Written by Attorney Eva Bacevice.
Updated August 26, 2020
The bankruptcy Means Test in Michigan is how you determine if you qualify to file a Chapter 7 case. The Means Test is a newer component of the bankruptcy process, which was added in 2005 when Congress revised the Bankruptcy Code. It is intended to address the concern that there were people filing Michigan bankruptcy cases even though they could actually afford to pay their debts. To address that concern, the Means Test was created to set some parameters around just who was allowed to file for a Chapter 7, and when allowing someone to do so would trigger a “presumption of abuse.” The Means Test operates in one of two ways. First, you can immediately qualify based on your income limits. If you earn less than the median household of the same size in Michigan, you pass the Chapter 7 Means Test. If you do not qualify by the threshold income amount, you can go through the full Means Test, which involves comparing your current monthly income (any and all money coming into the household averaged over the past 6 months) with your reasonable monthly expenses. If, after going through the full calculation, you find little or no disposable income remaining, you are also qualified to file your Michigan bankruptcy under Chapter 7 of the Bankruptcy Code.
Michigan Median Income Levels
Michigan Median Income Standards for Means Test for Cases Filed On or After May 1, 2021
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Discharge in Bankruptcy for Michigan
When you file for a Chapter 7 bankruptcy you are aiming to complete the case with a discharge. This is a court order allowing you to walk away from most (or all) of your debt and get a fresh start. In order to successfully get to your Michigan bankruptcy discharge, you need to make certain that you are completing all the necessary steps in your case. For a Michigan bankruptcy, these steps include completing both of your credit counseling courses, completing and filing all of your paperwork, and attending your Meeting of Creditors with your trustee. Once these steps have been completed, all you have to do is wait to receive the notice of discharge which should come approximately 60 days after your Meeting of Creditors has concluded.
Michigan Means Test Calculator
In order to determine if you qualify to file a Michigan bankruptcy under Chapter 7 of the Bankruptcy Code, it is vital to make certain that you are using an appropriate Michigan Means Test calculator. You will find many online Means Test calculators but they might not all be current with the correct information. This makes it key to partner with a trusted resource like Upsolve, who keeps the Michigan Means Test calculator current to the day, every day. If you exceed the income limits and you need to complete the extended bankruptcy Means Test in Michigan, you want to be certain that you are relying on the most current information possible as this calculation can have a huge impact on your bankruptcy options. Beyond keeping the Means Test calculator up to date, Upsolve can also help you through the entire bankruptcy process and help ensure that you complete every step and are able to get to that desired discharge.
What Happens If I Fail The Means Test for Michigan
Even if you do not initially pass the bankruptcy Means Test in Michigan, either by income threshold or the full Means Test calculation, take a moment to see if you missed anything, or if something may change in the near future that will allow you to qualify. First, make certain that you included all regular monthly expenses in your full Means Test. Second, - perhaps you or your partner are pregnant which will increase your family size and the income limits and allowed expense. If you are considering a separation or divorce, you might both individually qualify for a Chapter 7 case with your own households even though you do not qualify together. Maybe you are facing a possible layoff. If your income comes mainly from seasonal work, it is relevant when you are trying to file a Michigan bankruptcy under Chapter 7. In any of these scenarios, it can make sense to wait until the anticipated change happens and try to qualify again. For income that is mostly from seasonal work, your average monthly income will appear the highest just after the season ends, when if you wait a few months the average will be lower. For example, let’s say you have a job on Mackinaw Island that makes up the bulk of your income for the year, even though the work season is only during the summer. You may not pass the bankruptcy means test in Michigan in the fall but may pass in the spring. If and when you are ready to proceed with a Chapter 7 in Michigan, Upsolve can help walk you through the process step by step to help you obtain your discharge. If none of the above scenarios are likely to happen, then you should consider meeting with a bankruptcy lawyer to discuss a possible Chapter 13 case. Many bankruptcy lawyers in Michigan offer free consultations and their fees are built into the Chapter 13 plan so you do not need to come up with those fees out of pocket.