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The Dos and Don’ts of Declaring Michigan Bankruptcy (Part A)

Bankruptcy often has a negative connotation, but this is in large part because of misconceptions that have escalated over time. Declaring bankruptcy in Michigan simply gives you a chance to eliminate debts and repay creditors under the protection of certain stipulations set in federal bankruptcy court.

Declaring bankruptcy takes more than just a sporadic decision to relinquish your assets because of financial strain. Instead, the process often requires proper planning, evaluation and well-informed legal consultations.

When declaring bankruptcy in Michigan, you have 2 options: Chapter 7 bankruptcy (liquidation) and Chapter 13 bankruptcy (reorganization). Certain steps must be taken (as well as avoided) for either option. Such steps are commonly known as the dos and don'ts of declaring bankruptcy.

Before Declaring Bankruptcy in Michigan

It is important that you speak with an experienced Michigan bankruptcy attorney before filing for Chapter 7 or 13 bankruptcy so that you can get a better idea of which option may be the best fit for your financial situation. In addition, a Michigan bankruptcy attorney can advise you on some of the dos and don'ts of declaring bankruptcy in Michigan.

The following are some "dos" to consider before declaring bankruptcy in Michigan:

  • Do - continue with payments you have for vehicles you would like to keep or mortgages or leases for property you wish to retain.
  • Do - retain records such as pay stubs, tax returns and a general list of ongoing household expenses for preparation of your budget
  • Do - save money that you would have used to pay creditors so that you have the capital available to finance your future household needs

The following are some "don'ts" to consider before declaring bankruptcy in Michigan:

  • Don't - borrow money from your 401k or other retirement savings plan to cover the expenses of other bills.
  • Don't - use your house as collateral to obtain a loan to cover unsecured bills.
  • Don't - transfer ownership of your properties to someone else in an attempt to prevent them from seizure by a trustee or creditor.

Decisions you make before declaring bankruptcy in Michigan can affect your financial standing and the eventual outcome of your bankruptcy case. Talk with a Michigan bankruptcy attorney about some of the preparations you should make before declaring bankruptcy in Michigan.

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