What is a Means Test?
Qualifying for Chapter 7 Bankruptcy
If you are confronted with overwhelming debt, there are solutions for you. You may be considering filing for bankruptcy, or the many other
alternatives to bankruptcy. If you choose to file for Chapter 7 bankruptcy, you will need to pass a means test - which is a process of examining your income and expenses to determine whether or not you are eligible for Chapter 7 or if Chapter 13 bankruptcy would be more suitable for your specific situation. This process involves a formula to compare your income to expenses to find out if you are able to pay back your creditors on a payment plan.
If the means test evaluation shows that you have a certain amount of 'excess' or 'disposable' income, you may not be eligible for filing Chapter 7 bankruptcy - and a Chapter 13 may be more appropriate. It is advised to discuss the bankruptcy process with an experienced Michigan bankruptcy attorney to discover what your best options are. The means test can be very complicated. The first step is analyzing your income. You will need to collect financial records such as pay stubs and bank statements from the last 6 months. If you are self employed you will need more detailed paperwork.
If you are below the median income level for Michigan, you would "pass" a means test and can file Chapter 7. The means test also allows for certain reductions to your gross income such as payroll taxes, allowed budget credits set by government guidelines, secured debt on your home, a vehicle, and other necessary expenses which can affect your gross income. So, even if you are above the median level, you may still qualify for a Chapter 7 filing.
Talk to a Bankruptcy Lawyer in Michigan
At Hensel Law Office, PLLC, I will work with you one on one personally throughout every aspect of your bankruptcy case, and help you work out the details and collect what you need for your means test should you need to complete one. I began my firm with the belief that my clients should not have to deal with several different attorneys and paralegals with regards to their circumstances but rather have a compassionate, understanding ally to help them through this difficult time. By applying my knowledge and experience, I have been able to help many clients achieve a brighter financial future. I look forward to assisting you, but first you must take the initiative to call the firm today. My firm provides legal guidance to those living in Warren, Sterling Heights and many other areas within the state of Michigan.