Called the “Fresh Start” a Chapter 7 Bankruptcy eliminates most unsecured debt without the requirement to repay any of your creditors.
Chapter 7 is not for everyone, and not everyone qualifies for Chapter 7. The first step in determining whether you qualify for Chapter 7 is the “means test”. The “means test” looks at the median income by family size to determine if the peron(s) filing, qualify for a Chapter 7 Bankruptcy. The “means test” is regional so persons in Michigan have a different relevant income level, than persons in California or Mississippi.
The income numbers change every six months. Over the past 5 years the median income number in Michigan has fluctuated between $41,000 and $45,000 for single files and $70,000 to $74,000 for households of four. The current numbers are available at http://www.justice.gov/ust/eo/bacpcpa/meanstesting.htm
The “means test” income number is based on gross wages. If your gross income is less than the current means number for a household of your size, chances are you will quality for a Chapter 7 Bankruptcy. If your gross income exceeds the amount on the means test, you may still qualify for a Chapter 7 Bankruptcy. Factors that can influence your eligibility include but are not limited to: Car Payments, Alimony or Child Support Payments, Health Insurance, Taxes, Child care expenses, or verifiable above average household expenses, such as motor vehicle expenses related to long commutes for work.