The means test is used for more than determining Chapter 7 eligibility; it is also used in Chapter 13 bankruptcy cases. Most debtors prefer to file Chapter 7 bankruptcy as it eliminates the need for repayment. However, when you have been deemed ineligible to file Chapter 7 due to the means test, Chapter 13 bankruptcy may be your only option.
When applying the means test to filing bankruptcy in Michigan under Chapter 13, the procedure is slightly different. Along with the other deductions, it permits you to include deductions from pension contributions, pension repayments, and administrative expenses.
The amount of income remaining after the means test creates a starting point used to estimate how much unsecured creditors should receive initially under the repayment plan. However, you could be required to pay a greater amount if the remaining income is more than the amount the means test estimated.
Whether it’s a Chapter 7 or Chapter 13 filing for bankruptcy in Michigan, you may need the assistance of a bankruptcy attorney. The means test estimates certain amounts that will be used in further determining your eligibility. However, understanding the means test and the implications of the results may be complicated.
Basically, the means test is a way for the U.S. Trustee to determine if your current income is still substantial enough to be able to repay some of your debts after your expenses are taken into consideration. In general, failing the means test tells the Trustee that you are not in such dire financial straits that you should be wiped clean of debt.
The means test may be interpreted differently across or even within the same jurisdiction because of disagreements on what should be considered as income or allowable expenses. Your Michigan bankruptcy attorney may be able to save you time by evaluating your situation when filing bankruptcy in Michigan and estimating your results for the means test.
A number of factors may affect the means test result, such as your household size, occupation, income, or the time when you are filing bankruptcy in Michigan. Your Michigan bankruptcy attorney may be familiar with the common means test interpretations in Michigan cases. If you are not sure whether you may be eligible for filing bankruptcy in Michigan, it would be in your best interest to contact a bankruptcy attorney.
Filing bankruptcy in Michigan involves multiple stages that require careful analysis and understanding. The circumstances in each case are different and your case may not have the same outcome as the bankruptcy case you read about in the papers or heard about from your business colleague. Therefore, it is recommended that you consult an attorney before acting.
If you’d like to file bankruptcy in Michigan, the qualified attorneys at Johnson & McLoyd, PLC can examine your case and suggest your best course of action. Call us today for a FREE consultation - (734) – 669 – 9080