Chapter 7 Bankruptcy
Most people I speak with want to file a Chapter 7 Bankruptcy which discharges debt without a payment plan. It’s a fairly fast and inexpensive way to shed debt and get a fresh start. In most cases, it takes about three or four months from filing to finish and a lot of this time is spent waiting for the discharge order to come in the mail.
Eligibility for consumer bankruptcy filers is initially determined by how much money is earned in the household. For a single filer (as of November 2016), if you are under $46,501 annually, you are eligible. For a house hold size of two, it is $56,651. Add a kid and its $67,342. If you have twins, the median income for a household size of four is $81,951. Add $8,400 for each additional person. To figure out your income, we will need your last six months of pay stubs and proof of all other income. If your income is less than the median income for your household size you can file a Chapter 7.
Chapter 7 Means Test
If your income for your household size is greater than your median income level, it does not automatically mean that you have to file a Chapter 13. Instead, you will do what is called the “means test.” This allows you to deduct certain expenses from your gross wages to get you under the median income. If you have enough deductions, you can file a Chapter 7. If not, then you will need to file a Chapter 13.
I would like to stress that not every bankruptcy lawyer knows how to do the means test properly. If you are over income and would like to file a Chapter 7, it is critical that your lawyer knows exactly how to deduct every allowable expense.
Any questions? Give us a call at 313-291-0240.
Chris McAvoy is a Michigan attorney who helps people with bankruptcy, divorce, and estate planning. To find out more or set up an appointment, click here for contact info. Our attorneys help people in Taylor, Allen Park, Southgate, Lincoln Park, Riverview, Taylor, Trenton, Flat Rock, Wyandotte, Brownstown, Belleville, Dearborn, Dearborn Heights, Westland, Garden City, Canton and the Downriver, Michigan area.
