What Is Chapter 7 Bankruptcy?
According to the U.S. Bankruptcy Court for the Eastern District of Michigan, more than 250,000 people in Eastern Michigan filed for Chapter 7 Bankruptcy in the past 5 years alone. The Great Recession has hit everyone hard — even people who thought they were making good choices about their finances, like buying a home, getting an advanced degree, taking a home equity line of credit to make improvements or investing in the stock market.
If you're considering Chapter 7 Bankruptcy, you should know that you are far from alone. Thousands and thousands of people have gone through it before you and are already experiencing what it's like to live without debt. Even more, Mid Michigan Bankruptcy Center is ready to guide you through the process. It can seem like a maze, but we know what turns to make to get you the debt relief you need.
Chapter 7 is a quick, fresh start for the people with few assets and a great number of debts. Procedurally, it's the most straight forward type of bankruptcy to file and, because the workload for this type of case can be completed in about 90 days, it's generally the least expensive type of bankruptcy to file as well.
Chapter 7 may not be the best option for you if you have non-exempt assets you want to keep or if you make significant income. But, if you are concerned about losing a house or losing a car you owe money on, that is generally not the case. Your attorney can discuss this with you and help you choose the right type of bankruptcy for you.
Some people actually prefer to file Chapter 7 when they are upside down on their mortgages, because the retaining the home leaves them with a choice of struggling with a house payment that exceeds the current value of the house, or, foreclosure, where they might be facing an eventual deficiency judgment. In giving up the house, people also give up the ongoing responsibility to make the mortgage payments that go with it. This is typical with a high-interest loan that just reset to a much higher payment or a negative amortization mortgage.
In order to qualify for Chapter 7, you will have to meet some income requirements by passing a means test that is mandated by law. If you cannot pass this means test, Chapter 13 bankruptcy may be a better option for you. Generally, in Mid Michigan, a couple with income below $50,000 and a family less than $70,000 generally qualifies for Chapter 7 without showing other necessity.
