Bankruptcy Attorney in Michigan  

Walter A. Metzen, Michigan Bankruptcy Law Specialist Attorney

Board Certified Consumer Bankruptcy Specialist

American Board of Bankruptcy Certification

 


 

 Bankruptcy Basics:  Bankruptcy Information in Michigan


The U.S. Trustee's Role In Consumer Bankruptcy Cases

The vast majority of bankruptcy cases are filed by consumers rather than businesses. Most consumer cases are filed under either Chapter 7 or Chapter 13 of the federal Bankruptcy Code. Approximately 70 percent of cases are Chapter 7 liquidations filed by consumers, and nearly 30 percent are Chapter 13 wage-earner repayment cases. This fact sheet describes the United States Trustee's primary responsibilities in Chapter 7 and Chapter 13 consumer bankruptcy cases.

 

Chapter 7 Cases

In Chapter 7 cases, the United States Trustee litigates issues that affect the integrity of the bankruptcy system. For example, the United States Trustee might:

  • Argue that granting the debtor a bankruptcy discharge would constitute a "substantial abuse" of the bankruptcy process.
  • Object to excessive fees requested by the debtor's attorney.
  • Take action against unlawful practices by bankruptcy petition preparers--generally, non-lawyers who receive a fee to prepare a consumer debtor's bankruptcy papers.

The United States Trustee also appoints and supervises the Chapter 7 trustees who administer consumer debtors' bankruptcy estates. In most Chapter 7 cases, no assets are available for distribution to creditors. However, if a Chapter 7 debtor has property that is not exempt from creditors' reach under state or federal law, the trustee may sell that property and distribute the money to creditors.

The United States Trustee appoints each Chapter 7 trustee to a panel for up to one year, renewable at the United States Trustee's discretion; these "panel trustees" are then assigned to Chapter 7 cases on a blind rotation basis. The United States Trustee supervises the panel trustees' administration of individual debtor estates; monitors the trustees' financial record-keeping; and imposes other requirements to ensure that the trustees carry out their fiduciary duties.

Chapter 13 Cases

In Chapter 13 bankruptcy, the United States Trustee supervises the private trustees who administer Chapter 13 cases. In this chapter, the trustee does not liquidate the debtor's assets, but instead helps organize the debtor's financial affairs so the debtor may pay back some or all money owed to creditors.

A Chapter 13 debtor must propose a plan that devotes all disposable income to debt repayment over a period of up to five years. Most Chapter 13 cases are administered by "standing trustees" appointed by the United States Trustee to administer all cases filed in a particular geographic area.

As with Chapter 7 panel trustees, the United States Trustee supervises the Chapter 13 standing trustees' administration of individual bankruptcy estates; monitors the trustees' financial record-keeping; and imposes other requirements to ensure that the trustees carry out their fiduciary duties. The United States Trustee's supervisory actions include:

  • Periodically reviewing the trustees' case reports, budget reports, bank account information, management skills, court performance, and similar information.
  • Ensuring that trustees are bonded.
  • Ensuring that trustees are independently audited.
  • Determining trustees' maximum annual compensation and actual necessary expenses.
  • Providing training for trustees.
  • Monitoring trust account funds.

     

Contact:     Public Information Officer 
                  Executive Office for the United States Trustees 
                  (202) 305-7411 

When You File Bankruptcy
You can choose the kind of bankruptcy that best meets your needs (provided you meet certain qualifications):

Chapter 7 – A trustee is appointed to take over your property. Any property of value will be sold or turned into money to pay your creditors. You may be able to keep some personal items and possibly real estate depending on the law of the State where you live and applicable federal laws.

Chapter 13 – You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan.

Chapter 12 – Like chapter 13, but it is only for family farmers and family fishermen.

Chapter 11 – This is used mostly by businesses. In chapter 11, you may continue to operate your business, but your creditors and the court must approve a plan to repay your debts. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of your business and property.

If you have already filed bankruptcy under chapter 7, you may be able to change your case to another chapter.

Your bankruptcy may be reported on your credit record for as long as ten years. It can affect your ability to receive credit in the future.

 

What Is a Bankruptcy Discharge and How Does It Operate?
One of the reasons people file bankruptcy is to get a “discharge.” A discharge is a court order which states that you do not have to pay most of your debts. Some debts cannot be discharged. For example, you cannot discharge debts for–
  • most taxes;
  • child support;
  • alimony;
  • most student loans;
  • court fines and criminal restitution; and
  • personal injury caused by driving drunk or under the influence of drugs.

The discharge only applies to debts that arose before the date you filed. Also, if the judge finds that you received money or property by fraud, that debt may not be discharged.

It is important to list all your property and debts in your bankruptcy schedules. If you do not list a debt, for example, it is possible the debt will not be discharged. The judge can also deny your discharge if you do something dishonest in connection with your bankruptcy case, such as destroy or hide property, falsify records, or lie, or if you disobey a court order.

You can only receive a chapter 7 discharge once every eight years. Other rules may apply if you previously received a discharge in a chapter 13 case. No one can make you pay a debt that has been discharged, but you can voluntarily pay any debt you wish to pay. You do not have to sign a reaffirmation agreement (see below) or any other kind of document to do this.

Some creditors hold a secured claim (for example, the bank that holds the mortgage on your house or the loan company that has a lien on your car). You do not have to pay a secured claim if the debt is discharged, but the creditor can still take the property.

 

What Is a Reaffirmation Agreement?
Even if a debt can be discharged, you may have special reasons why you want to promise to pay it. For example, you may want to work out a plan with the bank to keep your car. To promise to pay that debt, you must sign and file a reaffirmation agreement with the court. Reaffirmation agreements are under special rules and are voluntary. They are not required by bankruptcy law or by any other law. Reaffirmation agreements–
  • must be voluntary;
  • must not place too heavy a burden on you or your family;
  • must be in your best interest; and
  • can be canceled anytime before the court issues your discharge or within 60 days after the agreement is filed with the court, whichever gives you the most time.

If you are an individual and you are not represented by an attorney, the court must hold a hearing to decide whether to approve the reaffirmation agreement. The agreement will not be legally binding until the court approves it.

If you reaffirm a debt and then fail to pay it, you owe the debt the same as though there was no bankruptcy. The debt will not be discharged and the creditor can take action to recover any property on which it has a lien or mortgage. The creditor can also take legal action to recover a judgment against you.

IF YOU WANT MORE INFORMATION OR HAVE ANY QUESTIONS ABOUT HOW THE BANKRUPTCY LAWS AFFECT YOU, YOU MAY NEED LEGAL ADVICE. THE TRUSTEE IN YOUR CASE IS NOT RESPONSIBLE FOR GIVING YOU LEGAL ADVICE.

 


 

 

   
  •   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

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