Consumer bankruptcy is a Federal process—but also very “local.”
What do bankruptcy lawyers mean when they say that?
The consumer bankruptcy process is governed by a variety of local court rules, local US Trustee policies, local Chapter 13 and Chapter 7 culture and practice, and, most importantly, by the law of the state in which the bankruptcy is filed.
For individuals wishing to file a Chapter 7 or Chapter 13 bankruptcy case in Michigan, that means that Michigan state law will very frequently enter the discussion when things such as property ownership considerations, vehicle titling, divorce judgment interpretation, and entitlement to sanctions for things like violations of privacy in the filing of documents in the Federal Bankruptcy Court are in dispute.
Even some form documents filed in bankruptcy matters are nationally utilized “official” forms, whereas others have been created and approved by our local Eastern and Western District Bankruptcy Courts.
Significantly, the forms of Chapter 13 Bankruptcy Payment Plans are startlingly different between cases, for example, filed in Grand Rapids versus those filed in Detroit. A Michigan bankruptcy attorney who has only filed Chapter 13 cases in Grand Rapids will be shocked by the amount of paper used for the same Chapter 13 payment plan in Detroit. And so on.
THE CONSUMER BANKRUPTCY PROCESS IN THE EASTERN DISTRICT OF MICHIGAN
That all said, the process is generally straightforward when you have an experienced bankruptcy attorney assisting you.
The process beings with the scheduling of an initial consultation with a good bankruptcy attorney.
Most Michigan bankruptcy attorneys do not charge any fee for an initial consultation appointment. The Law Offices of Walter Metzen offers free consultations.
At your initial consultation, Attorney Metzen will review your debt, your income and expenses, assets, personal and financial goals, and help you to determine whether a Chapter 7 or Chapter 13 bankruptcy is the right course of action for you. If it is, he will determine whether a Chapter 7 or a Chapter 13 is the right form of bankruptcy for you.
Once you sign a retainer agreement with The Law Offices of Walter Metzen, we will provide you a list of documentation we will need you to assemble and deliver to us, along with a detailed questionnaire for your completion so that we have all of the information we need to draft a thorough, complete, and accurate Chapter 7 or Chapter 13 petition for bankruptcy for filing with the US Bankruptcy Court.
Once the bankruptcy petition is filed, the Federal Bankruptcy “automatic stay” injunction will activate, requiring all of your creditors to cease and desist any and all collection efforts. You will need to pay a bankruptcy court filing fee of—currently—$338 (Chapter 7) or $313 (Chapter 13) unless you have worked with Attorney Metzen to file an “application” requesting that you be allowed to pay it to the Court in a small number of installments over the 8 to 12 weeks or so after the filing of the case.
You will need to file with your bankruptcy petition, also, a certificate proving that you have successfully completed a pre-filing “credit counseling” course. This is a requirement of the US Bankruptcy Code that has no real purpose or benefit other than to cost you an additional $15-25.
After you file your bankruptcy case, you will then need to take a further online “debtor education” course.
In a Chapter 7 bankruptcy, this must be accomplished and the resulting “certificate” filed with the Bankruptcy Court approximately 30 days after the day of filing.
In a Chapter 13 bankruptcy, it must technically be completed before the end of the Chapter 13 Plan, which can run anywhere from 36-60 months. (It is wise to complete it earlier as a failure to do it—because you’ve forgotten about it—will cause you to lose your discharge.)
Also approximately 30 days after filing, your first Bankruptcy Court hearing will be scheduled.
This is the so-called 341 Meeting of Creditors.
In a Chapter 7 bankruptcy, this is, in most cases, the only hearing you will be required to personally attend. In a Chapter 13 bankruptcy, it will be the first of two or more.
The purpose of the 341 Meeting is to allow the Chapter 7 or Chapter 13 Trustee, creditors, the US Trustee, or other parties in interest to the case to ask questions of the Debtor while he or she is under oath and being tape-recorded.
A Chapter 7 Trustee’s job is to investigate the financial affairs of the debtor and determine if there are any non-exempt assets that can be sold to pay creditors. Fortunately, in the vast majority of cases filed by my office, there are no assets available, after claimed exemptions, to be liquidated for the benefit of creditors. If there no non-exempt assets or pre-filing property transfers for the Chapter 7 Trustee to liquidate or unwind and there are no questions of good faith or bad faith or fraud in the filing of the Chapter 7, the Chapter 7 Trustee will, shortly after the 341 Meeting, file something called a “Report of No Distribution” with the Court.
This “Report” is essentially a declaration that the Chapter 7 Trustee has nothing further to do in the case. 60 days later, in the vast majority of cases, nothing else happens and the Court issues the Debtor’s Discharge, closing the case administratively thereafter.
In a Chapter 13 bankruptcy, the road winds on a little further.
Depending in which city you have filed your Chapter 13 bankruptcy, one thing versus another will happen after the 341 Meeting.
In Detroit, a few weeks after the 341 Meeting, the Chapter 13 Trustee will almost always file a host of “Objections” to the Confirmation (Court approval) of the Chapter 13 Plan.
These Objections can be based on anything from an allegation that a box wasn’t properly checked on Voluntary Petition form itself to an allegation that a Debtor is overstating his or her grocery expense to an allegation that the Chapter 13 Plan doesn’t work on a mathematical level—or anything else to which the Trustee feels like objecting.
Creditors may also Object, though, usually, these will come primarily from secured creditors (mortgage and vehicle loan servicers) or “priority” creditors such as the IRS.
Once the Objections are filed, Attorney Metzen moves quickly to resolve them in order to obtain Confirmation of the Chapter 13 Plan.
If an Objection cannot be resolved through amendment of documents, provision of further evidentiary documentation, or negotiation, Attorney Metzen will aggressively argue the Trustee’s Objection before the Court to request that the Judge overrule it.
Once a Chapter 13 Plan is Confirmed, either by resolving or having overruled any Objections, the Debtor will have a few primary obligations over the length of the Chapter 13 proceeding:
- Make all Plan payments as required.
- Turn over Federal tax returns and refunds as required. (In Detroit, this is obligatory unless 100% of all of the Debtor’s debts are being paid through the Chapter 13 Plan.)
- Complete the Debtor Education Course as noted above.
- Report any changes in income, employment, or Plan payment-affecting circumstance to his or her Bankruptcy Attorney and, likely, thereby to the Chapter 13 Trustee.
- Complete an end-of-the-case “Domestic Support Obligation Certification” with your bankruptcy attorney and ensure that it is timely filed.
- Quickly resume payment of ongoing, post-Chapter 13 monthly obligations such as mortgage installment payments that the Chapter 13 Trustee may have been paying for you as soon as your last Plan payment is made.
For Chapter 13 cases filed in Flint, Bay City, Lansing, Grand Rapids, Kalamazoo, and Traverse City, this process will vary to certain extents and in different ways.
In particular, the Detroit Chapter 13 Trustees’ custom of filing a profuse number of Confirmation Objections even in airtight Plans with nothing particularly wrong with them is significantly relaxed in the northern part of Michigan.
THE LAW OFFICES OF WALTER METZEN: YOUR LOCAL MICHIGAN BANKRUPTCY ATTORNEY
Consumer bankruptcy in Michigan is, therefore, very local.
This is a very good reason to avoid browsing the internet for information about the bankruptcy process rather than consulting a knowledgeable local bankruptcy attorney.
You may find good legal information about consumer bankruptcy on Google—but it may only be good in San Diego. Or Texas. Or even Bay City, Michigan, and not Detroit.
The Law Offices of Walter Metzen prides itself on its mastery of the local nuances of Federal bankruptcy law, custom, and practice everywhere a Chapter 7 or Chapter 13 bankruptcy case may be filed in Michigan.
Contact us now to schedule your free initial bankruptcy consultation.