What Is a Chapter 13 Plan?

The chapter 13 plan is the most crucial document you will submit if you’re choosing to file for bankruptcy under chapter 13. In the plan, you get the opportunity to lay out how you want your financial situation to be reorganized under your bankruptcy. This reorganization basically dictates how you plan to pay back your debts, including which debts you wish to pay back first and gives you the option to designate what portions of your payment go to which creditors. Filing your chapter 13 plan adeptly can determine many outcomes of bankruptcy mostly due to the fact that you can choose the order in which you pay back your debts. The initial chapter 13 plan you submit is not completely permanent either, as you will be able to modify it before your confirmation hearing and in some circumstances after your confirmation hearing as well.

If you're considering filing for bankruptcy under chapter 13, it would be extremely advantageous for you to consult with a local bankruptcy attorney in order to prepare a chapter 13 plan that maximizes benefits for you.

How do I Know if I Qualify for a Chapter 7 Bankruptcy?

The main qualifying factor concerning chapter 7 bankruptcies is whether or not you and your family fall above or below the state median income. The way your income is calculated for filing for bankruptcy is by collecting all proof of income for the previous 6 months, then multiplying that accumulated income by 2 to extrapolate your income throughout an entire year. This process is known as the means test. If you end up below that median then chapter 7 bankruptcy is an eligible option for you to consider. For filing for bankruptcy in 2020 Michigan’s median income is as follows for each specific household size:


Household of 1: $53,113.00
Household of 2: $64,428.00
Household of 3: $78,217.00
Household of 4: $93,653.00
Household of 5+: Add $9,000 to each previous household size (e.g. $102,653.00 for household size of 5, $111,653.00 for household size of 6, etc.)


To better understand if filing for bankruptcy is the right action for you to take, it is recommended you set up a consultation with a local bankruptcy attorney.

Smart Money: Your Tax Return Could be a Ticket to Financial Freedom

This tax season, the average American taxpayer is receiving a $3,000 return. What

will you spend your tax return on this spring? Studies have shown that 43% of

Americans put their tax return into savings, 36% put the money towards paying off

their debt, 10% put money towards vacation, 6% purchase a luxury item, and 5%

make a necessary purchase, such as a house or car. While all are worthy ways to

spend money, paying off your debt could be the best investment you can make

with your tax return if you are in debt. Carrying around high-interest debt, with

interest compounding against you every month can be especially stressful. Surveys

tell us that debt is the most common cause of financial stress in the United States.

Your tax return could be a ticket to financial freedom.

If you have excessive amounts of debt that you are struggling to pay off, you could

spend your tax return most efficiently by putting the money towards filing for

bankruptcy. Bankruptcy offers the opportunity for you to get caught up on mortgages

or car loans without the threat of repossession or foreclosure and sometimes you can

be relieved from the legal obligation to pay some debts. To better understand if this

is something worthy of investing your tax return in, set up a consultation with your

local bankruptcy attorney to learn more.

After Bankruptcy: What is Next?

Bankruptcy gives you a fresh start in your financial life. But once you’ve received your discharge
from your bankruptcy, you may not know exactly what steps to do moving forward.

1. Collect and file all your bankruptcy paperwork

Be sure to keep a copy of your bankruptcy petition, the 40-50 page document that details your
financial information. Also keep your notice of bankruptcy filing  as well as a copy of your discharge
order that you received from the court.

Why should you do this? Sometimes when lenders are considering you for new credit, they want to
see your bankruptcy papers. It is also important to keep these documents in case anyone wants to
collect on your old debt in the future.

2. Start a budget and review it frequently

Many bankruptcies begin as a result of unforeseen medical expenses, job losses, or sudden family
changes such as divorces or birth of children. Creating a budget allows you to prepare and set
goals for the future. There are many great budgeting tools you can access through apps on your
phone.

3. Start an emergency fund

As part of starting a budget, you will want to designate some funds for unforeseeable emergency
financial events. This fund could even turn into retirement savings or college tuition savings in
the future.

Why should you do this? This fund will prevent you from creating new debt when emergencies
arise. This fund will also make you feel less anxious about your finances and prevent panic when
emergencies happen.

4. Think about ways to improve your credit

Fresh out of your bankruptcy, you will have little to no debt. This is a great opportunity to build
your credit. However, be careful not to let yourself get carried away. Begin with a small credit
limit, monitor your charges, and pay more than just the minimum amount every month. Another
opportunity for building credit is by investing in a secured-CD.

5. Explore financial management resources in the area

Because bankruptcy allows a fresh start on your financial life, it never hurts to learn more
tips and tricks to navigating personal finance in the future. You can check out free seminars
offered by local non-profits or community colleges.

Discharging Student Loans

If you are looking to discharge your student loans, it is a complex process, but not impossible. After 1990, student loans are no longer considered “dischargeable.” This means that in order to seek relief, an adversary proceeding is required--a lawsuit must be filed separate from the bankruptcy case. You must prove that the payment on your student loans causes an undue hardship. Most courts use the Brunner test to measure the burden of the debt. It is a three-pronged evaluation that requires the following: 1) the individual and their dependents cannot maintain a minimal standard of living if they were required to pay the student loan, 2) there must be additional factors that guarantee this poor standard of living will continue throughout the whole payment period, and 3) the individual has made good faith effort to pay the loans. If you can demonstrate that you meet these conditions, your student loan could be cancelled as a whole.

There are advantages and disadvantages to discharging student loans. To better understand if filing for an adversary proceeding is for you, it is recommended that you set up a consultation with your local bankruptcy attorney.

Delaying A Petition For Bankruptcy

In certain circumstances it is in a person’s best interest to put off filing for bankruptcy until after their maximum amount of debt has been incurred.  This idea may sound strange, but sometimes it is known that additional debts will be incurred in the near future that are unavoidable.  A good example of this is upcoming medical expenditures.  It is wise to make sure that bankruptcy discharge is as beneficial as possible, but a person must also be careful about how pre-bankruptcy expenditures will be perceived by the Trustee and the court.  Purchases that are not deemed necessities can be viewed as being made under false pretenses, where there was no intent to pay.  These expenditures will more than likely be found non-dischargeable.  For a better understanding of how timing is important in bankruptcy, it is recommended to contact your local bankruptcy attorney.

What Happens to Non-Exempted Assets in Bankruptcy

If, after the meetings of creditors, the assigned bankruptcy trustee decides you have nonexempt property, you might be required to either give up those assets or provide the appointed trustee with its equivalent value in cash. If the property isn't worth very much or would be difficult for the appointed trustee to sell, the appointed trustee may "abandon" the property -- which means that you don't have to surrender it, even though it is nonexempt. Your bankruptcy attorney will advise you if this is the case.

Most property owned by our clients is either exempt or is essentially worthless for purposes of paying cash for the creditors. Therefore, few debtors end up having to handover any assets, unless it is collateral for a secured loan.

For information on our bankruptcy services or to speak with one of our Grand Rapids bankruptcy lawyers, feel free to give us a call at (616) 920-0555.