Understanding the Michigan Bankruptcy Means Test for Chapter 7 Bankruptcy
The Michigan Bankruptcy Means Test determines eligibility for Chapter 7 bankruptcy by assessing income and expenses. Below is a simplified breakdown of its key aspects.
What does the Means Test mean?
Purpose of the Means Test
Ensures Chapter 7 bankruptcy is reserved for individuals who genuinely cannot repay debts.
Prevents abuse of the bankruptcy system by filtering out those with sufficient disposable income.
Step 1: Income Evaluation
Compares your average monthly income over the past six months to Michigan’s median income for your household size.
If your income is below the median, you automatically qualify for Chapter 7.
If your income is above the median, further calculations assess disposable income.
Step 2: Expense Calculation
Certain expenses are deducted from income, including:
Housing and utility costs
Food and clothing expenses
Medical and health-related costs
Childcare and education expenses
Secured debt payments (e.g., mortgage, car loan)
If disposable income after deductions is low, you may still qualify for Chapter 7.
Means Test Exemptions
- Disabled veterans with debts incurred during active duty or homeland defense activities.
- Individuals whose debts are primarily business-related rather than consumer debts.
Importance of Legal Guidance
Accurate Filing: Attorneys ensure proper documentation and compliance with Michigan bankruptcy laws.
Exemption Maximization: Legal professionals help protect assets under Michigan’s bankruptcy exemptions.
Court Representation: Lawyers advocate for clients during hearings and creditor meetings.
Michigan Compiled Laws (MCL) Links
For official Michigan bankruptcy statutes, visit the
Understanding the Michigan Bankruptcy Means Test is crucial for determining eligibility for Chapter 7 bankruptcy. Consulting a qualified bankruptcy attorney ensures a smoother process and better protection of assets. If you’re considering bankruptcy, legal guidance can help you make informed choices.