Chapter 7 Eligibility Easier As Of April 1, 2015
[caption id="attachment_3003" align="aligncenter" width="300"] Image by Beyer courtesy of Wikimedia Commons and the German Federal Archives[/caption] The US Trustee's Office (the division of the Department of Justice that administers the bankruptcy process in the United States) has released its updated median income numbers for each state for Chapter 7 and Chapter 13 bankruptcy petitions filed on April 1, 2015 or after. These numbers are used in the "bankruptcy means test" to determine income-based eligibility for Chapter 7 bankruptcy and, in Chapter 13 bankruptcies, to determine whether a Chapter 13 payment plan can be just 36 months long or if a plan must be 60 months long (as well as whether there is a minimum amount that unsecured creditors must receive from the Chapter 13 payment plan). The new numbers contain some good news for Michigan residents considering filing for bankruptcy: median incomes per household size have risen by approximately $1,000.00 since November 1, 2014, the last time these numbers were updated. To be eligible for Chapter 7 bankruptcy, your household income, as determined by the bankruptcy means test, must be under the median income for a household of your size. This means that, going forward, at least until the next time the US Trustee updates these means test numbers, it will be slightly easier to file Chapter 7 bankruptcy---and slightly cheaper to file a Chapter 13 bankruptcy.
New Bankruptcy Means Test Numbers for Michigan
The new median incomes for each household size in Michigan as of April 1, 2015 are:
- Household of 1: $45,226.00
- Household of 2: $54,510.00
- Household of 3: $63,995.00
- Household of 4: $77,865.009
- Households Above 4: Add $8,100.00 for each additional household member above 4 to the "Household of 4" median number
A Warning Regarding the Bankruptcy Means Test: Do Not Try This At Home!
It is important to remember, however, that it takes a skilled bankruptcy attorney to fully calculate the means test, which allows for various deductions to be applied if your household income is slightly higher than those median-numbers that can still allow you to qualify for Chapter 7. There is much in the way of practical experience, knowledge of local US Trustee practices, knowledge of local and Supreme Court case-law on the subject, and general tactics that go into full means test calculation that a layperson sitting at home with a computer and calculator will never be able to fully realize and incorporate. Online "means test calculators" do not do anything like an adequate job of incorporating these considerations and should be avoiding. Knee-jerk assumptions that you do not qualify for Chapter 7 bankruptcy based on a quick comparison of your household income with these numbers and that, therefore, you should not bother to seek the advice of an experienced bankruptcy attorney could be a costly and dangerous mistake if you are having issues dealing with your debt and the types of people who make a living trying to collect it from you. Schedule a consultation with an experienced Michigan bankruptcy attorney to fully and accurately explore your options. If you are a Michigan resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced Michigan bankruptcy attorney, please contact us at (866) 674-2317 or click the button below to schedule a free, initial consultation.
If you enjoyed reading "New Means Test Numbers for April 1, 2015," please browse our other articles on our main Michigan Bankruptcy Blog.