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Qualifying for Chapter 7 Bankruptcy

Who is eligible for Chapter 7 bankruptcy in Michigan?

As you may know, not all debtors are eligible to file under Chapter 7 of the U.S. Bankruptcy Code. Rather, this form of bankruptcy has been reserved for those who are in dire need of financial relief. Unlike Chapter 13 bankruptcy—which would allow you to restructure your debt and repay creditors over three to five years—Chapter 7 bankruptcy would allow you to liquidate non-exempt assets and repay creditors over a very short period of time.

At the end of your case, the court would then discharge any remaining debts, effectively freeing you of the legal obligation to repay them. It is for this reason that the federal government has taken measures to limit the number of people who would qualify. Now, you would be required to take and pass a "means test" in order to prove that your financial situation is serious enough to warrant an immediate discharge of debt.

What factors will the means test take into consideration?

The means test was designed to limit the number of people filing for Chapter 7 bankruptcy in the U.S. In order to do so, it takes several different factors into consideration when determining whether or not the debtor has enough monthly "disposable income" to repay creditors. First, the formula factored in the individual's current monthly income—which would be one's average income over the six months leading up to their bankruptcy filing.

If their income is above the state's median income, it will subsequently be determined how much money is being spent on necessary expenses each month (i.e. mortgage, car payments, and basic necessities) and subtracted from the total amount. If at this point their disposable income exceeds a certain amount, they would be barred from filing under Chapter 7. They could still choose to file under Chapter 13, however, as everyone is eligible to file under this chapter.

Wondering if you qualify for Chapter 7? Call our firm today!

If you are interested in filing a Chapter 7 bankruptcy, it is important for you to retain the help of a Michigan bankruptcy attorney early on in the process. Since you would be barred from filing under this chapter if you were to fail the means test, we encourage you to speak with our firm before taking the test. In doing so, you may have a much better chance of successfully filing under Chapter 7 and obtaining immediate relief from your overwhelming debt.

Call today at (888) 258-0651 to take advantage of a free consultation or schedule your first appointment – we are available on the weekends and in the evening, in addition to normal business hours.

Client Testimonials

  • He is respectful and down to earth with his approach to very complicated legal matters.

    “Hensel Law Office has helped me during a very difficult time in my life. Tom has done a wonderful job with my Chapter 13 case. He always kept in touch with me and explained everything in terms I could understand. I would highly recommend Mr. Hensel to anyone who is facing any bankruptcy filing. He is respectful and down to earth with his approach to very complicated legal matters.”

    Sandra

  • He always responded quickly and intelligently.

    “Mr. Hensel made a difficult and uncomfortable situation as easy as possible for me. He always responded quickly and intelligently to my questions and never made me feel as if I were bothering him. He explained the unknown aspects of bankruptcy, the court system, and my options in clearly understandable terms. I felt confident that he was handling my case in the best possible manner and in my best possible interests. I feel lucky to have found the Hensel Law Office and I never hesitate to refer others who could use assistance - because I know they will get superior service and help.”

    Kelly

  • We have and will continue to recommend you to others in need of a fresh start.

    “Dear Tom, my husband and I wanted to express our deepest thanks for the help you gave us during our embarrassing and stressful time. I was very impressed that you returned every phone call in a timely manner. You were able to explain exactly what was going to happen in words that "we" could understand. You answered every question we threw at you. The whole bankruptcy process from start to finish was complete in the time you told us it would take. Your professionalism yet friendliness made the whole experience for us almost enjoyable... almost! We have and will continue to recommend you to others in need of a fresh start.”

    Melissa

  • His knowledge and expertise made a very difficult time in our lives much easier.

    “From start to finish our experience with Mr. Hensel was great. He carefully and thoroughly explained the entire process to us and was always available for any questions or concerns we had. His knowledge and expertise made a very difficult time in our lives much easier. We are very thankful for his help in our situation.”

    Christine and John

  • You made a difficult experience so much easier.

    “Back a few years ago, you helped me through a bankruptcy. I still tell people how you made a difficult experience so much easier, with your clarity, support, and friendly approach to the law. I'm still very appreciative for all your help – it really helped to pull me out of a difficult place and put my life back on track.”

    Eric