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| 1009 Washington Avenue Bay City, MI 48708-5780 (989) 892-6551 - Phone (989) 892-1568 - Fax info@stplaw.net - Email |
| | 1009 Washington Avenue | Bay City, Michigan | 48708 | 989-892-6551 - Tel | 989-892-1568 - Fax | |
| Copyright © 2007 Seward, Tally & Piggott, P.C. All Rights Reserved. |
| Bankruptcy - FAQ’s What is bankruptcy? Bankruptcy is relief for individuals, partnerships or corporations, who are unable to pay their debts. It provides debtors with a fresh start in regard to their finances. Bankruptcy is very complex and each case is different from the next. Common types of bakruptcy: Chapter 7 Also known as “straight” bankruptcy or liquidation. Relief under this chapter is available to individuals, partnerships and corporations. The debtor’s non-exempt assets will be sold to pay creditors. Chapter 13 For individuals who have a regular income, including sole proprietorships. Secured debts must be less than $807,750 and unsecured debts less than $269,250. Chapter 13 provides the debtor with the opportunity to restructure debts, and this plan of restructuring must be confirmed by the Bankruptcy Court. The creditor will receive the agreed upon payment during a period not to exceed five years. How do I file for bankruptcy? You should contact an attorney and let him review your financial status to determine whether a bankruptcy alternative is in your best interest. Why should I file for bankruptcy? The primary purpose an individual files bankruptcy is to obtain a discharge of his debts. A bankruptcy will also stop harassment by your creditors and wage garnishments. What is the automatic stay? The automatic stay prevents creditors from taking any action against the debtor or their property, however, it does not stop criminal proceedings or actions to collect alimony, maintenance or child support. Creditors who have collateral securing their debts may seek permission from the Bankruptcy Court to lift this automatic stay in order to repossess their collateral. The stay goes into effect immediately once a bankruptcy petition is filed with the Court. What is the co-debtor stay? In Chapter 13, the automatic stay extends to co-debtors or guarantors on consumer debts. The debtors are protected from the collection activity while the bankruptcy is pending. The creditor can ask the court to lift the stay that relates to the co-debtor or guarantor to pursue them for payment of the debt at anytime during the bankruptcy proceeding. What are exemptions? Individual debtors may exempt property under the laws of the State of Michigan or those provided by the federal law. The federal bankruptcy exemptions allow a debtor to exempt a larger amount of property, except in cases where an individual debtor owns a substantial amount of property with his or her spouse. Under federal law, exemptions are provided to each debtor and generally applies to the following property: - Equity in real estate, used as the debtor’s residence - not to exceed $16,150; - Equity in one motor vehicle - not to exceed $2,575; - The debtor’s interest in personal belongings - not to exceed $425 in value per item and $8,625 in total value; - The debtor’s interest in jewelry - not to exceed $1,075; - The debtor’s right to receive: - Social Security benefits, unemployment compensation, or local public assistance benefits; - Veteran’s benefits; - Disability, illness, or unemployment benefits; - Alimony; - A payment under a stock bonus, pension, profit sharing or similar plan if certain other technical requirements of the Bankruptcy Code are met. What is a discharge? A discharge means you will no longer be legally responsible to pay certain pre-bankruptcy debts. Corporations and partnerships are not granted a discharge in Chapter 7 cases. Some debts are not dischargeable in Chapter 7 cases including amounts of money obtained by fraud, embezzlement or larceny, drunk driving judgments, amounts due to alimony and child support and some types of student loans. Will a bankruptcy filing ruin my credit? The bankruptcy will affect your ability to obtain credit and will be reflected on your credit reports for at least ten years. Do I need to have a minimum amount of debt? No, the Bankruptcy Code does not require a minimum amount of debt before a person can seek bankruptcy relief. Can I save my home from foreclosure by filing a bankruptcy petition? You can stop foreclosure by filing a bankruptcy petition, filing fee and other required documents prior to the sheriff’s sale. While the foreclosure is stayed by the bankruptcy filing, you should attempt to develop a repayment plan acceptable to the foreclosing creditor so that you can keep your home. The bankruptcy petition is the act of filing bankruptcy. The preceding is provided for informational purposes only. While every effort has been made to ensure accuracy, it cannot be relied upon as legal advice. Applicability of the legal principles discussed may differ substantially in individual situations. Therefore, you should consult with Seward, Tally & Piggott, P.C. |