In Part 1, we discussed the first five essential things to tell your Metro Detroit bankruptcy lawyer. Now, we’ll cover the final five—equally vital details that can make or break your Chapter 7 or Chapter 13 bankruptcy case in Michigan.
As previously mentioned, filing for bankruptcy is a voluntary—but highly complex—legal process. It requires total honesty and full disclosure to your attorney. The information you share not only helps your lawyer protect you but also prevents serious legal consequences.
Let’s continue with the next five must-know disclosures.
6. Who You’ve Paid Recently—Even Friends and Family
You may think it’s admirable to pay debts before filing bankruptcy—but it can hurt your case.
Any repayment of more than $600 to a single creditor within 90 days before filing is considered a “preference payment” under the Bankruptcy Code. If the person you repaid is a friend, family member, or anyone considered an “insider,” that look-back period stretches to one full year.
The Chapter 7 Trustee can sue that insider to recover the funds—even if it’s your grandmother.
This also applies to personal loans made on a handshake. All debts must be disclosed, whether or not there’s a written contract. In Chapter 13, preference payments won’t lead to lawsuits, but they must still be reported.
Bottom line: tell your lawyer who you’ve paid and how much, or your loved ones could be dragged into your case.
7. What You Own and Where It Is
The goal of most Michigan bankruptcy cases is to eliminate your debt without losing any of your property. But to achieve that, your attorney needs to know exactly what you own.
In Chapter 7, your lawyer will use legal exemptions to protect your assets from liquidation. But they can’t exempt what they don’t know about. If you hide or forget to disclose assets, you risk losing them—or worse, facing criminal charges for bankruptcy fraud.
In Chapter 13, your property value affects how much you must repay creditors. A calculation called the “liquidation analysis” determines your minimum payment.
Failing to disclose assets can derail your case entirely. Be honest, and let your lawyer protect you.
8. What You’ve Sold, Gifted, or Given Away
Sold a car? Gifted furniture to a relative? These actions may seem harmless—but in bankruptcy, they may be considered fraudulent transfers.
A fraudulent transfer is any asset given away or sold for less than its actual value within two years of filing (or up to six years under Michigan law). Intent doesn’t matter. The law looks at value and timing, not your motivation.
Tell your lawyer about any property transfers—even gifts—before filing. They can evaluate the risk and advise you accordingly.
9. Your Monthly Living Expenses
The bankruptcy system requires “good faith” from filers. If your spending habits are extravagant, you may face a motion to dismiss your case—especially in Chapter 7.
Your attorney will need a complete list of your necessary monthly expenses to prepare your bankruptcy petition and run the Means Test. This includes rent, food, utilities, and transportation—but not luxury items like private school tuition or expensive car payments.
In Chapter 13, these expenses also determine your monthly plan payment. Disallowed expenses will be struck down by the Trustee, so full disclosure is key.
10. Whether You’ve Filed All Required Tax Returns
If you haven’t filed all of your tax returns, your bankruptcy case could be delayed—or dismissed.
Recent tax debts are not dischargeable, and returns must be filed before your case is filed. If the IRS has filed a “substitute return” for you, that tax debt may also be non-dischargeable.
That said, certain older tax debts can be eliminated in bankruptcy—but only if your attorney has all the facts.
Even if non-dischargeable, a tax debt may be manageable through a Chapter 13 plan, where it can be repaid over five years without interest or penalties.
Final Thoughts: Full Disclosure Protects You
These 10 critical disclosures are just the beginning of the information your Detroit bankruptcy attorney will need from you. The process may seem overwhelming, but it’s designed to help—not punish—honest debtors.
Be open with your attorney. Ask questions. Understand the reasoning behind each inquiry. The more your lawyer knows, the better equipped they are to protect you, your assets, and your future.
At the end of the day, this is your bankruptcy case. Trust, transparency, and communication are the foundation of a successful outcome.
Detroit bankruptcy attorney John Hilla has helped hundreds of clients navigate Chapter 7 and Chapter 13 bankruptcies across Livonia, Detroit, Westland, Ann Arbor, and throughout Michigan. We offer free virtual consultations and one-on-one service to guide you through the process with experience—and compassion.
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