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Know Your Options: Understanding Bankruptcy Choices

10.02.2015 by Law Firm of Seglund Gabe Pawlak & Groth in Bankruptcy

Bankruptcy attorneys can assist individuals and companies in deciding which process is best to handle unmanageable debt.

Have you acquired more debt than you can manage? Have you been unemployed for a long period of time? No matter your situation, it can be stressful to try to manage mounting obligations when you do not have sufficient funds to pay all of your bills. In cases like this, you should consult a financial planner or bankruptcy attorney to find out what options you have available. The United States has provided a means for debtors to get a fresh financial start when they are overwhelmed by debts and obligations through various kinds of bankruptcy processes. The rules and processes that govern bankruptcy cases are outlined in the laws contained in Title 11 of the United States Bankruptcy Code.

When people consider bankruptcy, they often envision a person who has to liquidate all assets to settle with creditors. However, this is not always the case. There are many different ways to file bankruptcy. When you work with a bankruptcy attorney, they will collaborate with you to decide which process is in your best interest. The following is a brief outline of the most common kinds of bankruptcy:

  • Chapter 7: This kind of bankruptcy is the process in which a trustee is appointed to gather all non-exempt property from the debtor and liquidates it to distribute the proceeds to creditors. Following the liquidation and payment processes, creditors are no longer allowed to hassle the debtor with collections for further payments and the debtor has the ability to move forward free of paralyzing debts in an effort to rebuild their financial situation and credit. Certain debts that are not discharged under a Chapter 7 bankruptcy include child support, student loans, and property taxes, among others. (It should be noted that in many Chapter 7 cases, the debtor is able to exempt and keep all of his or her property).
  • Chapter 11: This kind of bankruptcy process is used for businesses that need to file for bankruptcy and are willing to restructure. During this process, the business is able to continue operations but the bankruptcy court is able to make major decisions for the company including the sale of property and assets, lease contracts, mortgage payment arrangements, major business openings/closings, and licensing and other contract agreements. The company is required to submit a financial plan for responsible restructuring in order to strengthen its financial standing.
  • Chapter 13: Under Chapter 13 of the United States Bankruptcy Code, individuals who have a regular source of income are given the opportunity to submit a financial reorganization plan. The plan must be approved by the courts and is required to outline a process in which the debtor will pay towards their debts over a period of three to five years. During this time, the debtor is able to pay towards debt such as credit cards and personal loans without having to liquidate all of their assets.

When deciding what steps to take to manage outstanding debt, it is best to consult with a professional bankruptcy lawyer. This person can outline your options and help you decide which steps are most beneficial for you and your financial situation.

 

Michigan Legal Solutions

Our experienced attorneys are committed to providing our clients with the guidance and support that they need to resolve their legal issues. With over five decades of experience serving clients in Southeastern Michigan, the attorneys of Michigan Legal Solutions have the experience and resources to resolve your legal issues. Our expert bankruptcy attorneys are seasoned professionals that will help you successfully navigate this time in your life.

Attorney ServicesMichigan Legal Solutions

28345 Beck Road, Suite 401

Wixom, MI 48393

Phone: (248) 869-0030

Fax: (248) 869-0039

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