In these uncertain times, thousands of families in Michigan and across the country are facing significant financial worries and concerns. Jobs are being lost, but the bills still have to be paid. With no money coming in, it does not take much for debt to spiral out of control. It may feel like there’s no way out. Those who find themselves in this situation may want to inquire about filing for Chapter 7 bankruptcy.
Chapter 7 bankruptcy is the simplest and most common kind of bankruptcy. Chapter 7 bankruptcy can discharge most of a person’s unsecured debt, so many often refer to it as liquidation bankruptcy. An individual must pass an exam called a means test in order to qualify for this type of bankruptcy. The means test examines income, expenses and debt to find out if disposable income is below the median income for the filer’s state.
According to the American Bankruptcy Institute (ABI), over 94 percent of those who filed for Chapter 7 in 2019 had their debts forgiven. Chapter 7 bankruptcy will discharge debt such as personal loans, credit card debt and medical debt. It won’t discharge all debts, however. Student loans, back taxes, child support and court fees and penalties are a few types of non-dischargeable debt.
Keep in mind that filing for bankruptcy has lasting impacts and is never ideal, so treat it as a last resort. The most important component in the process of filing for bankruptcy is to consult a legal representative. A seasoned attorney knowledgeable in bankruptcy law can answer difficult questions and guide those in Michigan through the bankruptcy process.