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Sometimes bankruptcy is a hard pill to swallow. Certainly that is the perception folks in Michigan may have when it comes to the bankruptcy case of General Motors. Last year Michigan, according to news articles, lost over 21,000 jobs due to the reorganization bankruptcy plan by General Motors to shut down 7 of 14 plants within the state. If that is not enough for one state, the Wyoming Stamping Plant in Grand Rapids closed its doors after 74 years loosing another 700 jobs in the poor economy. Whether we like it or not, bankruptcy is a sign of the times.
The number of Americans filing for personal bankruptcy rose by nearly a third in 2009, a surge largely driven by foreclosures and job losses. Overall, personal bankruptcy filings hit 1.41 million last year, up 32% from 2008, according to the National Bankruptcy Research Center. Chapter 7 filings were up more than 42% as of November 2009, compared with the same period a year earlier. November is the most recent month with analyzed data available. Chapter 13 filings rose by 12% and made up less than a third of 2009 filings as of November. The Chapter 7 increases in filings are especially significant because a “means” test was introduced in 2005 in order to force people toward a Chapter 13 so they would still have to pay back a portion of their debts. Instead, the worst US recession in four decades is testing the effectiveness of the “means” test laws.
The housing crisis and high unemployment rate in this recession have prompted more people to file for bankruptcy who never have considered the possibility than ever before. More middle-class Americans, people with high incomes, and people with higher education levels have resorted to bankruptcy filings. Bankruptcies are happening to famous people, rich people, poor people, infamous people, and people all between because bankruptcy is no respecter of persons or standings in society. Bankruptcy may be a hard pill to swallow, but it can happen to anyone at anytime. It can happen to you.
As a society, we have come a long way since the days of debtor prisons and states. The Constitution provided for our protection against those antiquated ways when it gave Congress the power to legislate bankruptcy law making the primary laws governing bankruptcy federal. State laws supplement the federal laws by clarifying the necessary details. The laws have been designed to protect both creditor and debtor making bankruptcy a legal proceeding designed to allow the honest person to work their way out of a bad financial situation.
There are two types of bankruptcies an individual can file- a chapter 7 or a chapter 13. A Chapter 7, commonly called liquidation of your assets, is normally the simplest and quickest form of bankruptcy. It is available to individuals, married couples, corporations, and partnerships. A chapter 13 bankruptcy is the second bankruptcy available to individuals and is also called a wage earner’s plan. It enables individuals with regular income to develop a plan to repay all or part of their debts.
If you have an income and qualify for a chapter 13, there are certain advantages for filing one. These advantages are: to save your home from foreclosure; to reschedule secured debts; to provide protection for co-debtors; to consolidate your loans under one plan; to keep non-exempt property; to extend certain tax obligations, student loans, or other such qualifying debts; and to qualify for bankruptcy relief. Filing a chapter 7 will not afford you these various opportunities listed. So, if you have assets you want to keep, you currently have an income, and you want to try to pay your creditors as much as what is reasonable, you may want to consider filing a chapter 13 bankruptcy. But, if you do not have many assets, you do not have a mortgage, you just want to get out from under the burden of your debts, and you qualify, you may want to consider filing a chapter 7 bankruptcy.
Bankruptcy laws are complicated, and common sense indicates you will need a bankruptcy lawyer in order to properly understand how these complex laws may apply in your situation. If you determine you are in need of relief from the stress associated with debt and you live in or around the metropolitan areas of Grand Rapids, Muskegon, or Holland, Michigan, contact us today. We will help you find a bankruptcy attorney in your area that will help you with any questions you may have on bankruptcy law.
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