Bankruptcy Attorney in Michigan  

Walter A. Metzen, Michigan Bankruptcy Attorney

Bankruptcy Attorney in Michigan

Board Certified Consumer Bankruptcy Specialist

American Board of Bankruptcy Certification

 

Before you file for bankruptcy, a MEANS TEST will determine, in most cases, which type (or chapter) is right for you. Here is a brief description of each of the different types of bankruptcies:


B 201 (10/05)

UNITED STATES BANKRUPTCY COURT

NOTICE TO INDIVIDUAL CONSUMER DEBTOR UNDER 342(b) OF THE BANKRUPTCY CODE

In accordance with 342(b) of the Bankruptcy Code, this notice: (1) Describes briefly the services available from credit counseling services; (2) Describes briefly the purposes, benefits and costs of the four types of bankruptcy proceedings you may commence; and (3) Informs you about bankruptcy crimes and notifies you that the Attorney General may examine all information you supply in connection with a bankruptcy case. You are cautioned that bankruptcy law is complicated and not easily described. Thus, you may wish to seek the advice of an attorney to learn of your rights and responsibilities should you decide to file a petition. Court employees cannot give you legal advice.

1. Services Available from Credit Counseling Agencies

With limited exceptions, 109(h) of the Bankruptcy Code requires that all individual debtors who file for bankruptcy relief on or after October 17, 2005, receive a briefing that outlines the available opportunities for credit counseling and provides assistance in performing a budget analysis. The briefing must be given within 180 days before the bankruptcy filing. The briefing may be provided individually or in a group (including briefings conducted by telephone or on the Internet) and must be provided by a nonprofit budget and credit counseling agency approved by the United States trustee or bankruptcy administrator. The clerk of the bankruptcy court has a list that you may consult of the approved budget and credit counseling agencies.

In addition, after filing a bankruptcy case, an individual debtor generally must complete a financial management instructional course before he or she can receive a discharge. The clerk also has a list of approved financial management instructional courses.

2. The Four Chapters of the Bankruptcy Code Available to Individual Consumer Debtors

Chapter 7: Liquidation ($240 filing fee, $39 administrative fee, $15 trustee surcharge: Total fee $299)

1. Chapter 7 is designed for debtors in financial difficulty who do not have the ability to pay their existing debts.  Debtors whose debts are primarily consumer debts are subject to a “means test” designed to determine whether the case should be permitted to proceed under chapter 7. If your income is greater than the median income for your state of residence and family size, in some cases, creditors have the right to file a motion requesting that the court dismiss your case under 707(b) of the Code. It is up to the court to decide whether the case should be dismissed.

2. Under chapter 7, you may claim certain of your property as exempt under governing law. A trustee may have the right to take possession of and sell the remaining property that is not exempt and use the sale proceeds to pay your creditors.

3. The purpose of filing a chapter 7 case is to obtain a discharge of your existing debts. If, however, you are found to have committed certain kinds of improper conduct described in the Bankruptcy Code, the court may deny your discharge and, if it does, the purpose for which you filed the bankruptcy petition will be defeated.

4. Even if you receive a general discharge, some particular debts are not discharged under the law. Therefore, you may still be responsible for most taxes and student loans; debts incurred to pay non-dischargeable taxes; domestic support and property settlement obligations; most fines, penalties, forfeitures, and criminal restitution obligations; certain debts which are not properly listed in your bankruptcy papers; and debts for death or personal injury caused by operating a motor vehicle, vessel, or aircraft while intoxicated from alcohol or drugs. Also, if a creditor can prove that a debt arose from fraud, breach of fiduciary duty, or theft, or from a willful and malicious injury, the bankruptcy court may determine that the debt is not discharged.

Chapter 13: Repayment of All or Part of the Debts of an Individual with Regular Income ($235 filing fee, $39 administrative fee: Total fee $274)

1. Chapter 13 is designed for individuals with regular income who would like to pay all or part of their debts in installments over a period of time. You are only eligible for chapter 13 if your debts do not exceed certain dollar amounts set forth in the Bankruptcy Code.

2. Under chapter 13, you must file with the court a plan to repay your creditors all or part of the money that you owe them, using your future earnings. The period allowed by the court to repay your debts may be three years or five years, depending upon your income and other factors. The court must approve your plan before it can take effect.

3. After completing the payments under your plan, your debts are generally discharged except for domestic support obligations; most student loans; certain taxes; most criminal fines and restitution obligations; certain debts which are not properly listed in your bankruptcy papers; certain debts for acts that caused death or personal injury; and certain long term secured obligations.

Chapter 11: Reorganization ($1000 filing fee, $39 administrative fee: Total fee $1039)

Chapter 11 is designed for the reorganization of a business but is also available to consumer debtors. Its provisions are quite complicated, and any decision by an individual to file a chapter 11 petition should be reviewed with an attorney.

Chapter 12: Family Farmer or Fisherman ($200 filing fee, $39 administrative fee: Total fee $239)

Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm or commercial fishing operation.

3. Bankruptcy Crimes and Availability of Bankruptcy Papers to Law Enforcement Officials

A person who knowingly and fraudulently conceals assets or makes a false oath or statement under penalty of perjury, either orally or in writing, in connection with a bankruptcy case is subject to a fine, imprisonment, or both. All information supplied by a debtor in connection with a bankruptcy case is subject to examination by the Attorney General acting through the Office of the United States Trustee, the Office of the United States Attorney, and other components and employees of the Department of Justice.

WARNING: Section 521(a)(1) of the Bankruptcy Code requires that you promptly file detailed information regarding your creditors, assets, liabilities, income, expenses and general financial condition. Your bankruptcy case may be dismissed if this information is not filed with the court within the time deadlines set by the Bankruptcy Code, the Bankruptcy Rules, and the local rules of the court.

Certificate of [Non-Attorney] Bankruptcy Petition Preparer

I, the [non-attorney] bankruptcy petition preparer signing the debtor’s petition, hereby certify that I delivered to the debtor this notice required by 342(b) of the Bankruptcy Code.

________________________________________ ___________________________________

Printed name and title, if any, of Bankruptcy Petition Preparer Social Security number (If the bankruptcy petition preparer is not an individual, state the Social Security Address: number of the officer, principal, responsible person, or _______________________________________

partner of the bankruptcy petition preparer.) (Required by 11 U.S.C. 110.)

X_______________________________________

Signature of Bankruptcy Petition Preparer or officer, principal, responsible person, or partner whose Social Security number is provided above.

Certificate of the Debtor

I (We), the debtor (s), affirm that I (we) have received and read this notice.

_________________________________________ X___________________________________

Printed Name (s) of Debtor (s) Signature of Debtor Date Case No. (if known) ____________________ X___________________________________

Signature of Joint Debtor (if any) Date

 

 

Chapter 7 - Liquidations

Means Testing

     A means test has been designed to force those debtors who have the ability to pay some of their debts into Chapter 13 as opposed to liquidating their debt under Chapter 7 and wiping the slate clean.  The Act eliminates the presumption that, without a finding of substantial abuse, a debtor is entitled to relief under Chapter 7.  Instead, a debtor's Chapter 7 case will be dismissed or, with the debtor's consent, converted to a Chapter 13 upon a finding of abuse.  The Act lowers the "substantial abuse" standard for dismissal or conversion to one of simple abuse.  Whether abuse is presumed depends on the outcome of the means test.  This test is complicated, but in a nutshell, once the debtor's current monthly income (CMI) is determined and reduced by all of the allowances, actual monthly expenses, and secured and priority claimed deductions, the number resulting from those calculations is multiplied by 60 months.  Abuse is presumed if that number is not the lesser of 25% of the debtor's non-priority unsecured claims or $6,000.00, whichever is greater, or $10,000.00.  The debtor will be required to show the calculations to determine whether a presumption of abuse arises.  (Sec.  707 (b)(2)(C)).  The presumption of abuse may only be rebutted with detailed documentation of "special circumstances" requiring additional expenses or adjustment of current monthly total income for which there is no reasonable alternative.  (Sec.  707(b)(2)(B)(ii)).

    The United States Trustee must review all materials filed by Chapter 7 debtors, and not later that ten days after the meeting of creditors, file a statement as to whether the presumption of abuse is triggered.  If the debtor has income in excess of the of the median income, the United States Trustee must either file a motion to dismiss or convert the case or file a statement setting forth the reasons why the motion is not appropriate, within 30 days of the filing of the notice.

The purpose of a chapter 7 is to grant debt relief and allow a person to obtain a fresh start, free from creditors and free from the pressures of over-whelming debt. Under chapter 7, a trustee takes possession of non-exempt property assets, converts them to cash and distributes the funds to creditors. After filing for relief, an individual debtor may receive a discharge of debts.

A discharge permanently prohibits most creditors from attempting to collect those debts listed by the debtor on the bankruptcy schedules. However, some debts are non-dischargeable. They include certain taxes, student loans, alimony, and child support to name just a few.

 

A corporate business that files chapter 7 is not eligible to receive a discharge.

  •   Driver's License or State ID & Social Security card
  •   Pay Stubs for the past 2 months
  •   Copies of all Bills, Summons or Judgments against you by creditors
  •    Divorce Judgments or Decrees
  •   Real Estate Documents, Deeds, Recorded Mortgages, mortgage balance statements
  •   Property Tax Bills (SEV)
  •   Bank Statements for 3 months
  •   Recorded Mortgage and Deed
  •   Car Titles
  •   Income Tax Returns & W2 forms
    for the last 2 years