For Michigan consumers who are facing a financial crisis or are unable to repay their debts, Chapter 7 bankruptcy may provide debt relief and a fresh start. Not all applicants are eligible for a Chapter 7 bankruptcy, which eliminates most of the person’s outstanding unsecured debts without requiring them to repay creditors. In order to proceed with a Chapter 7 bankruptcy, applicants will need to pass a means test, budget analysis and asset analysis.. People with too high of an income or too many assets may need to pursue Chapter 13 bankruptcy, which sets up a repayment plan, as an alternative.
Beginning a Chapter 7 bankruptcy application
A Chapter 7 bankruptcy filing begins with a petition before the bankruptcy court. Chapter 7 bankruptcy is available to both individuals and businesses, and the petition should be filed where the applicant lives or where the business primarily functions. There are a number of other documents that must also be filed in addition to the petition.
Additional documents requested by the bankruptcy trustee
A bankruptcy lawyer may advise applicants of the information they need to provide, including a schedule of both assets and liabilities. They also need to submit their current income and expenses on an ongoing basis, a statement of their current financial affairs and a list of all contracts and leases currently in force.
Applicants for Chapter 7 consumer bankruptcy will then need to file additional documents with the trustee appointed by the court. They must provide tax returns for the most recent year as well as any filed while the case is pending, a certificate that they went through credit counseling and a copy of any debt repayment plan. They must also provide the trustee with pay stubs or other evidence of their recent income from employment as well as a statement of their monthly income. Providing documents requested by the trustee is important to protect the bankruptcy case as it moves forward through the court.