Total Lawyer Fees for 2026

In Chapter 7, the trustee looks at your properties and compares their equity to the exemptions you declare. Equity is the value of the residential or commercial property minus what you owe on it. If your equity in a home, lorry, or other property is fully covered by exemptions, the trustee typically leaves that property alone.

That analysis often identifies whether Chapter 7 is safe for somebody with built-up equity in Michigan real estate or a paid-off vehicle. In Chapter 13, exemptions still matter, however in a different method. Rather of offering non-exempt residential or commercial property, the law normally needs that unsecured financial institutions receive at least as much through your plan as they would have gotten if you submitted Chapter 7 and your non-exempt properties were offered.

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For example, a Michigan house owner with equity above the homestead exemption may pick Chapter 13, make a greater regular monthly payment for a set number of years, and still keep the house. Because the option between Michigan and federal exemptions can tilt the balance between Chapter 7 and 13, this is not something to rate.

If Chapter 7 looks dangerous but the customer's income can support a realistic Chapter 13 payment, the suggestion may shift toward Chapter 13 to secure hard-earned residential or commercial property. How each chapter treats your specific debts frequently matters more than any abstract pros and cons list. Unsecured financial obligations, such as charge card, medical costs, payday loans, and numerous individual loans, typically receive comparable end results in both chapters, however through various courses.

In Chapter 13, unsecured lenders frequently receive a share of what you pay into the strategy, which may be anywhere from a little percentage to the full quantity, and the remaining balance can be discharged at the end if you complete your strategy. Guaranteed debts include home that acts as collateral, such as a home loan on a home or a lien on a cars and truck.

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Keeping a secured property often includes remaining current on payments and, sometimes, signing a reaffirmation agreement that keeps you personally responsible on that specific loan after personal bankruptcy. If you are far behind and can not catch up quickly, surrendering the home in Chapter 7 cleans out your individual liability for any deficiency balance after the loan provider offers it.

You can expand home mortgage or auto loan defaults over a 3 to five-year strategy, which is called treating financial obligations, while likewise resuming your regular month-to-month payments. In some scenarios, Chapter 13 likewise permits a decrease of specific lorry loan balances to the automobile's current value, a concept called cramdown, though in-depth rules use.

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Concern and nondischargeable debts, such as recent income taxes, child support, alimony, and the majority of trainee loans, stand in a different category. These are typically not eliminated in Chapter 7, though the automatic stay can stop briefly some collection while the case is pending. In Chapter 13, these financial obligations are typically paid completely through your plan before unsecured financial institutions get anything.

At Hensel Law Office, PLLC, a comprehensive financial institution list is mapped to these classifications so you see precisely which debts will be erased, which need to be paid, and which chapter manages them more successfully. Knowing for how long each chapter lasts and what life appears like during the case can make the choice feel less abstract.

Shortly after filing, the automated stay normally stops garnishments, suits, and the majority of collection calls. You attend a conference of creditors, frequently called the 341 meeting, where the trustee asks concerns about your documentation and financial resources. After that, you primarily await deadlines to pass and for the court to provide a discharge, unless the trustee requires more details or is checking out non-exempt assets.

Essential Filing for Chapter 7 in 2026

You file the case, and the automatic stay enters into effect, stopping garnishments, foreclosure sales, and a lot of collection activity. You propose a payment strategy, start making regular monthly payments to the Chapter 13 trustee, and go to a 341 conference and, in a lot of cases, a verification hearing where the judge considers whether to authorize the plan.

Lots of Michigan filers are amazed by how structured but manageable the daily reality can be when the strategy is practical. In Chapter 7, your primary duties are to be sincere, provide documents, attend your conference, and finish a needed financial education course. In Chapter 13, the included obligations consist of staying with a budget, making every plan payment on time, and reporting substantial earnings changes.

When you comprehend how each chapter works, the next step is lining that up with your objectives. One core tradeoff is speed versus structure. Chapter 7 relocations much faster and normally involves no long-lasting payment responsibilities, which appeals to Michigan tenants and property owners who are current on their home loans and have mostly unsecured debts.