Chapter 13 is a type of bankruptcy designed to consolidate bills and repay creditors. Under Chapter 13, a person makes regular payments to a Trustee assigned by the Court. These payments are generally made through a wage assignment if the person is employed. The following is an overview of Chapter 13 bankruptcy law:
- Filing of Chapter 13 Bankruptcy Petition in Michigan: After you have retained our Michigan bankruptcy law firm, we will prepare your Chapter 13 bankruptcy petition. In preparing a petition for a Michigan Chapter 13 bankruptcy, it is important to list all debts owed, even if the payments are current. If you do not list a debt, it will not be consolidated.
- Utility Bills: If you owe money for utilities (electricity, gas, water, garbage, etc.), you must also include these on the petition, and your services will not be terminated. You may, however, have to pay a deposit equal to 1 ½ times the highest monthly bill. You must also pay your future utility bills yourself. If your utility bills are current, it is not necessary to list them.
- Foreclosure and Repossession: Often times, clients seeking a Michigan Chapter 13 bankruptcy are at risk of losing their homes due to foreclosure. If your house is in foreclosure or at risk of foreclosure, it is important that you schedule an appointment with one of our attorneys as soon as possible. Your Chapter 13 bankruptcy petition must be filed before a sheriff's sale, or you will not be able to reinstate your mortgage.
- Repayment Plan: When you come to our office to sign your petition, one of our Michigan bankruptcy attorneys will prepare your repayment plan. Your assistance is required to determine the payments, which will be made over a period of 3 to 5 years, depending upon your income and expenses.
- Payments to Bankruptcy Trustee: After we file your petition, the Bankruptcy Court will assign your case to a Bankruptcy Trustee. As soon as you are notified of the Bankruptcy Trustee assigned to your case, you should start making payments to that Bankruptcy Trustee. The first payment must be made within 30 dyas of filing the case. Most cases are dismissed because of the Debtor's failure to start promptly making payments to the Trustee. Although most cases have wage assignments, these do not take affect immediately. Do not wait for the wage assignment to take effect to start making your payments. You should keep a record of all your payments.
- Incurring Debt: After filing for Chapter 13 bankruptcy in Michigan, you may not incur additional debt over $1,000.00 without court approval. If you seek to incur a debt to purchase a vehicle or repair a home, you should bring a copy of the proposed purchase agreement or repair quote to the attorney to present to the court. If you obtain new debts after you file such as utility bills etc., you may have to dismiss your case and re-file to include these debts in a new Chapter 13 repayment plan.
- Creditor Contact: After your case is filed, the Court will send a notice of First Meeting of Creditors to you, your creditors, and to our office. Your creditors will stop calling you after they receive this notice. If they continue to call, explain to them that you filed bankruptcy and give them your case number and the date you filed.
- Meeting of Creditors: The First Meeting hearing lasts approximately 10 minutes, and you should appear well before the hearing called the confirmation hearing because you must complete paperwork at the court. The second hearing usually occurs approximately a month after your first meeting and generally lasts much longer.
- Creditor Objections: After your case is filed, you may receive objections from your creditors or the trustee. We will also receive copies of these objections. Our office will address these objections. We will contact you to obtain information necessary to resolve the objection or request that you make an appointment with our office to review our response to the objections.
- Forwarding of Federal Tax Refunds to Trustee: Most cases require that you send 100% percent of your Federal Tax refunds to the Trustee. It is your obligation to forward the refund to the Trustee if it is not intercepted by the Trustee. Failure to forward the refund to the Trustee will result in your failure to complete the case and obtain a discharge.
- Filing of Tax Returns: In a Chapter 13, you must file your tax returns timely every year and provide a copy to our office and the Trustee
- Refinancing Your Home: If you have a home you may consider refinancing your mortgage at some point. You must obtain court authorization to refinance, and you should schedule an appointment with our office to review the procedure.
- Statements from Trustee: The Trustee will generally send you semi-annual statements regarding your progress in the case. You should contact the office if you are unable to make payments. We understand that this is a difficult time for you and we will help to make the process run as smoothly as possible.
- Completing Your Plan: Your Michigan Chapter 13 bankruptcy plan must be completed within the time proposed for your case. The plan will start running from the date your case is confirmed. No plan can extend more than 60 months after the confirmation date.
If you'd like to contact our office to speak with a Detroit, Michigan bankruptcy attorney, please call us at 1-866-690-2140, e-mail bankruptcy attorney John Steinberger or complete the form on our contact us page.