What Income is Eligible to Qualify for Filing Bankruptcy in Michigan?

Are you experiencing financial hardship, but uncertain if you would qualify to file for bankruptcy relief based on your income?  We can help!  Below is some general information regarding the types of bankruptcy relief and how income is considered for filing.  To get a free evaluation of your circumstances, call our office at 866-261-8282for a free consultation.  We offer same day phone or in-office appointments. Here is a breakdown of how income is considered in the various types of consumer bankruptcy.

Chapter 13 Bankruptcy:

Chapter 13 is a court-authorized debt consolidation plan.  You need to have some source of income to qualify for the program, as it is a repayment plan.  If you are behind on secured debt such as a home or vehicle, Chapter 13 reorganization can help bring those obligations current.  We also ensure that your living expenses are covered within your monthly budget.  You are only required to pay back your unsecured debts based on what you can afford given your monthly income and expenses.  The unpaid balances of the unsecured debts are legally eliminated at the completion of the program. At the free consultation, we can evaluate your finances and explain how we would structure the Chapter 13 plan to best serve your finances. Sources of income could be:

• W2 employee income (i.e. hourly, salary, overtime, bonuses, commissions, etc.)  This includes:
  • Full-time hours
  • Part-time hours
  • Seasonal
  • Temporary work
  • 1099 income (i.e. contract work)
  • Unemployment income
  • Pension, retirement income or annuity
  • Insurance income (such as disability) or proceeds from a  lawsuit
  • Child support payments
  • Government benefits, such as:
    • Social Security income/SSI
    • Disability
    • Government pensions

Chapter 7 Bankruptcy:

Generally the less income the better when filing a Chapter 7 bankruptcy.  The purpose of the Chapter 7is to eliminate general unsecured debts, such as credit cards, medicals bills, personal loans, etc.  You must establish with the court that you are either:

• Below the median income based on your family composition and dependents, or;
• Able to pass the "Means Test."  This test is designed to determine if you have any disposable income to pay back your creditors (i.e. Chapter 13) versus eliminating the debt through a Chapter 7 discharge.  Even if your household is over the median income, you still may qualify for Chapter 7 if you pass the means test.  We will make this determination for you.

Household income is calculated based on total revenue for the family; even if only one spouse is filing.  The court reviews your income based on the income received over the six months prior to the filing.  This information is used to calculate the means test. In the State of Michigan, here are the Median Income figures for May 1, 2013 through November 14, 2013 (5/1/13 - 11/14/13) based on various household sizes:

Median Income:

Size:                      Annual:               Monthly:

1 Earner               $45,029                  $3,752

2 People              $52,621                    $4,385

3 People              $61,715                    $5,143

4 People              $73,864                    $6,155

5 People              $81,964                    $6,830

6 People              $90,064                    $7,505

7 People              $98,164                    $8,180

8 People              $106,264                  $8,855

Additional           $8,100                      $675

  To best understand your debt resolution options, call one of our licensed attorneys at 866-261-8282 for a free evaluation.  We specialize in helping families find a stable financial footing and lasting financial freedom through Chapter 13 debt consolidation, Chapter 7 debt elimination and non-bankruptcy debt settlement.  Don't continue to struggle with your finances, we are here to help.