Some individuals may find that while their debts are indeed overwhelming, they still have a strong enough cash flow to continue making decreased payments to their creditors. Under this structure, the debtor prepares a plan with their attorney, which takes into account all sources of income and estimated living expenses. The income that remains after living expenses are satisfied is then divided up among the creditors in a "plan" that must then be approved.

 

SHOULD I FILE FOR BANKRUPTCY PROTECTION?

Filing Chapter 13 bankruptcy is for people who have some discretionary income after their normal and usual monthly expenses are deducted from their normal monthly income. For this reason, a Chapter 13 is called a "Wage Earner Bankruptcy"

36 Monthly Payments
The big difference between Chapter 7 bankruptcy and bankruptcy, chapter 13, is that there are monthly payment plans created for the chapter 13 debtor. Payments must be made to the Chapter 13 Trustee over a period of 3 years (sometimes as long as 5 years).

What are these payments? These payments are usually some or all of your credit card debt, whatever you may be behind on your mortgage payment, and sometimes your car loans. This is a good way to stop foreclosure and save your house, as well as stop creditor harassment. And of course, all the Michigan bankruptcy exemptions still apply, so you can keep some or most of your stuff.

Wage Earner Bankruptcy
Chapter 13 of the Bankruptcy Code is designed to enable individual debtors under Court protection and supervision to apply a portion of future earnings to the payment of a portion of their debts over an extended period of time. The debtor is protected from creditors by an automatic stay while a plan of repayment is developed and carried out. It is similar to a Chapter 11 Business Reorganization. In fact, Chapter 13 is sometimes called "Consumer Debt Adjustment."

Chapter 13 was intended to give the wage earner a reasonable opportunity to arrange installment payments out of future income so that creditors would receive more money than they otherwise would receive in liquidation.

You're going to want a skilled Detroit bankruptcy attorney to help you so you can make your payment plan no more than you can afford for your Chapter 13.
More Chapter 13 Information