Pros and Cons of Filing for Bankruptcy (Part A)
If you have debts in Michigan that you cannot pay, and your creditors are threatening you with collections, liens, or foreclosure on your property, you may want to consider filing for bankruptcy. However, there are pros and cons to filing bankruptcy in Michigan which you should consider before proceeding.
For professional help with your Michigan bankruptcy case, or to answer any questions that you may have, you can contact a Metro Detroit bankruptcy attorney.
The Positive Side of Filing for Bankruptcy in Michigan
Below is a list detailing the potential “pros" of filing bankruptcy in Michigan:
* You will owe nothing to your creditors– Once you successfully complete a Chapter 7 bankruptcy filing, most of your non-governmental debts will be erased. This includes your credit card debts, medical bills, utility bills, and any other unsecured debts that you may have. An unsecured debt is a debt that has not been collateralized by personal property.
If your debts are secured debts, such as a home mortgage or auto loan, you may have to file for Chapter 13 bankruptcy, in which you will need to structure an extended plan to repay your collateralized debts. This will prevent you from losing the home or vehicle which you still owe money for.
* You can restructure your payments – Under Chapter 13 bankruptcy in Michigan, you can negotiate a plan to repay your debts over a 3 to 5 year period. Under this plan, you will make a monthly payment to a trustee who will account for all of your debts.
* Your creditors will stop harassing you – Once you file for bankruptcy in Michigan, the court will declare an “automatic stay" that will prevent your creditors from contacting you. This means that your credit card companies, mortgage lender, and auto lender will no longer bother you about the money that you owe.
* Putting a stop to repossession and foreclosure– If your auto lender has been threatening to repossess your vehicle, or your mortgage lender has been threatening to foreclose on your home, filing for bankruptcy in Michigan will put a stop to (or at least delay) these threats. Under a bankruptcy plan, you may be able to keep your car and home by making the restructured payments.
On the other hand, if you plan to give up your car or home in order to lower your monthly payments, the automatic stay will give you time to reorganize your life.
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