Debt can get out of hand before you realize it, leaving you struggling to pay bills and fearing legal action from creditors. Despite efforts to make payments and cutting your budget, you may be unable to stay on top of your finances. Unfortunately, the more you fall behind, the more the fees add up. You may have already considered some options for getting out of debt without court, but these are not always the best fit for your situation. Bankruptcy in Michigan may be a wise solution, since it eliminates qualifying debt. One of the first questions for many filers is timing and how long it takes to get a discharge in Detroit.
There is no way to predict the exact duration of your case, regardless of whether you file for Chapter 7 or Chapter 13 bankruptcy. Numerous variables affect the proceedings, especially mistakes that can lead to delays or even a dismissal of your case. Working with a Detroit bankruptcy attorney ensures you avoid errors and can move forward with a smooth process. You can also get an idea of how long bankruptcy takes by reviewing some basics.
Overview of Bankruptcy Steps
According to the most recent statistics on debt in the US, Americans are around $16.84 trillion in consumer debt. The largest increases comparing 2022 to 2023 are due to spikes in credit card debt, which grew more than 16 percent, and personal loans which account for around 21 percent. Bankruptcy could be a solution for many of these individuals, and they have similar questions about the duration of a bankruptcy case.
Because the date to complete a case will vary, it is easier to understand how long it takes when you know the steps. They are slightly similar to Chapter 7 and Chapter 13, so it is necessary to:
- Collect financial paperwork;
- Complete the required credit counseling course before filing;
- Prepare the proper forms for the type of bankruptcy you will file, along with all schedules;
- Attend the meeting of creditors to answer questions about your bankruptcy petition;
- Work through debt issues that apply to your Chapter 7 or Chapter 13 case; and,
- Complete the case and obtain the final discharge order.
Background on Chapter 7
Even though some aspects of the two bankruptcy processes are similar when looking at the steps, discharge in Detroit through Chapter 7 is faster. In total, the proceedings may be up to 5 to 6 months for Chapter 7. There are also different rules, so you can only wipe out qualifying debt if you meet the criteria. If you earn less than the state median income in Michigan, you automatically qualify. If not, you must meet the Means Test that assesses income and expenses.
Still, even if you are eligible for Chapter 7 to eliminate debt, you should be aware of a potential drawback. In these cases, the bankruptcy trustee takes control of your assets and can liquidate them. However, you have two advantages:
- You can apply exemptions to real estate and personal property, which protects your interests.
- In some cases, the bankruptcy trustee will decline to liquidate assets that will not produce profit to pay your debt to creditors. You would not lose these items through Chapter 7 bankruptcy.
Facts About Chapter 13
It is also possible to discharge qualifying debts through Chapter 13, but the case will be longer than Chapter 7. At the same time, there are some aspects of Chapter 13 that you may prefer for your debt situation and your financial future. For one, the only eligibility rule is that you must have a job. Second, your assets are not subject to liquidation in Chapter 13.
A Chapter 13 case will take multiple years to obtain a discharge in Detroit, and the longer time is due to specific bankruptcy rules. With these cases, you will enter into a debt repayment plan with creditors. This is essentially an extra task in the bankruptcy steps, because you will be paying every month over a 3 to 5-year period. The total amount you pay through the plan will be lower than what you owe because of Chapter 13 debt reorganization. At this point, your case will conclude and you can obtain the discharge order.
Debts That Cannot Be Discharged
Through Chapter 7 and Chapter 13, individuals and married couples can discharge a wide range of debt. Credit cards and personal loan debt are the most common, but you can also eliminate amounts for medical debt and other lines of credit. However, it is not possible to get rid of some debts, such as:
- Child support;
- Tax debts as designated by law;
- Certain debts owed to the court for a criminal case, civil lawsuit, or administrative proceeding;
- Debt for a personal injury lawsuit in which you caused a DUI crash; and,
- Other nondischargeable debts are described by law.
In addition, secured debts cannot be eliminated in bankruptcy, but not because of bankruptcy rules. When a debt is secured by collateral, the lender can go through legal proceedings to recover its financial interest. The bank might do so through foreclosure, in which the collateral to secure the loan is your home.
A Michigan Bankruptcy Attorney Helps with an Efficient Process
An overview is useful for understanding bankruptcy, but one key factor that affects how long it takes to get a discharge in Detroit is legal representation. When you have advice and assistance from a Detroit bankruptcy lawyer, you have assurance that you are making the right decision as far as Chapter 7 or Chapter 13. There are countless benefits to filing bankruptcy, which you enjoy when you have guidance from an attorney. For instance:
- Upon filing your bankruptcy petition, there is an automatic stay on all creditor efforts to collect your debt.
- You emerge from the bankruptcy process debt-free concerning qualifying debts. Creditors can no longer pursue you, easing your mind and reducing stress.
- Though there is a hit to your credit score, you have access to many options for rebuilding credit. A secured loan or credit account may be possible.
- You completed credit counseling, enabling you to apply the knowledge and avoid problems in the future.
Trust a Detroit Bankruptcy Lawyer to Assist with Your Case
While you cannot get an exact date of how long it takes to get a discharge in Detroit, this overview should help you understand the proceedings. Our team at Kostopoulos Bankruptcy Law is dedicated to ensuring the process is smooth, whether you go with Chapter 7 or Chapter 13. Please contact our firm today to set up a consultation with a Michigan bankruptcy attorney who can provide additional details.
Related Content: What Type of Debt Can Be Discharged Through Bankruptcy?