Michigan Chapter 13 Bankruptcy Filing

Bankruptcy Representation Rooted in 25 Years of Michigan Practice

Chapter 13 of the U.S. bankruptcy code gives people facing financial hardship a structured way forward: a repayment plan spread over three to five years, without liquidating what you’ve worked to build. If you’re falling behind on debt payments and bills, Chapter 13 may offer a realistic path to getting your finances back under control.

Most people arrive at this decision after something they didn’t choose: job loss, a medical crisis, divorce, or the death of a spouse. Understanding the bankruptcy process is the first step toward knowing whether it’s the right answer for your situation. There are alternatives to bankruptcy, and Chapter 13 isn’t the right fit for everyone. Talking through your options with a Michigan attorney who handles these cases directly can help you decide.

What Chapter 13 Bankruptcy Means in Michigan

Chapter 13 bankruptcy, also known as a wage earner’s plan or reorganization bankruptcy, allows debtors with regular income to propose a 3- to 5-year repayment plan for all or part of their debts. Filing for Chapter 13 can help debtors save their home from foreclosure, make up missed car payments to prevent repossession, and address other pressing obligations before they spiral further.

The amount repaid to creditors is determined through Michigan’s Means Test. If you continue making payments under the plan, any remaining dischargeable debt may be discharged once the plan is completed.

Keeping Your Assets While Repaying Your Debts

Unlike Chapter 7, where non-exempt property may be liquidated, Chapter 13 lets you keep your assets while directing a portion of your future income toward creditors through a single combined payment. Your attorney works with you to develop the plan, and at a repayment plan confirmation hearing, the court approves or disapproves it. The payment amount and duration depend on your income, property value, and expenses.

Payments are made through a bankruptcy trustee who oversees the case. In most situations, the trustee may allow automatic bank drafts from your account. The trustee doesn’t audit your monthly expenditures during the plan period. Your budget is established at filing, and the assumption is that expenses remain roughly consistent unless you update your schedule.

Upon filing, an automatic stay takes effect and bars creditors from continuing collection efforts. For many people, that alone brings immediate relief: no more calls, no more pressure, and the space to think clearly about what comes next.

How Your Chapter 13 Payment Amount Is Calculated

Your monthly plan payment depends on several factors:

• Your income
• Your essential expenses and disposable income
• Your total debts
• Where you live and own property

When calculating disposable income, you can deduct essential expenses including food, housing, utilities, clothing, taxes, alimony, child support, some education costs, childcare, and healthcare.

If your income falls below Michigan’s state median for your household size, you won’t need to calculate monthly disposable income. Instead, your repayment plan is built around your actual budget. If your income exceeds the Michigan median, your plan must run five years. If it falls below, a three-year plan may be available.

Additional Advantages of Chapter 13 in Michigan

Beyond keeping your property and consolidating payments into a single monthly amount, Chapter 13 carries several advantages worth understanding before choosing which path fits your situation.

Lien Stripping on a Second Mortgage
If your home is worth less than the outstanding balance on your first mortgage, a process called lien stripping may allow the court to eliminate a second mortgage lien entirely. If the plan is completed, that stripped lien may be discharged along with other qualifying debt, potentially reducing what you owe on the property.

Credit Report Timeline
A Chapter 13 bankruptcy is typically removed from a credit report after 7 years, compared to 10 years for a Chapter 7 bankruptcy. For some filers, that shorter window is a meaningful factor in choosing between the two chapters.

Tax Debt and Penalty Relief
Tax debts included in a Chapter 13 plan may generally benefit from a freeze on accruing interest and penalties for the duration of the plan, letting you pay down the principal rather than fighting a compounding balance.

Co-Debtor Protection and Domestic Support Arrears
In a Chapter 7 filing, creditors can typically pursue co-debtors and co-signers directly for payment. Chapter 13 may protect those individuals from collection efforts for the duration of your plan. And while child and spousal support obligations can’t be discharged in any form of bankruptcy, they can be included in the three- to five-year repayment plan and paid over its duration.

Your Chapter 13 Bankruptcy Attorney in Michigan

At Hensel Law Office, PLLC, our founding attorney has handled bankruptcy matters since 1999 and personally manages every Chapter 13 case from the initial filing through plan completion. Clients aren’t passed between attorneys or staff at different stages. You work directly with the same lawyer throughout, which means you tell your story once and receive consistent guidance at every step.

Our attorney is a member of the American Bankruptcy Institute, NACBA, and the Consumer Bankruptcy Association, reflecting an active commitment to staying current in bankruptcy law. We offer free, no-obligation consultations so you can understand your options before making any decisions, and we provide a confidential, supportive environment where clients throughout Michigan can discuss sensitive financial matters with confidence.

If you’re looking for a Chapter 13 bankruptcy lawyer in Michigan who handles cases personally rather than delegating them, we can help you take the next step.