Michigan residents with debt may look into methods of easing the debt. For many, bankruptcy is a viable option. But did you know that each type of bankruptcy has its own set of requirements? Not just anyone can file for any type of bankruptcy.
Today we will look at Chapter 7 bankruptcy. In particular, we will examine the restrictions on filing for it. We will see who qualifies and what makes them qualified.
The means test
We will examine the circumstances in which a person is not eligible for Chapter 7 bankruptcy. First is if the income of the debtor is too high. To file for Chapter 7 bankruptcy, you must take the “means test”. This requires you to compare your monthly income to the state’s median income. Monthly income includes:
- Bonuses, overtime, wages and salary
- Rents and real property income
- Gross business income
- Royalties and interests
- Workers’ compensation or unemployment
- Disability insurance
If your income is equal or below the state’s median income, then you qualify.
What can disqualify you from Chapter 7?
Other disqualifications have to do with your financial past. For example, did you discharge a debt via bankruptcy in the last 6 to 8 years? If so, you cannot file again. Did you file for a previous bankruptcy case within 180 days that the courts dismissed? You cannot file again.
Next, you must meet credit counseling requirements. This includes participating in credit counseling. You also are not eligible if you can pay back any of your debt.
Are you interested in Chapter 7 bankruptcy? Do you want to learn more about it? Do you want to see how Chapter 7 bankruptcy works for individuals? If so, take a look at our linked web page. You can learn more about it there.