If you’re struggling to manage your debt, filing for bankruptcy can help you get a fresh start. But before filing for bankruptcy, there are many things you should consider first. As a bankruptcy attorney in Michigan, I’ve guided many people through this process. In this article, I’m sharing how to file for bankruptcy the right way.
Exhaust all other alternatives first
While filing for bankruptcy can help give you a fresh start, it’s important to know that a bankruptcy will stay on your credit report for about 10 years. This can make it difficult to get approved for loans and rental applications.
Based on your situation, you may want to consider these bankruptcy alternatives:
Credit card debt negotiation
Those with credit card debt may be able to negotiate with their creditors. In some cases, your creditor may agree to accepting a lump sum payment that is lower than what you owe. Or, they may agree to a new payment plan. A Michigan bankruptcy attorney can help you determine if this is the best option for you.
Have you fallen behind on your home mortgage payments? Before filing for bankruptcy, you should contact your loan provider and ask if they offer a forbearance program.
Forbearance programs allow you to stop making payments for a certain amount of time. This is a great option if you suddenly lost your job or had unexpected expenses that you had to cover.
“Offer in Compromise” for tax debt
Certain taxpayers may qualify for a federal program called an “Offer in Compromise” for federal back taxes. In order to qualify, you need to meet strict requirements. You may qualify if:
- You’ve filed all your tax returns and/or made estimated tax payments for the year.
- You can’t pay your current back taxes, and it’s unlikely that your income or assets can be used to cover the amount you owe.
However, if you can pay your back taxes using a payment installment plan, then you will not qualify for this program.
Choose the right type of bankruptcy
Once you’ve exhausted your other options, it’s important to file for the right type of bankruptcy. There are many different types available, and the right one for you depends on your financial situation.
The most common types of bankruptcy include:
- Chapter 7: This type of bankruptcy involves the liquidation of your assets in order to pay off your debt. If you have a limited income, then this option might be best for you.
- Chapter 13: Instead of liquidating your assets, Chapter 13 bankruptcy allows you to consolidate your debt and make payments according to a court-approved payment plan. This option is best if you have enough income to pay off your debts, and you want to keep your assets.
Hire a bankruptcy attorney in Michigan for legal help
Hiring an attorney is one of the single most important things you can do when filing for bankruptcy. The process involves more than just filing paperwork with the court. You need an experienced professional who can uphold your rights and make sure you are positioning yourself for a fresh start.
Another thing to consider is that certain debts are more difficult to discharge in a bankruptcy, such as student loans and marital debts. That’s why you need the help of an experienced bankruptcy attorney in Michigan who can negotiate on your behalf.
If you’re considering filing for bankruptcy, contact James L. Gutting, Attorney-at-Law for a consultation. Our offices are conveniently located in Flint and Corunna, MI.