Michigan consumers most often file for Chapter 7 or Chapter 11 bankruptcy. Both provide a fresh financial start and a brighter, happier future without stress about debt, but how do you choose which one is right for you? There are several benefits for filing for Chapter 7 bankruptcy that are different than Chapter 11.
According to FindLaw, you will receive an entirely fresh start. Chapter 7 bankruptcy is designed to give you a new beginning and eliminate certain debt completely. There are several types of debt that are not dischargeable, including the following:
- Some taxes
- Alimony and child support
- Student loans (unless the court rules for it)
- Debts created by fraud
To qualify for Chapter 7, you must meet an income limitation. You also give up your property in exchange for the discharge of your debt, so bankruptcy can be freeing in more ways than just financially.
In most cases, you can keep your future income with Chapter 7 bankruptcy. Any property you acquire after filing is not included in your bankruptcy. Inherited property, death benefits, property from a divorce settlement or decree and money from a life insurance policy are included in the bankruptcy estate if they are acquired within 180 days after you file.
With Chapter 7, there are no limitations to the amount of debt, there is no repayment plan and the debt is discharged quickly. While you may have to give up some of your possessions, the benefit is that you walk away clear from debt that can be smothering and overwhelming.
The benefits to filing for bankruptcy often outweigh the costs but all situations are unique. Those who are considering bankruptcy may benefit from speaking to an attorney before filing.
This is intended for educational purposes and should not be interpreted as legal advice.
