to devise a repayment plan and present it to the bankruptcy courts and prove that you can pay your creditors within a given time period of 5 years at the maximum. This repayment plan outlines how you allocate your funds to pay every debt you owe. The trustee is in charge of collecting that fund each month and paying it to the appropriate creditors according to the court.

It has been common knowledge that federal laws have set meager exemptions for debtors. These exemptions are properties safeguarded from creditors. Michigan bankruptcy laws have specified their own exemptions to augment the federal courts provisions. The following are the basic exemptions for the state:

• Your home with an equity of $34,450;
• A single vehicle up to $2,775;
• 40% of earned, but unpaid wages for individuals, and 60% for head of the family;
• Household goods, furniture, books, and utensils amounting to $3,450;
• Food and fuel worth 6 months;
• Personal belongings like family heirlooms, family portraits and albums; and
• Other benefits like health insurance, disability benefit, and employee’s pension.

Filing for bankruptcy involves a lot of paperwork and it won’t even be a guarantee that your petition can be approved. Talk to a lawyer to know what you’re up against.