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Michigan Means Test

In 2005 the Bankruptcy laws changed and now use what is called the means test to determine if you can file a Chapter 7 Bankruptcy

http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm.

Under the old way of doing things you,the debtor, would list your income and minus your expenses and if you had less then $200 left over you could file for a Chapter 7 Bankruptcy. That old standard still pretty much applies. But to eliminate Bankruptcy abuse the Code added what is called the Means Test.

http://en.wikipedia.org/wiki/Means_test

There is a lot on the Internet about the means test and it can get complicated. But to make it simple. If you are under the median income for your household size for the county you live in you are not required to do a means test. The simple numbers are, this is based on Oakland County Michigan, a single person can make about $42,500.00 a year, based on a 6 month average and not have to do a means test. A family of 2 can make up to $50,079 and not have to do a means test. For each family member you add the median goes up about $7,500.00 per person per year.

If you are over the median income it doesn’t mean that you can’t file a Chapter 7 it just means you have to file a means test to show that you need to file a Chapter 7. 11 U.S.C. 707(b) is the law that governs this.

http://www.law.cornell.edu/uscode/usc_sec_11_00000707—-000-.html

Basically, you take your household gross and back out your taxes, your secured debt repayment, and your allowable living expenses and it gives you a number that you multiply by 60 and it will determine if you qualify for a Chapter 7. I have provided links on this page for those that want to read how the law works. There is plenty on the Internet about it. I would rather have you come to my office and set down and discuss your personal situation and run the numbers while you are in my office in person.

But if you can’t pass the means test you can still file for bankruptcy. You will have to file a Chapter 13 and pay a portion of your debt back. That is where the term means test comes from. It means you have the “means” to pay back a portion of your debt. Often times it is a small amount. If you have a lot of creditors chasing you down and you need protection it may still be a better option then getting sued and garnished. If you call me today at 810-632-9160 to set up a time to set down and talk about your means test.

But honestly the best way is come in and sat down and talk to me personally and we will just run the numbers. If you are looking for a bankruptcy attorney in Michigan then call me I would be glad to discuss the means test.