A Chapter 7 bankruptcy is a liquidation plan. While not all debts can be discharged (including, among others: tax liens, student loans, child support and other domestic support obligations), many of them can be. (It is worth noting that a discharge of debt will not remove a lien on a property.) Unlike a bankruptcy under Chapter 13, there is no maximum limit imposed on how much debt you may possess.
Under a Chapter 7 bankruptcy, a court-appointed trustee will sell off all your non-exempt property in order to pay off as many of your creditors as possible. While creditors do have the right to object to a discharge in court, once a debt has been discharged under Chapter 7 you no longer carry any liability for that debt. Chapter 7 bankruptcy is meant to give you a fresh start by discharging as many of your debts as possible.
Under the federal Bankruptcy Code, filing a petition for bankruptcy will "automatically stay" harassing collector calls, most wage garnishments, and the majority of other collection actions. While not necessarily permanent, this stay is meant to grant you a reprieve from collection actions until your bankruptcy case is decided.
If your income is higher than your state's median income, you may be subject to a "means test." This test is meant to ensure that you are not abusing the protections offered under a Chapter 7 bankruptcy. Due to this test, it is critical that you obtain the representation of an experienced, quality bankruptcy attorney to represent your interests throughout your Chapter 7 action. If, during the "means test", the court determines that you are being "presumptively abusive" your action will either be converted to a Chapter 13 bankruptcy (with your permission), or it will be dismissed.
If you have questions about filing for bankruptcy in Michigan, experienced bankruptcy attorney Lander McLoyd can help you decide if a Chapter 7 bankruptcy is right for you. Don't wait to secure your financial future - contact Michigan bankruptcy attorney Lander McLoyd today.