How To File Bankruptcy for Free in Michigan

Collect Your Michigan Bankruptcy Documents

You’ll need to collect certain financial documents before you can begin a Chapter 7 bankruptcy. Some documents are required, meaning you’ll have to turn them in with your bankruptcy forms when you file your case. Required documents include:

• Your last two years of tax returns, 

• Your last 60 days of pay stubs, and 

• Your most recent bank statement. 

Other documents aren’t required, but they’ll be helpful as you fill out your forms. These include lender statements and bills, letters from collection agencies and debt collectors, and bank statements from the last 6-12 months to help you figure out your expenses. 

On your bankruptcy forms, you’ll need to list the names and addresses of everyone you owe. You’ll list unsecured debts like medical bills, student loans, credit cards, and personal loans, as well as secured debts like car loans and mortgages. You’ll also list priority debts like tax debts and child support obligations. If you don’t know the names of all of your creditors or the amounts you owe, it’s a good idea to get a copy of your credit report. You’re entitled to a free report every 12 months from each of the three consumer credit reporting agencies. If you file using Upsolve’s free filing tool, it’ll pull a credit report for you.

Take a Credit Counseling Course

Bankruptcy law requires that you complete a credit counseling course within the 180 days before you file your case. You’ll need to make sure that the credit counseling provider is approved in the state of Michigan. The U.S. Trustee approves providers and keeps a separate list for Michigan’s Eastern District and Western District. We’ll cover each district more in-depth below.

There’s a small fee for the credit counseling course — usually under $50. But you can apply for a waiver based on your income. When you finish taking the course, you’ll get a certificate of completion. You need to submit this to the court when you file your bankruptcy petition.

Complete the Bankruptcy Forms

Most of the forms you need to file bankruptcy are federal, so they’re the same nationwide. These forms include the bankruptcy petition and the schedules containing your assets, debts, income, and expenses. You can get fillable PDFs of those forms online for free from USCOURTS.gov. 

People who file with an attorney typically fill out a questionnaire, and then either the attorney or their staff completes the forms. People who use Upsolve’s filing tool complete an online questionnaire, and then our software generates the forms based on the information that’s provided.

Get Your Filing Fee

There’s a court filing fee of $338 to file a Chapter 7 bankruptcy. If your income is less than 150% of the poverty guidelines in Michigan, you can request a waiver of the filing fee (see the table for Michigan Fee Waiver Eligibility below). If the court denies your waiver request or you can’t afford to pay the full fee, you can apply to pay in installments. This is an option people sometimes use when they need to file quickly to stop creditor action like wage garnishment. As soon as you file your case, the automatic stay goes into effect, which stops wage garnishment and other collections.

If you miss an installment payment the court can dismiss your bankruptcy case and you won’t be entitled to a refund. For that reason, if you don’t have to file quickly, it’s best to wait until you’ve got the full amount of the court’s fee so you don’t risk a dismissal later.

Print Your Bankruptcy Forms

If you’re filing on your own, you need to print your completed forms in black ink on white, letter-size paper. All the forms need to be printed on only one side because the court won’t accept double-sided pages. Make sure you print out each and every required form and sign every signature space.

If you file with an attorney, you’ll be asked to sign hard copies of the forms, but your attorney will file your case and pay the court’s fee electronically. Upsolve users get their packet of bankruptcy forms as a single download, with dividers that flag each signature page.

File Your Forms With the Michigan Bankruptcy Court

The Michigan Bankruptcy Court is divided into two districts: the Eastern District and the Western District. (We’ll cover each district more in-depth soon.) Only lawyers can file bankruptcies electronically in the Eastern District of Michigan, but the Western District has an Electronic Self-Representation (eSR) tool that allows individual filers to file electronically. If you’re filing on your own, you can also mail your completed forms in either the Eastern or Western District. 

Prior to COVID-19, filers could also file documents in person. The courts may have mandatory or optional delivery options in place because of COVID-19, like drop boxes, online portals, or special email options. You should check the court’s website or call the clerk for confirmation of available delivery methods. 

As soon as you file, you’re protected by the power of bankruptcy’s automatic stay, which stops creditor action in its tracks. The automatic stay will stop garnishments, foreclosures, and repossessions (at least temporarily), as well as harassing creditor phone calls and letters.

Mail Documents to Your Trustee

After you file your bankruptcy papers, the court will assign a Chapter 7 bankruptcy trustee to oversee your case. Your meeting of creditors will also be scheduled. (More on this soon.) Bankruptcy law requires that you send your trustee certain documents at least seven days before the 341 meeting. Many trustees will send a letter telling you exactly what they want, but it’s good to contact your trustee right away after you file to find out what documents you’ll need to turn over and how to send them.

Michigan bankruptcy rules require that you send the following documents to the trustee at least seven days before your 341 meeting: 

• Pay stubs from the 60 days before filing, 

• Your two most recent tax returns,

• Any certificates of title,

• Current statements from your secured creditors,

• Copies of deeds, leases, mortgages, and land contracts,

• Property tax statements,

• Asset appraisals,

• Casualty insurance policies, 

• Business records, if they exist, and

• Bank statements for the last 90 days (Western District) or one year (Eastern District) Make sure that your most recent bank statement covers the date you filed for bankruptcy.

If you live in the Western District, you also need to send a judgment of divorce and/or domestic support document, if applicable. You’ll also need to submit credit card statements if you live in the Eastern District.

Take a Debtor Education Course

After providing your information to your Chapter 7 trustee, you should complete your second required course — a financial management course. You must submit a certificate of completion for this course to the court within the 60 days following your 341 meeting. If you don’t, you won’t be eligible for a discharge of your debts. Like the credit counseling course, the financial management course must be taken from an approved provider. You can find an approved provider by going to the United States Trustee’s website, checking the box on the left for Michigan, then checking the box for the district you’re filing in (Eastern or Western District).

Attend Your 341 Meeting

The 341 meeting is also called a meeting of creditors, but it’s unlikely that any of your creditors will show up. Usually, the meeting is just with your trustee. The trustee will review all of your bankruptcy papers and ask you some questions. All 341 meetings in Michigan are currently done by phone because of COVID-19, but this practice hasn’t been adopted permanently. Check your correspondence with the court and trustee to verify when and how to attend your meeting. If the trustee thinks your information is missing or incomplete, your 341 meeting could be rescheduled to a later date so you can get the missing items.

The Eastern District of Michigan’s local rules require that you bring certain information to the 341 meeting, including proof of your income and expenses for one year before the filing, life insurance policies, proof of joint debts, information about divorce settlements and domestic support obligations, and keys to non-exempt buildings and vehicles. If you’re attending a 341 meeting in person, you’ll need your driver’s license and Social Security card with you. If your 341 meeting is by phone, the trustee will ask for copies of your license and Social Security card at least seven days before the meeting.

In most Chapter 7 cases, the 341 meeting goes smoothly and quickly. The trustee will simply thank you at the end of the 341 meeting and tell you that you’re done.

Dealing with Your Car

You’ll need to make a decision about what to do with your car. Your choices vary depending on whether you own it outright, lease it, or have a car loan.

If you own the car, you can keep if it’s worth less than the bankruptcy exemption that covers it. If you use the federal exemptions, that’s $4,000. If you use state exemptions, that’s $3,525. We’ll talk more about exemptions soon.

If you’re leasing a car can either reject or assume the lease. If you reject it, you’ll terminate the lease and give the car back. If you assume the lease, you’ll keep it going as it was and keep driving the car.

You must be current on your car payments to keep a financed car through a Chapter 7 bankruptcy. Your car lender may request that you sign a reaffirmation agreement, where you recommit to making your car loan payments after your Chapter 7 discharge. If you don’t want to keep your car or if you can’t afford the loan payments, you can surrender it to the lender during bankruptcy. A good thing about surrendering a car in bankruptcy is that you won’t be on the hook for any part of the loan, even if the balance is more than the car’s value. You can then buy a more affordable vehicle after your bankruptcy.

If you want to keep a financed car and you’re behind on payments, you should probably get legal advice from an experienced bankruptcy attorney who does Chapter 13 bankruptcies. Unlike Chapter 7, Chapter 13 can help you catch up on your past-due car payments, or catch up on house payments to avoid a mortgage foreclosure. A Chapter 13 bankruptcy is essentially a structured, multi-year debt repayment plan controlled by the court. In contrast, a Chapter 7 liquidation is a much shorter process.