How Much Does Chapter 13 Bankruptcy Cost in Michigan?

Because you’re already facing financial challenges when considering bankruptcy, it’s understandable that you’ll have concerns about expenses. Many filers ask the question: How much does Chapter 13 bankruptcy cost in Michigan?

Filing for Chapter 13 bankruptcy in Michigan costs $313 in court fees. Additional expenses include credit counseling fees, typically $20-$50, and attorney fees, which average between $3,000 and $4,500. These costs vary based on case complexity and attorney experience.

As a Michigan bankruptcy attorney who has served clients for more than two decades, I’ve helped many individuals regain financial standing through Chapter 13. In this article, I’ll answer questions about costs, explain what to expect with your bankruptcy case, and cover the implications for your credit score.

What Should I Know About Chapter 13 Bankruptcy?

Chapter 13 bankruptcy is a legal process that enables individuals in Michigan to reorganize their debts through a repayment plan. Unlike Chapter 7, which involves liquidating assets, Chapter 13 enables debtors to keep their property while paying off debts over three to five years.

This option is often chosen by those with a regular income who can afford to make monthly payments. Understanding the costs associated with Chapter 13 bankruptcy in Michigan is crucial for anyone considering this financial path.

How Does Michigan Bankruptcy Work?

In Michigan, the bankruptcy process begins with filing a petition in the appropriate district court. For those in Detroit, the appropriate venue is the US Bankruptcy Court for the Eastern District of Michigan.

For Chapter 13, this includes submitting a proposed repayment plan that outlines how debts will be paid. The court must approve this plan, and creditors have the opportunity to object.

Once approved, the debtor makes regular payments to a trustee, who distributes the funds to creditors. Michigan’s bankruptcy laws are designed to provide a structured way for individuals to manage overwhelming debt while protecting their assets.

What are the Main Costs to Bankruptcy in MI?

Filing for Chapter 13 bankruptcy in Michigan involves three primary costs:

The filing fee is a mandatory cost set by the court.
Completion of a credit counseling course is required both before filing and before discharge, and the responsibility for paying it is yours.
Legal fees can vary significantly depending on the complexity of the case and the attorney’s experience.

Understanding these costs is essential for anyone considering Chapter 13 bankruptcy in Michigan, as they can impact the overall financial outcome.

Initiate Your Path To Relief

Claim Your Right To Restart

How Much are Bankruptcy Filing Fees in Michigan?

The cost to file Chapter 13 bankruptcy in Michigan includes a filing fee, which is currently set at $313. This fee is paid to the court at the time of filing the bankruptcy petition. In some cases, the court may allow the fee to be paid in installments. It’s important to budget for this expense, as it is a necessary part of the bankruptcy process.

Additionally, there may be other administrative costs associated with filing, so it’s wise to consult with a legal professional to understand the full scope of expenses.

What Should I Expect for Credit Counseling Fees?

Credit counseling is a mandatory step in the Chapter 13 bankruptcy process in Michigan. Before filing, individuals must complete a credit counseling session with an approved agency. The cost for this service typically ranges from $20 to $50, depending on the provider.

A second counseling session, known as debtor education, is required before the bankruptcy can be discharged. These fees are relatively modest but are an essential part of the process, so that debtors understand their financial situation and options.

Do Bankruptcy Attorneys Charge a Flat Fee for Chapter 13?

In Michigan, many bankruptcy attorneys charge a flat fee for handling Chapter 13 cases. This fee can vary based on the complexity of the case and the attorney’s experience. On average, flat fees for Chapter 13 bankruptcy in Michigan range from $3,000 to $4,500. This fee typically covers the entire process, including:

Filing the petition
Creating the repayment plan
Representing the debtor in court

It’s important to discuss fee structures with potential attorneys to understand what services are included and check that there are no hidden costs.

Will Inflation Affect the Cost to File Bankruptcy in Michigan?

Inflation can impact the cost of filing for Chapter 13 bankruptcy in Michigan, as it affects the overall cost of living and legal services. While filing fees are set by the bankruptcy court and do not fluctuate with inflation, attorney fees and credit counseling costs may increase over time.

It’s important for individuals considering bankruptcy to be aware of these potential changes and budget accordingly. Consulting with a knowledgeable attorney can provide insight into current costs and help plan for any future increases.

How Do I Choose the Correct Chapter of Bankruptcy in Michigan?

Choosing the correct chapter of bankruptcy in Michigan depends on individual financial circumstances.

Chapter 13 is suitable for those with a regular income who can afford to make monthly payments. However, the process takes longer because of the 3-5 year debt repayment plan.
Chapter 7 is often chosen by those with limited income and assets, but some debtors may not qualify due to strict criteria.

A bankruptcy attorney can help determine the best option based on income, total debt , and financial objectives. Reviewing the differences between chapters is crucial for making an informed decision that aligns with long-term financial stability.

What are the Effects on My Credit Report with Chapter 13?

The implications for your credit score are also a factor when choosing the right chapter of bankruptcy for your needs. Filing for Chapter 13 bankruptcy in Michigan will have an impact on your credit report. This type of bankruptcy remains on your credit report for seven years from the filing date.

While it may initially lower your credit score, successfully completing a Chapter 13 repayment plan can demonstrate financial responsibility and potentially improve your credit over time. It’s important to monitor your credit report regularly and take steps to rebuild credit, such as making timely payments and reducing debt.

Do I Need a Lawyer to File Bankruptcy in Michigan?

While it’s possible to file for Chapter 13 bankruptcy in Michigan without a lawyer, it is generally not recommended. The bankruptcy process is complex, and having an experienced attorney can help you meet all legal requirements and see that the repayment plan is feasible.

An attorney can also provide valuable guidance and representation in court, increasing the likelihood of a successful outcome. For most individuals, the benefits of hiring a lawyer outweigh the costs, making it a wise investment in their financial future.

Trust a Michigan Bankruptcy Lawyer for Help with Chapter 13

Knowing the costs for Chapter 13 in Michigan is essential as you consider your options and the impact of bankruptcy on your financial situation. At Kostopoulos Bankruptcy Law, our extensive knowledge of Chapter 13 bankruptcy can guide you through this complex process with confidence and clarity. Our experienced attorneys are dedicated to helping you understand your financial options and develop a plan tailored to your needs.

Call us today at 877-969-7482 for a free, no-obligation consultation and take the first step toward financial stability.

Related Content:

Start Your Financial Reset

Embrace A Debt-free Future

FAQs About Chapter 13 Bankruptcy Costs in Michigan

How much does it cost to file for Chapter 13 bankruptcy in Michigan?

Filing for Chapter 13 bankruptcy in Michigan involves a court filing fee of $313. This fee is required at the time of filing the bankruptcy petition. In some cases, the court may allow the fee to be paid in installments. Additionally, there are costs for mandatory credit counseling and attorney fees, which can vary based on the complexity of the case and the attorney's experience. It's important to budget for these expenses when considering Chapter 13 bankruptcy.

How much debt is needed to file Chapter 13?

There is no minimum debt requirement to file for Chapter 13 bankruptcy in Michigan. However, there are maximum debt limits. As of 2023, unsecured debts must be less than $465,275, and secured debts must be less than $1,395,875. These limits are adjusted periodically. Chapter 13 is designed for individuals with a regular income who can afford to make monthly payments, so the decision to file should be based on the ability to adhere to a repayment plan rather than a specific debt amount.

How long does it take for Chapter 13 to be approved?

The approval process for Chapter 13 bankruptcy in Michigan typically takes between 30 to 60 days after filing. This period includes the time needed for the court to review the proposed repayment plan and for creditors to raise any objections. Once the plan is confirmed by the court, the debtor begins making payments according to the plan's terms. The entire Chapter 13 process, from filing to discharge, usually spans three to five years, depending on the repayment plan's duration.

What is the downside to filing Chapter 13?

One downside to filing Chapter 13 bankruptcy in Michigan is the impact on your credit report, as it remains for seven years. Additionally, the repayment plan requires a long-term commitment, typically lasting three to five years, during which the debtor must adhere to strict budgetary constraints. Failure to make payments can result in the dismissal of the case. Furthermore, while Chapter 13 allows for debt reorganization, it does not eliminate all debts, such as certain taxes and student loans, which must still be paid.