Page Last Updated
January 16, 2008
01:50 PM
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USBC WDMI - Frequently Asked Questions
How Do I Find an
Attorney?
What Is The Difference Between Chapters 7,
11, 12, & 13?
Common Bankruptcy Definitions
Pro-Se Debtor Guide
Frequently asked questions posed to this court by debtors filing
bankruptcy without the assistance of legal counsel (pro-se).
Please Note: Court employees are prohibited by law from giving
any legal advice.
Getting Help - Finding
an Attorney
The staff of the Bankruptcy Clerk’s Office will try to help you as best
they can, and can answer most non-legal questions for you. They are,
however, forbidden from giving any advice that may be construed as legal
advice. The clerks may not recommend an attorney.
If you are in need of an attorney and do not have one, you may contact
one of the following referral agencies:
- Grand Rapids Lawyer Referral and Information Service (LRIS):
Call toll free : (888) 454-9554
- Legal Aid of West Michigan : (616) 774-0672
- State of Michigan LRIS : (800) 968-0738
- Kalamazoo : (616) 384-8257
For more information please visit the
US Courts
Pro-Se page
Bankruptcy Types
Before you file for bankruptcy, you should decide which type (or chapter)
is right for you. Here is a brief description of each of the different
types of bankruptcies:
Chapter 7 - Liquidations
- The purpose of a chapter 7 is to allow a person to obtain a fresh
start, free from creditors and free from the pressures of over-whelming
debt. Under chapter 7, a trustee takes possession of non-exempt property
assets, converts them to cash and distributes the funds to creditors.
After filing for relief, an individual debtor may receive a discharge of
debts.
- A discharge permanently prohibits creditors from attempting to
collect those debts listed by the debtor on the bankruptcy schedules.
However, some debts are non-dischargeable. They include certain taxes,
student loans, alimony, and child support to name just a few.
- A corporate business that files chapter 7 is not eligible to receive
a discharge.
Chapter 11 - Reorganizations
- The purpose of a chapter 11 bankruptcy is to allow an individual or
business a limited amount of time free from creditors collection efforts
to restructure its financial obligations so it may continue to operate
in a normal fashion under a court approved plan of reorganization.
Creditors of a business filing a chapter 11 vote on the repayment plan
and the plan must be approved by the court.
- The advantage of chapter 11 is if a trustee is not appointed, the
individual or business maintains control of its property during the
bankruptcy and allow time to deal with creditors and to negotiate a plan
of repayment.
- Chapter 11 is normally for corporations and businesses but
individuals may also file chapter 11. Chapter 11 is complicated and
there may be advantages to filing under a different chapter. An
individual should consult with an attorney before making the decision to
file chapter 11.
Chapter 12 - Family Farmer Debt Adjustment
- The chapter 12 bankruptcy law was created to help family farmers who
need to reorganize their debts while keeping their land and farming
business. Chapter 12 is meant to assist farmers who have potential to
reorganize and to allow them relief from a heavy debt burden, while at
the same time allow farmers to pay their creditors what is deemed
reasonable under the terms of a court approved repayment plan.
- The rules of a chapter 12 bankruptcy are modeled closely after those
of a chapter 13. A chapter 12 case may only be filed by certain family
farmers and businesses. A trustee is appointed, but the farmer usually
remains in possession of the farm while formulating a plan.
Chapter 13 - Individual Wage Earner
- The purpose of a chapter 13 bankruptcy is to allow an individual
debtor with a regular income pay back debts using their income and
enabling a debtor to keep certain assets. A person who operates a small
business as a sole proprietor may also file under this chapter.
- Under a chapter 13 bankruptcy filing, the debtor must promptly file
a repayment plan and obtain the court's approval of the plan. Any
creditor may object to the plan. The debtor, along with the appointed
trustee, must work out any objections to the plan before the court will
approve it. The typical repayment period of a chapter 13 is 3 to 5
years. The debtor makes regular payments to the trustee and the trustee
distributes these monies to creditors according to the terms of the
plan.
- After completion of the plan, the debtors debts are discharged (with
some exceptions) and the debtor is no longer obligated to pay them.
Common Bankruptcy
Definitions
Bankruptcy - A legal proceeding in federal court in which an
individual or company may be released (or "discharged") from all or a
portion of their debts.
Debtor - The person or company filing bankruptcy.
Trustee - A person who administers a debtor's estate. A
trustee is always appointed in a chapter 7, 13, or 12 bankruptcy. A
trustee may be appointed in a chapter 11 case.
Creditor - The people or companies to whom a debtor owes
money or property. Creditors have claims against the debtor.
Proof of Claim - A proof of claim is a written statement
filed with the court describing the debt that a creditor claims the debtor
may owe them.
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