CHAPTER 7

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.

Leave a Reply

Your email address will not be published.