Commonly Asked Questions About Bankruptcy In Michigan
What Exactly Is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy, often known as a straight bankruptcy, is a liquidation proceeding. The debtor hands over all non-exempt assets to the bankruptcy trustee who then converts it to cash for distribution to the collectors. The consumer will get a discharge of all dischargeable financial obligations generally within four months. In the majority of cases the consumer has no assets that he would lose so Chapter 7 will provide that him / her a relatively quick “fresh start”.
One of the most important functions of Bankruptcy Law is to allow an individual, who is hopelessly mired with debt, a clean start by wiping out his / her debts.
Men and women who file for chapter 7 bankruptcy must agree to go to credit counseling. After declaring chapter 7 bankruptcy, it may be tough to obtain credit for a few years, and you will not be able to file for personal bankruptcy again for a set period of time.
It has become more challenging to file for chapter 7 bankruptcy in the United states, thanks to laws which substantially tightened the bankruptcy policies in the early 2000s. It is wise to consult a legal professional and an accountant prior to investing in a bankruptcy filing, because even though the professional fees for the assessment may be high, there may be an option that has not been thought about. A professional consultation can also smooth the way to move forward with bankruptcy filings, if a debtor decides to carry on with bankruptcy proceedings.
What Is Chapter 13 Bankruptcy?
Chapter 13 Bankruptcy is commonly recognized as a reorganization bankruptcy. Chapter 13 bankruptcy is filed by individuals who would like to pay off their financial obligations over a period of three to 5 years. This type of bankruptcy appeals to individuals who have non-exempt assets that they want to retain. It is also only an alternative for individuals who have predictable earnings and whose income is sufficient to pay their reasonable expenditures with some sum left over to pay down their financial obligations.
Federal Bankruptcy Court For Eastern District of Michigan Had No Jurisdiction Regarding IRS Orders
In a recent case, The US District Court Eastern District Of Michigan found that sovereign immunity was not waived as to proceedings against the IRS redirecting tax refunds to be paid to chapter 13 Trustees instead of to the debtors.
It was found that the bankruptcy court had no jurisdiction and authority to enter chapter 13 confirmation orders ordering the IRS to redirect tax refunds to be paid to chapter 13 Trustees instead of to the debtors.
The Court declared that the chapter 13 Trustees for the Eastern District of Michigan may not seek to enforce any provisions of chapter 13 plan confirmation orders entered by the United States Bankruptcy Court for the Eastern District of Michigan that compel the IRS to pay future tax refunds claimed by chapter 13 debtors to the chapter 13 Trustees instead of to the debtors.
You can read the Court’s full opinion here.
NOTICE REGARDING CORRECTION IN LOCAL BANKRUPTCY RULE 3001-2
The Court has corrected an error in the copy of the Local Bankruptcy Rules posted on the web. Local Bankruptcy Rule 3001-2 on the website omits subsections (e)-(h).
Subsections (e)-(h) were added to Local Bankruptcy Rule 3001-2 on March 24, 2009 pursuant to Administrative Order 09-4. Subsections (e)-(h) of Local Bankruptcy Rule 3001-2 have continuously been in effect since March 24, 2009.
The copy of the Local Bankruptcy Rules on the Court’s website has been corrected.
A Message From The United States Bankruptcy Court Eastern District of Michigan
Here is what the US Bankruptcy Court for the Eastern District of Michigan has to say about consulting with a bankruptcy lawyer:
“A bankruptcy case is a legal proceeding affecting the rights of both debtors and creditors. Title 28 U.S.C. Sec 955 PROHIBITS any member of the Clerk’s Office staff from giving any advice which may be considered legal in nature. Canon 2(f) and Canon 3 of the Judiciary’s Code of Conduct also PROHIBITS this office from providing legal advice and further instructs the staff to remain impartial.
Because bankruptcy is frequently complicated, it is strongly suggested that lay people obtain the services of an attorney.”
Talk with one of our experienced Michigan bankruptcy lawyers today.