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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

  • Tom was the most professional.

    “I researched 3 attorneys before signing with the Hensel Law Office for my bankruptcy proceedings. Tom was the most professional and he explained all of my questions without trying to make a quick buck on me. I would recommend Hensel Law Office to my friends or family going through a similar difficult situation.”

    Jerry

  • We couldn't have gotten through this difficult process without Tom.

    “We couldn't have gotten through this difficult process without Tom. We evaluated a number of bankruptcy attorneys and found Tom to be the most knowledgeable and compassionate. He takes the time to explain all aspects of the process and answers your questions thoroughly and promptly both in person and via email. He knows the law and ensures that you receive the best treatment possible depending on your particular situation.”

    T & J

  • Tom Hensel is definitely the right attorney to call!

    “I was referred to Tom Hensel by a friend. My first impression was not only was Tom professional but he's so kind and caring too. He helped my husband and I through an embarrassing, scary situation and definitely made it more positive one. He guided us through our options and helped us make the right decision for us which ended up being a chapter 7 bankruptcy. Tom was so knowledgeable and helped us throughout the whole process. He never once made us feel uncomfortable or dumb when we had questions. He was also very easy to get a hold of when questions would come up and would always return our calls and emails promptly. I strongly recommend Tom to anyone going through this kind of financial nightmare. Do yourselves a favor and call him right away. He will help you get on the right path again. Our only mistake was waiting so long to call him!! When we in court waiting our turn all the other attorneys referred to their clients as "The debtors" Tom on the other hand acknowledged us by our names. Little things mean a lot and that left a lasting impression with us. Tom Thank You again for all your help!!”

    Stacy S.

  • Professional, competent, empathetic attorney.

    “My husband and I were forced into a position to file for Chapter 7 bankruptcy. We were devastated and mortified that we had to choose that route, but Tom eased our stress about the filing and court hearing process, as he thoroughly explained what Chapter 7 entails, as well as exactly what to expect during and after the filing process; he was accurate on each point that he advised us on. Tom also kept in frequent contact with us and responded quickly to any questions or concerns that we had while we worked with him. Tom's expertise and tact was invaluable for us, and we will absolutely recommend him to any of our friends and relatives that may find themselves in similar positions to ours. Thank you, Tom, for your dedicated help during this process.”

    EJO

  • 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