People who have lived in Michigan at least six months and have realized they cannot pay their debts as expected are eligible to file for federal bankruptcy as a resident of the state. There are two divisions of the federal bankruptcy court in Michigan, which enables residents to pursue either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy forgives most consumer debts, while Chapter 13 is a special repayment plan of debts which may include reduction of some obligations, such as credit card bills.
Visit one of the U.S. Bankruptcy Court -- Michigan web sites (see Resources) to find resources for declaring bankruptcy. Those in the areas surrounding Detroit and Flint will need to find a court in the Eastern District, while people living around Kalamazoo and Lansing would want to visit the Western District website.
Decide whether you want to pursue a Chapter 7 or Chapter 13 case. In Michigan, your personal property and most farm animals cannot be seized if you declare any form of bankruptcy. However, in Chapter 7 you do risk losing your house and to qualify must pass a federal means test (see Resources).
Write down a list of all your debts, including those which may not be noted on your credit file such as utility bills, and a list of all your assets. You cannot lose a retirement account in Michigan or any other state by filing bankruptcy, but you still have to disclose the fact that you have one.
Collect copies of your recent tax returns, any proof of recent income, and banking account statements.
Complete an approved credit counseling session and keep the certificate you will receive. You cannot file bankruptcy in Michigan without this certificate. A link to federally approved credit counselors is noted in the Resources section below.
Fill out all bankruptcy forms, which you can download and print from the U.S. Bankruptcy Court forms web site (see Resources). Full instructions are available, and you will be advised which documents you must copy and place into your bankruptcy petition. You can also hire a lawyer to handle this for you, and also act on your behalf in your local Michigan bankruptcy court.
Take your forms, any required document copies, and payment to your local bankruptcy court in the Eastern or Western District of Michigan. As of 2009, filing a Chapter 7 case in Michigan cost $299, while a Chapter 13 case in the state cost $274. If you truly cannot pay the entire fee upfront, the court might allow you to pay this debt in installments. If you hired an attorney, he or she will do this for you.
Wait for notice of your 341 hearing, which is a meeting of creditors. Those people and institutions to which you owe money have the opportunity to come to the Michigan bankruptcy court and object to your case, but this rarely happens. Be sure to attend this hearing, even if you have a lawyer.
Visit the Michigan bankruptcy courthouse as directed for any other hearings. Likely you will only need to go to the courthouse one more time, and that is for your bankruptcy completion. If you secured an attorney, you might not need to go to court again.