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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 amount 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 amount 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 was factor 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 filling 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

  • Mr. Hensel walked me through every step.

    “I would highly recommend the Hensel Law Office!! Mr. Hensel walked me through every step, got my garnishments stopped very quickly (even got garnished wages returned to me!) and told me what to expect along the way. He answered all of my questions in a very timely manner- no matter what time I sent an email or gave him a phone call. Also, I felt his price was very reasonable compared to some of the other places that I called. Mr. Hensel answered plenty of questions that I had before I even became a client.”

    Carl

  • Sincerest thanks for all of your help in affording me what I consider a real "fresh start."

    “I wanted to give you my sincerest thanks for all of your help in affording me what I consider a real "fresh start". My divorce was unfortunate but definitely a needed change for the better. However, the financial side of things still seemed to keep that past linked, which makes this an enormous weight lifted. I just can't believe the impact it's made on my outlook with...everything.I will be sure to keep your business cards handy to distribute along with highly favorable words of recommendation should the needs arise.Thank you again for your time and professional guidance.”

    Michelle

  • 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

  • Utmost dedication and professionalism.

    “I chose to work with Tom Hensel after meeting with several big name firms in the area. Tom handled my unique situation with the utmost dedication and professionalism. The personal service I received from him made all the difference in my case. My only regret is that I didn't call him first.”

    Craig

  • 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