Written by the Upsolve Team.
Updated September 29, 2020
When it’s difficult to make ends meet, it can be hard not to feel alone and in despair. You’re in the moment and worried about the day to day without much time to think about the big picture. One of the most important things someone struggling financially should take care to remember is that there is no shame in seeking the protections of the bankruptcy laws. In fact, there have been many Detroit companies and notable individuals that filed bankruptcy to turn things back around. Just think of Henry Ford - he sure showed the world that bankruptcy can be a new beginning! Of course, no instance is more notable than the Motor City itself. That’s right, the city of Detroit is making a comeback! In the last 6 years, there have been huge transformations in both the corporate and residential aspects of the city. The city has a renewed vibrancy evidenced by the new companies and restaurants moving in as well as the expansion of sidewalks and bike lanes. Had the city not filed bankruptcy back in the summer of 2013, Detroit would still be saddled with over $18 billion worth of debt and these renovations would not have been possible. The city of Detroit is a perfect example of how sometimes seemingly drastic steps are needed to move forward. If a city down on its luck such as Detroit was able to make a comeback by filing for bankruptcy, then there is no reason why a Detroiter like yourself cannot do the same!
Individuals filing bankruptcy in Detroit typically choose one of two types of bankruptcy: Chapter 7 bankruptcy to get a fresh start quickly or Chapter 13 bankruptcy to reorganize their debts and create a budget that works. A Chapter 13 bankruptcy is a good option if you are looking for a way to catch up your mortgage or car payments over time. A person who is facing foreclosure and wants to keep their home can do so under a Chapter 13 bankruptcy, assuming they have enough regular income to make the regular monthly payments. Compare that to what a Chapter 7 bankruptcy in Detroit allows you to do to find out which chapter might be best for you. Unlike a Chapter 13 case, you don’t have to make payments to your creditors to receive a discharge order that eliminates your debts. In a Chapter 7, a bankruptcy Trusteereviews your property to find out if there is anything that the law does not protect. If so, the unprotected (nonexempt) property is sold and the proceeds are used to pay creditors. In 96% of Chapter 7 bankruptcy cases nationwide, there is nothing the Trustee can sell. This means that in 96% of all Chapter 7 cases, the filer is relieved of their debts without having to give up anything!
The process of filing bankruptcy in Detroit is pretty straightforward, even though there are a lot of steps to maneuver and requirements to complete. While having a bankruptcy lawyer to help guide you through the process, you don’t have to hire a lawyer to get the relief you need. This is especially important to keep in mind as many folks needing bankruptcy relief simply can’t afford to hire a lawyer. There are a number of resources out there to help you file Chapter 7 bankruptcy in Detroit without having to come up with money for a lawyer.
Detroit Bankruptcy Lawyers – Estimated Cost
Filing bankruptcy in Detroit is common enough that there are many attorneys who do nothing but practice bankruptcy law. Most of the bankruptcy lawyers in Detroit will offer you a free initial consultation. During the consultation, the attorney will let you know if bankruptcy is a good option for you, and if so, what type of bankruptcy you should file. You should take advantage of the consultation and ask the attorney any questions you have about the benefits of bankruptcy and the bankruptcy process itself. By the end of the consultation, the attorney will have a good idea about the complexity of your case and will discuss cost with you. The cost of a bankruptcy lawyer can range from as low as $700 to as high as $1,500 for a Chapter 7 bankruptcy in Detroit. Some attorneys also allow you to pay their fee in installments and can get the process started for little to no money down.
How to File Bankruptcy in Detroit, Michigan for Free
You can file a bankruptcy in Detroit for free by either finding an attorney that will take your case pro bono or by filing on your own which is referred to as a “pro se” filing. Aside from the online resources available to you, you can also go to the Pro Se Law Clerk’s Office located in the courthouse to provide you with information. The information below is meant as a guide to help you file your own Chapter 7 bankruptcy in Detroit if it doesn’t make sense to hire a lawyer to help you.
Collect Your Detroit Bankruptcy Documents
To file a Chapter 7 bankruptcy in Detroit you will first need to collect all of the necessary documents. The documents will aid you in filling out the bankruptcy forms accurately and some of them will have to be provided to the Trustee after your case has been filed. The documents you collect will reflect information about your income, your debts and your assets. Therefore, pay stubs, bank statements and tax returns for the previous two years will be important documents to collect for obtaining information about your income. If you don’t have your last 6 months of pay stubs saved, ask your employer’s HR or payroll department for a copy. If disability or social security has been your only source of income over the last couple of years, you won’t need your tax returns. However, if you have other sources of income you will need the last 2 years of tax filings. If an accountant or tax preparation service like H&R Block or TurboTax filed your taxes, ask them to provide you a copy if you no longer have it. Your documents should be organized and kept in a folder so you can easily find what it is you’re looking for before and after filing bankruptcy in Detroit. Finally, you also want to collect your bills and get a copy of your credit report as you’ll need the names and addresses of all your creditors for your bankruptcy forms. You are entitled to a free credit report once a year and can obtain a copy of your credit report online fromAnnualCreditReport.comor by contacting the credit bureaus directly.
Take Credit Counseling
Before you file your Chapter 7 bankruptcy in Detroit, bankruptcy laws require you to complete a credit counseling course. The purpose of the credit counseling course is to make sure that filing bankruptcy is the right choice for you. The course will review your finances and aid you in exploring alternative debt relief options. The credit counseling course can be done online so you can kick back and complete it in the convenience of your own home. If you prefer to take the course in person, you’ll unfortunately have to travel out of town, as none of the approved providers have locations in Detroit. The credit counseling takes about an hour and a half to complete and runs between $15 - $35. Once done, the agency providing the course will send you a certificate confirming that you have completed the course. You should print out the certificate and keep it in a folder with all of your other documents, as you’ll need to submit it to the Michigan Bankruptcy Court along with the rest of your forms.
Complete the Bankruptcy Forms
After you have completed your credit counseling the next step in filing your Chapter 7 bankruptcy in Detroit is to fill out the bankruptcy forms. You can obtain these forms from the Court’s websitein fillable pdf format. Download and print the Court’s checklist for Chapter 7 filing requirements before you get started, so you don’t miss anything. The forms will inquire basic information about you such as your address, where you work and your social security number. You will have to provide information about your income, assets and debts as well. While all of the information the forms ask for is relatively straight forward, plan on spending a few hours to get them done as there are a lot of different forms with a lot of questions. Filing bankruptcy in Detroit will provide you with permanent relief from your creditors, but only if you do your part and provide the Court with all of the information it needs. That’s why it’s important to take your time and carefully review everything so by the time you’re signing your forms under penalty of perjury, you’ll be confident that you didn’t miss anything.
Get Your Filing Fee
The current cost to file a Chapter 7 bankruptcy in Detroit is $335. This fee is non-refundable and if possible, should be in full paid at the time you file your case. The only payment methods the court accepts is cash, certified check or a money order. Keep in mind that if you decide to use cash to pay the fee when filing bankruptcy in Detroit, you’ll need to bring the exact amount with you since the Court can’t give you any change. If you can’t pay the fee all at one but need to file your case now, you can ask the Court to set you up with a payment plan. This will allow you to file bankruptcy in Detroit and get the protections of the automatic stay, then make payments to the Court over 4 months. Be careful with doing this, however, as missing just one payment can result in your case being thrown out. If you make less than 150% of the federal poverty guidelines, you can also ask the Court to waive your fee. If your application is approved, you won’t have to pay anything to the Court for your Michigan bankruptcy case. If the Court finds that you can afford to pay the fee in installments, your request for a waiver will be denied, but you’ll be given the chance to pay the fee in installments.
Print Your Bankruptcy Forms
Once you’ve gotten this far, the next step for filing bankruptcy in Detroit is to print all of your bankruptcy forms, as only lawyers are able to file documents online. Thankfully, the forms are printed on regular 8.5” x 11” paper that any home or office printer can handle. Even though you’ll end up printing more than 60 pages, make sure not to print anything double-sided as the Court won’t accept that. If you don’t have access to a printer at home, check if your local library offers printing and, if so, how much they charge per page. Then, shop around to see if your local Kinko’s of Office Depot has better prices. Alternatively, if you have a friend with a printer, consider asking them to use their printer but make sure to bring your own paper. It’ll be helpful to have a copy of everything you’re submitting to the Court when filing bankruptcy in Detroit, so remember to print two full copies of everything.
Go to Court to File Your Forms
Once you have printed everything and carefully reviewed and signed all of the forms, it’s time to submit them to the Court and officially get your Michigan bankruptcy case under way. As a resident of Detroit, your case will be filed at the U.S. Bankruptcy Court for the Eastern District of Michigan, located at 211 W. Fort Street in downtown Detroit. While you can mail everything to the Court, it’s best to visit the courthouse in person to file your case. That way you know it’s been done and don’t have to wait for confirmation that you successfully filed Chapter 7 bankruptcy in Detroit to come in the mail. The clerk’s office at the Bankruptcy Court is open to the public from 8:30 am to 4:00 pm, Monday through Friday. Keep in mind, however, that the Court is closed on federal holidays. Once you arrive at the courthouse, you will go through security and take the elevator up to the 17th floor. Once you get to the 17th floor you will go to the intake counter and the court clerk will make sure you have all of the forms and will stamp and process everything for you. Once done, your Detroit bankruptcy case is filed, and creditors are prohibited from contacting you.
Mail Documents to Your Trustee
Once the court clerk has stamped and processed the paperwork, they will assign Trustee to your Chapter 7 bankruptcy in Detroit. The Trustee is the individual in charge of administering the bankruptcy estate on behalf of your unsecured creditors. You will be provided with your Trustee’s contact information, including a phone number shortly after filing bankruptcy in Detroit. In addition to reviewing the forms you filed with the Court, the Trustee needs to review certain additional documents. that you’ll have to provide to them. Every Trustee does things a little differently than the next, but something a little different but for the most part the documents they’ll request will include your most recent tax return and your pay stubs, as well as bank statements, and copies of your vehicle title. Unless you hear otherwise from the Trustee assigned to your Michigan bankruptcy case, make sure to send at least the tax return and your recent paycheck stubs to their office so they get it at least a week before your creditors’ meeting.
Take Bankruptcy Course 2
Under bankruptcy law, an individual filing bankruptcy in Detroit has to complete a second counseling course before the Court will grant them a discharge. While you don’t have to complete the course right after filing your case, it’s a good idea to just plan on getting it done by the time your 341 meeting takes place for a couple of reasons. First, after the 341 meeting many people simply forget to take the second course and so risk having their case closed without a discharge. Since getting your discharge is your primary goal when filing Chapter 7 bankruptcy in Detroit, that is clearly not ideal. Second, having the course completed before the 341 hearing saves you another trip to the courthouse because you can file the certificate verifying that you took the course from an approved provider at the clerk’s office while you’re there for your 341 meeting. The purpose of the course is to teach you how to manage your finances and use credit wisely after filing bankruptcy in Detroit. Like credit counseling, this course can be taken online and takes roughly an hour and a half to complete.
Attend Your 341 Meeting
Your 341 meeting is likely the only time you will have to go to Court after you file your Chapter 7 bankruptcy in Detroit. The meeting is also known as the “meeting of creditors” as your creditors can attend the meeting to ask you questions. More often than not, no creditors show up, and the meeting is more like a conversation with your Trustee than anything else. You do have to verify your identity before the meeting can start, so make sure you bring your picture ID and social security card or original form W-2. If you don’t have proper identification, the Trustee can’t conduct your meeting and will reschedule it to another day. That not only delays your case, it also means you have to take more time off to attend another 341 meeting. The hearing itself is fairly short and should take no longer than roughly 10 minutes. The Trustee will ask you basic questions about your income, assets and debts and verify that the information on your documents is truthful and accurate. The meeting will take place approximately 21 - 40 days after you go to Court and file your Michigan bankruptcy case.
Dealing with Your Car
If you live in the Motor City, odds are you probably have a vehicle. If you do own a vehicle, that vehicle will have to be listed as an asset in your Detroit bankruptcy; this is so even if you are still making payments on it. If you are behind on your vehicle payments and can’t catch up or if you just don’t want to keep the vehicle you can surrender the vehicle to the bank. Since you’re doing so after filing bankruptcy in Detroit, you won’t have to worry about having to pay the rest of the loan after that. If you want to keep your car, you’ll have to be current and stay current with your payments. Your lender will likely want you to fill out what is called a reaffirmation agreement which will allow you to continue making payments on the vehicle after the Chapter 7 bankruptcy process has been completed. These payments can help improve your credit score after your discharge. If your vehicle is worth less than what you owe on it, it may make sense to redeem it. A redemption allows you to pay the current market value of the car to get clear title, and discharge what’s left on the loan as part of your Chapter 7 bankruptcy in Detroit.
Michigan Bankruptcy Means Test, Bankruptcy Forms, and Exemptions for Detroit
Michigan Means Test
To be eligible to file a Chapter 7 bankruptcy in Detroit you will need to pass the Michigan bankruptcy Means Test. To qualify for a Chapter 7 bankruptcy, you either have to make less than the median household income for a household of your size or complete the extended Michigan bankruptcy Means Test analysis. This analysis helps you show the Court that you need Chapter 7 relief even though it looks like you make enough money at first glance.
Median Income Levels for Michigan
Michigan Median Income Standards for Means Test for Cases Filed On or After May 1, 2020
|Household Size||Monthly Income||Annual Income|
Poverty Levels for Michigan
Michigan Fee Waiver Eligibility for Cases Filed On or After May 1, 2020
Eligible for fee waiver when under 150% the poverty level.
|Household Size||State Poverty Level||Fee Waiver Limit (150% PL)|
Michigan Bankruptcy Forms
The Michigan bankruptcy forms you will need when you first file Chapter 7 bankruptcy in Detroit are primarily comprised of the official national formsthat are the same in every state. You do need to complete a local Michigan bankruptcy form, the petition cover sheet, and file that with your petition. Your best bet to making sure you’re not missing anything is to review and follow the checklist for Chapter 7 cases prepared by the Court. You should also make sure to review the guidelines for submitting list of creditors before filing bankruptcy in Detroit.
When you file a Chapter 7 bankruptcy in Detroit you get to choose between federal bankruptcy exemptions and Michiganbankruptcy exemptions. Exemptions are laws that allow you to protect certain property, such as your home, vehicle and even money in the bank even after filing bankruptcy. There are some significant differences between the exemptions so you will want to choose the set that best fits your situation. You can’t mix and match. The biggest difference between the federal andMichigan bankruptcy exemptions is the amount of equitythat can be protected if you are a homeowner. Federal exemptions protect up to $25,000 worth of home equity while state exemptions allow you to protect up to $38,000 worth of equity and up to $57,000 if you’re disabled or over the age of 65.