One of the most common questions people ask me is: “Do I qualify for Bankruptcy?” When the credit industry helped re-write the bankruptcy laws in 2005, they certainly made if more difficult and expensive for people to file Chapter 7 Bankruptcy; however, everyone continues to qualify for one form of Bankruptcy or another. The most common forms of Bankruptcy are Chapter 7, also known as the “Fresh Start” and Chapter 13, which allows you to make payments over time.
Most consumer bankruptcies are either Chapter 7’s or Chapter 13’s. Fishermen or Family Farmers may file under Chapter 12, and persons with certain debt levels exceeding the Chapter 13 maximums of $336.900 in unsecured debt or $1,020,650 in secured debt, may have to file under Chapter 11. In any event, no matter what your situation, there is a form of Bankruptcy that can help you discharge, or at least manage, your debt.
Chapter 7 bankruptcy, is available for those with certain income levels, as well as persons whose expenses bring their disposable income within the levels allowed under the “Means Test”. (We will discuss the means test in a future blog entry) Without getting into too much detail, if your income is below the median Michigan income for your family size, you qualify for Chapter 7 relief. As of November 2009 the median income for a single filer is $43,611, a couple $52,620, a family of three $61,737 and a family of four $74,824. You can add $6,900 for each additional family member. You may still qualify for Chapter 7 if your income exceeds these amounts, or you may want to file Chapter 13 for reasons other than income, even if you qualify for Chapter 7. Every situation is different so find an attorney who offers free consultations to get an answer for your individual financial situation.
