Michigan Chapter 13 Bankruptcy: A Complete Debt Consolidation Plan

Chapter 13 is a court authorized debt consolidation plan designed to provide reasonable repayment terms and court protection for your assets such as a home or vehicle.  The purpose of the program is to:

• Consolidate, prioritize and reduce your debts;
• Provide a consistent repayment plan with favorable terms;
• Improve your credit;
• Provide court protection from your creditors.

Our attorneys specialize in Chapter 13 debt consolidation and are available to meet with you and provide a comprehensive evaluation of your finances.

What is Chapter 13 Bankruptcy?

In the most simple terms, Chapter 13 means court protection from your creditors while you work through financial circumstances to reduce your debt and improve your credit.  Consider it simply as a ”financial tool” that provides:

• Optimal repayment terms (i.e. 0% Interest);
• A way to consolidate, restructure and reduce your debt;
• The time and breathing room to improve your credit and reach your financial goals in an orderly fashion

Through the Chapter 13 debt reorganization plan we can:

• Stop a home foreclosure;
• Remove a second mortgage or home equity loan;
• Stop a vehicle repossession or recover a vehicle before it has been sold at auction;
• Prevent utility shut-offs;
• Stop a judgment or wage garnishment from occurring;
• End all creditor calls and harassment;
• Improve your credit score by improving your debt-to-income ratio and restoring timely monthly payments to your creditors.

The plan simply requires that you make your “best effort” to pay back your debts over a 36 – 60 month time period.  Whatever unsecured debts are not paid at the end of that time period are legally eliminated or discharged.

We develop a repayment plan taking into consideration your income and all of your debts.  We can prioritize certain debts (i.e. getting caught up on a first mortgage) that will get paid through the plan before other bills (i.e. credit cards).

This Chapter 13 plan is then presented to your creditors and the Chapter 13 Trustee for review.  The approval process typically takes about 2 -3 months.  Our job is to provide you with the most favorable repayment terms possible.

That is where experience counts.  Because our Michigan law firm specializes in Chapter 7 and Chapter 13 bankruptcy, we understand all of the available options.  We will put together a successful Chapter 13 plan that places you in the best financial position after the repayment process is completed.

What are the Advantages of Filing Chapter 13 vs Other Debt Management or Debt Consolidation Programs in Michigan?

We believe that the Chapter 13 is a superior program. There is peace of mind that comes from an organized plan to repay your debts and begin a fresh financial future. Here are several key differences between a Chapter 13 plan and other debt management programs:

• The Chapter 13 plan is set up for a finite time period (36 – 60 months).  Whatever unsecured debt is not paid is legally eliminated through a court discharge.
  • This cannot be guaranteed by a debt management agency.

• All repayment on unsecured debt and arrearages is set at 0% interest with no continued late penalties.  This means that every dollar you pay in goes straight to the principal debt.
  • In most debt management programs, repayment terms and settlements are up to negotiations with individual creditors with no leverage to force any certain terms or guarantee a positive outcome.

• Debts discharged in bankruptcy do not convert to taxable “income.”
  • Conversely, debts forgiven pursuant to a debt management program may result in receiving a 1099 form from the creditor and being taxed on the “forgiven” debt.

• All creditors are bound to the terms of a Chapter 13 plan.  This means no creditor calls while you are in the program, your property is legally protected and no actions can be taken against you (judgments, garnishments, etc.).

• The Chapter 13 program provides timely, consistent monthly payments to your creditors.  Since you are paying principal debt rather than interest fees, your debt-to-income ratio improves with each payment.  Both of these factors will have a positive impact on your credit and credit score over the course of the program.

We welcome your call to discuss your options for debt consolidation and debt resolution.  We offer a free consultation, over the phone or in person, to discuss Chapter 13 and other options you may have for finding financial freedom.

Call us today at 734-722-2999  or set up an appointment online to meet with us at any at our Westland Michigan office.