Means Test in Michigan

The means test is a tool the bankruptcy court uses to help decide whether you qualify for a Chapter 7 bankruptcy.  The means test is used to weed out high income individuals from filing Chapter 7 bankruptcy by determining if there is disposable income left over at the end of the month.  As bankruptcy lawyers in Michigan, we’ve ran this test thousands of times. If you don’t pass the means test, don’t worry, you’re still eligible to file for Chapter 13 bankruptcy.

How does the Means Test work?

The means test takes the average of the previous six full months of household income and subtracts specific monthly expenses to arrive at your monthly disposable income.  If the average of the previous six full months of household income is less than Michigan’s median income for a household of your size in your state, you will qualify for a Chapter 7 bankruptcy.

What if my Household Income is Over Median?

Even if your household income is over median, you may still be able to pass the means test, but the test becomes much more complex.   Being over median means we will need to take other expenses such as taxes, involuntary deductions, insurance, car payments, house payments, child care into account.  Although you can use the actual expense for certain things, some of the expenses used will be national and local standards for a household of your size.

If you still have disposable monthly income left after deducting all of your expenses, then Chapter 13 bankruptcy may be your best options.

The means test can become very confusing. It’s important to speak with an experienced bankruptcy attorney. If anyone can get you past the means test, we can!  Call our office today at 248.237.7979 to make sure your debt is eliminated in the most cost-effective, efficient way possible.

United States Department of Justice