Advantages to a Michigan Chapter 13 payment plan:
- If you choose and you can afford the payment plan, you can keep all your property, exempt and non-exempt.
- While debts are not canceled as in a Chapter 7 discharge they can be reduced under a Chapter 13 payment plan.
- You have immediate protection against creditor’s collection efforts and wage garnishment.
- More debts are considered to be dischargeable (including debt you incurred on the basis of fraud and credit card charges for luxury items immediately prior to filing).
- If the Chapter 13 plan provides for full payment, any co-signers are immune from the creditor’s efforts.
- You have protection against foreclosure on your home by your lender as long as you meet the terms of the plan.
- You have more time to pay debts that can’t be discharged by either chapter (like taxes or back child support).
- You can file a Chapter 13 at any time.
- You can file repeatedly.
- You can separate your creditors by class where different classes of creditors receive different percentages of payment. This enables you to treat debts where there is a co-debtor involved on a different basis than debts incurred on your own.
Disadvantages to a Michigan Chapter 13 payment plan:
- You create a payment plan where you use your post bankruptcy income. This ties up your cash over the Chapter 13 plan period.
- Legal fees are higher since a Chapter 13 filing is more complex.
- Your plan and therefore your debt will last for 3 to five years.
- You are involved in the bankruptcy court process for the term of the 3-5 year plan.
- Stockbrokers, and commodity brokers cannot file a Chapter 13 bankruptcy petition.
There are a number of options to consider under the US Bankruptcy Code when it comes to dealing with debt and filing a petition. Chapter 13 Bankruptcy is a more complex form of petitioning and the main difference between it and Chapter 7 is that the former is a “reorganization” or “restructuring” of debt, whereas the latter is straight “liquidation”.
So what are the main characteristics of the Chapter 13 Bankruptcy under Michigan Bankruptcy Laws?
• Chapter 13 Bankruptcy is available as an option only for individuals
• It is an opportunity for them to start afresh and pay-off significant portions of their outstanding debts
• The debtor commits to repaying all or part of what he owns to his creditors under a 3-5 year repayment plan which has to be approved by the Court.
• The individual must be earning a regular income and have sufficient disposable income to apply for Chapter 13 Bankruptcy
• Most commonly people use Chapter 13 when they are late with mortgage, tax or car payments or want stop their tax debt accruing interest.
Typically, debtors who apply under Chapter 13 have valuable secured assets, such as real estate or a car, which they want to protect as the equity in these assets is higher than the protected amount under Michigan bankruptcy exemptions.
How does it work?
The first step is to develop a repayment plan which is the key to a successful Chapter 13 petition as it describes in detail how much each of your creditors will get paid. The next step is to get the plan approved by the court. You then have 30 days after filing the case to make your first repayment.
The investors get placed between the rock and the hard place when the company he or she has invested has declared bankrupted. But if the company has filed the bankruptcy under the Chapter 11, there’s a fair chance to get paid off.
According to Securities and Exchange Commission, while the company has file under Chapter 11 the bondholders stop receiving interest and principal payments while the stockholders, on the other hand, stop receiving dividends. “If you are a bondholder, you may receive new stock in exchange for your bonds, new bonds or a combination of stock and bonds. If you are a stockholder, the trustee may ask you to send back your stock in exchange for shares in the reorganized company.” These new shares may be fewer in number and probably will worth less than it was before. In other words the reorganization plan “…spells out your rights as an investor and what you can expect to receive, if anything, from the company.”
There is no direct relationship between Chapter 7 and Chapter 11. But when it comes to corporate bankruptcies there can set a relationship between the two bipolar Chapters.
The U.S. Security and Exchange Commission (SEC) define Chapter 7 as taking the business out of its all operations and turning it into an asset. The asset is sale off through an appointed committee and the one, investors or creditors, who take the least risks, are paid first. Chapter 11, while on the contrary, keeps the business in the running state and allowing it to pay the creditors by re-planning or rephrasing its financial acts.