Michigan Bankruptcy Myths

Misconceptions about filing bankruptcy in Michigan

I have personally handled over 10,000 bankruptcy cases in the past 20 years and have met with thousands of people and consulted them regarding their financial circumstances and how a bankruptcy filing might help them. Here are some of the common misconceptions I have found that people have regarding a bankruptcy filing.

Chapter 7 bankruptcy does not exist anymore.

Many clients think that Chapter 7 bankruptcy was eliminated when the bankruptcy laws changed in October of 2005, but the truth is that Chapter 7 bankruptcy is alive and well and just about 98% of my clients are still eligible to file under that Chapter.

You lose all of your property if you file for bankruptcy.

Not true. In fact, in the vast majority of the cases I file (99%), my clients lose nothing to the bankruptcy trustee. The idea behind a Chapter 7 bankruptcy filing is that you agree to give up any non exempt assets you may have in your possession to be sold or liquidated, reduced to cash so that the trustee may make some type of disbursement to your creditors. In most cases that I file in Michigan, as well as throughout the United States, there are no assets that are not exempt or protected and therefore, the bankruptcy trustee takes nothing from you and simply reports that the case is a “no asset case”. My job as your bankruptcy attorney is to counsel you and help you prepare your bankruptcy case properly, to be sure that your assets are listed and exempted.

Bankruptcy will ruin your credit and you’ll never have good credit again.

In most of the thousands of bankruptcy cases that I have filed here in Michigan over my career, my client’s credit scores have actually increased shortly after the bankruptcy filing rather than go down. Generally, by the time people decide to seek the help of a bankruptcy lawyer, their credit is already shot due to late payments or non payments on accounts, lawsuits and judgments brought by their creditors and derogatory remarks by collection agencies. A successful bankruptcy filing which results in a court ordered discharge of debts will increase your debt to income ratio and therefore the overall credit score in most cases.

Your husband or wife will automatically become liable for your debt if you file alone.

Not true. Your spouse does not somehow magically become liable for your debt if you file bankruptcy. They must be on the hook from the time of the credit application or have signed some document indicating they would be liable for the debt.


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