Filing Chapter 13

• You file for Chapter 13 bankruptcy in Michigan by paying a $274 fee (as of 2011) and filing your bankruptcy petition and schedules with the bankruptcy court. Unlike in a Chapter 7 bankruptcy case, you also must file a debt repayment plan for Chapter 13 bankruptcy. The debt repayment plan should provide for the payment of your creditors in monthly or bi-weekly installments. The bankruptcy court must approve this plan before your case can go forward. Once the plan has been approved, you begin making payments to the bankruptcy trustee who will be administering your case. The bankruptcy trustee, in turn, pays your creditors.
  
  

Applicable Commitment Period

• Your debt repayment plan will last for a period of three or five years. You can determine the length of your debt repayment plan by figuring out your family income and comparing it to the median family income in Michigan. If your family income falls below Michigan's median family income, your plan will last for three years. If your family income hovers above Michigan's median family income, your plan will last for five years.
  
  

Plan Provisions

• Your Chapter 13 debt repayment plan should provide for the payment of priority claims, secured claims and a percentage of unsecured claims. Generally, you must pay priority claims in full unless your creditors agree to different repayment terms. Secured creditors should receive at least the value of the collateral securing their claims. The amount you must pay into the plan toward your unsecured debts varies on a case-by-case basis. When you propose the plan, you will provide for the payment of all of your projected disposable income toward your unsecured debt. The bankruptcy court will grant you a discharge after you have made all plan payments and completed a financial management course.
  
  

Hardship Discharge

• If you happen to lose your job or suffer an illness that prevents you from completing your debt repayment plan, you can ask the Michigan bankruptcy court for a hardship discharge. The bankruptcy court may only grant you a hardship discharge if your failure to complete the plan payments is due to circumstances beyond your control and through no fault of your own; your creditors have received as much payment as they would have received in a Chapter 7 case; and modification of the debt repayment plan is not possible.