Struggling with overwhelming debt can be stressful, and many wonder whether they qualify for Chapter 7 bankruptcy. What is the bankruptcy means test in Michigan?
The bankruptcy means test is a calculation that determines if someone is eligible for Chapter 7 bankruptcy, which allows for the discharge of most debts. It assesses whether an individual’s income is sufficient to repay creditors, ensuring that those who can afford to pay at least some of their debts do not abuse the bankruptcy system.
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Frequently Asked Questions
How do I know if I qualify for Chapter 7 in Michigan?
If your household income is below Michigan’s median income level, you qualify automatically. If your income is higher, the means test will calculate your allowable expenses and disposable income.
Can I pass the means test with a high income?
Yes, if you have high necessary expenses—such as mortgage payments, medical bills, or childcare costs—you may still qualify after deductions.
What happens if I fail the means test?
Failing the means test means you may need to file for Chapter 13 bankruptcy, which involves repaying a portion of your debts over 3–5 years.
Does every bankruptcy filer have to take the means test?
No, if your debts are primarily business-related, you may be exempt from the means test.
Should I retake the means test if my income changes?
Yes, if your income decreases due to job loss, medical expenses, or other financial hardship, you may requalify for Chapter 7 bankruptcy.