Filing for Chapter 7 bankruptcy can offer life-changing financial relief for Michigan residents overwhelmed by debt. However, you must meet certain eligibility requirements before moving forward. Understanding these rules can help you determine whether Chapter 7 is the right path. At Michigan Attorney Don E. Burch, we can provide legal assistance to the Okemos public as they navigate this process.



Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy is often referred to as a liquidation process, where non-exempt assets may be sold to repay creditors. Many filers, however, keep most or all of their property due to exemptions allowed under Michigan and federal law. The primary goal is a fresh financial start through the discharge of unsecured debts such as credit cards, medical bills, and personal loans.

The Michigan Means Test

The means test determines whether your income is low enough to qualify for Chapter 7. The test compares your household income to the median income for a similar household size in Michigan.

• If your income is below the state median, you automatically pass.
• If it is above, you must complete the full means test, which examines your necessary expenses to see if you still qualify.

This test prevents individuals with the ability to repay from filing under Chapter 7.

Michigan Residency and Filing Requirements

To file in Michigan, you must:

• Live in the state for at least 180 days before filing.
• Use either Michigan or federal bankruptcy exemptions, depending on which better protects your assets.

Michigan exemptions commonly protect:

• A portion of home equity
• Vehicles
• Clothing and personal items
• Certain retirement accounts

Credit Counseling Requirement

Before filing, you must complete an approved credit counseling course within 180 days. This class helps you evaluate alternatives to bankruptcy and understand the financial impact of filing.

Prior Bankruptcy Filings

Your eligibility may also depend on your bankruptcy history:

• You must wait eight years after a previous Chapter 7 discharge to file again.
• You must wait six years after a Chapter 13 discharge, unless debt repayment met certain requirements.

Signs Chapter 7 Might Be Right for You

You may benefit from Chapter 7 if you:

• Have mostly unsecured debts
• Cannot afford monthly payments
• Are facing lawsuits, wage garnishment, or collection harassment
• Have limited income or assets

Every case is different, and an attorney can help determine whether Chapter 7 is your best option.

How an Attorney Can Help

The bankruptcy process involves strict timing, documentation, and legal standards. A Michigan bankruptcy attorney can help ensure you meet eligibility requirements, prepare filings correctly, and protect as many assets as possible.

At Michigan Attorney Don E. Burch, we can provide legal assistance to the Okemos public and help you understand your debt relief options.