A Chapter 7 bankruptcy allows someone to liquidate their qualifying debt and use it to pay their creditors and discharge their debts. For those who find themselves struggling to make ends meet and pay their bills, this option can bring welcome relief and a new beginning. However, as with any bankruptcy, the debtor must qualify under the bankruptcy chapter they are seeking to use. Here are some facts to know about eligibility requirements for a Chapter 7 bankruptcy.

If you make a higher income, you must qualify under the Michigan Means Test in order to file for a Chapter 7 bankruptcy. The Means Test is used to determine if the higher income debtor can afford to pay back some of their debts through a Chapter 13 bankruptcy rather than discharging them completely in a Chapter 7 bankruptcy. There are some debtors who will be exempted from the Means Test. For instance, Michigan residents whose income falls below the median income for their size of household can file for Chapter 7 without submitting to the Means Test. Additionally, individuals with debts which are not mostly consumer debts may be exempt. Disabled veterans who incurred most of their debt during active duty military service or other qualifying types of service may also be exempt from the Means Test.

In Michigan, those seeking to determine if they must submit to the Means Text will have to examine their average household income for six months and then multiply that number by twelve in order to calculate their annual income. The person will also be able to deduct certain expenses during this calculation so that they can determine their average disposable income. From there, the person will need to compare that figure to those of the median income for their household size. If the amount of your income is greater than the median income figure provided by the State, then you must submit to the means test.

The test will take into consideration different pieces of information such as your monthly income from all possible sources. For example, the salary from your job, pension benefits you are receiving, as well as income from rental property would need to be disclosed. You will also provide your allowable expenses. From there you would subtract your expenses from your income in order to determine what resources remain to pay creditors who were part of a Chapter 13 plan. If your total monthly income is below a certain amount, you pass the means test and can file Chapter 7. The alternative is either to file under Chapter 13 or to look at whether your disposable income falls between certain amounts. If it does, there are more calculations you can do in order to determine in you are going to allowed to file under Chapter 7.

Filing for Chapter 7 bankruptcy is a solution under some circumstances. However, when contemplating bankruptcy, it is important to consult with an experienced bankruptcy attorney to understand your choices. We have the knowledge and experience you need to help you understand your options and find solutions. Please contact us online or by phone if we may be of assistance. http://bestmichiganlawyer.com/contact-us