What is the Bankruptcy Means Test in Michigan?

Struggling with overwhelming debt can be stressful, and many wonder whether they qualify for Chapter 7 bankruptcy. What is the bankruptcy means test in Michigan?

The bankruptcy means test in Michigan determines whether an individual’s income and expenses qualify them for Chapter 7 bankruptcy. If your income is below the state median, you automatically qualify; if it exceeds the threshold, additional calculations determine eligibility.

With decades of experience handling bankruptcy cases, we have helped countless Michigan residents determine their eligibility and find the best path toward financial relief. In this article, I’ll break down how the means test works, what factors influence eligibility, and what to do if you don’t qualify.

How Does the Bankruptcy Means Test Work in Michigan?

The means test evaluates a debtor’s income and expenses to determine whether they can repay creditors under Chapter 13 or qualify for Chapter 7 liquidation.

Steps in the Bankruptcy Means Test:

1. Compare Income to Michigan’s Median Income: If your household income is below the state median for your family size, you pass automatically.
2. Calculate Allowable Expenses: If your income exceeds the median, necessary expenses are deducted to determine disposable income.
3. Determine Eligibility: If disposable income is too high, you may need to file for Chapter 13 instead of Chapter 7.

What Are Michigan’s Median Income Limits for Bankruptcy?

What income qualifies for Chapter 7 bankruptcy in Michigan? As of 2025, the median income levels for Michigan bankruptcy filings depend on household size.

Michigan Median Income Levels (as of 2025):

If your income is below these limits, you automatically qualify for Chapter 7. If your income is higher, further calculations are required.

What Expenses Are Allowed in the Michigan Means Test?

Certain necessary living expenses are deducted when evaluating eligibility.

Allowable Expenses Include:

• Housing & Utilities – Rent, mortgage payments, and essential utilities.
• Food & Household Needs – Grocery costs and essential household expenses.
• Medical & Insurance Costs – Health insurance, prescriptions, and medical care.
• Transportation Costs – Car payments, fuel, and maintenance.
• Childcare & Support Obligations – Daycare, child support, and spousal support.

After deducting these expenses, the remaining disposable income determines whether you qualify for Chapter 7.

How Often Does the Means Test Change in Michigan?

Does the means test change over time? Yes, the means test income limits are updated twice a year, typically in April and November, to reflect economic changes and cost-of-living adjustments.

Why Do Means Test Income Limits Change?

• Inflation Adjustments: Rising costs of living affect eligibility thresholds.
• Economic Conditions: Michigan’s median income levels fluctuate based on state and national economic factors.
• Bankruptcy Filing Trends: The U.S. Trustee Program periodically adjusts income limits to maintain fairness in bankruptcy qualifications.

How Can This Affect Your Bankruptcy Case?

• If your income is near the threshold, waiting for an update may improve eligibility.
• Reviewing current income limits before filing ensures accurate qualification assessments.
• Consulting a bankruptcy attorney can help determine the best timing for filing.

What Documentation Do You Need for the Means Test?

What paperwork is required for the means test? To complete the means test, you must provide detailed financial documentation, including proof of income, expenses, and debts.

Essential Documents for the Bankruptcy Means Test:

✔ Pay Stubs (Last 6 Months): Verifies income for means test calculations.

✔ Tax Returns (Last 2 Years): Confirms reported income and deductions.

✔ Bank Statements: Provides a record of income deposits and monthly expenses.

✔ Mortgage/Rent Payment Records: Establishes housing expense deductions.

✔ Utility Bills: Documents essential living expenses.

✔ Medical Bills & Insurance Statements: Supports allowable healthcare deductions.

✔ Child Support & Alimony Payments: Verifies court-ordered financial obligations.

✔ Vehicle Loan Statements: Confirms transportation expenses.

✔ Credit Card & Debt Statements: Identifies total outstanding unsecured debts.

Providing complete and accurate documentation is crucial for passing the means test and avoiding unnecessary delays.

Can the Means Test Be Challenged or Overturned?

What if you fail the means test but believe you should qualify for Chapter 7? In some cases, you may be able to challenge the means test results through legal arguments or by demonstrating financial hardship.

Ways to Challenge the Means Test:

• Special Circumstances Petition: If unique financial circumstances exist (e.g., sudden job loss, disability, or unexpected medical expenses), a bankruptcy attorney can argue for Chapter 7 eligibility.
• Recalculate Income: If income calculations include one-time payments (such as bonuses or settlements), adjustments may allow qualification.
• Expense Reevaluation: Some necessary expenses may have been omitted or underreported, impacting disposable income calculations.
• Bankruptcy Court Review: A judge may override the means test in extreme hardship cases.

If you believe the means test unfairly disqualifies you, working with a knowledgeable bankruptcy attorney can help you explore legal options and alternative filing strategies.

If your income and disposable income exceed the limits for Chapter 7, you may have other options.

Alternatives to Chapter 7 Bankruptcy:

1. File for Chapter 13: Allows debt repayment over 3–5 years instead of liquidation.
2. Adjust Expenses: Reducing discretionary spending may help pass the means test.
3. Seek Legal Guidance: A bankruptcy attorney can explore exemptions or other legal strategies to qualify for Chapter 7.

Need Help with the Bankruptcy Means Test? Contact Kostopoulos Bankruptcy Law

Understanding the Michigan bankruptcy means test can be overwhelming, but you don’t have to face it alone. Our skilled bankruptcy attorneys are prepared to evaluate your financial situation, maximize your exemptions, and develop a tailored strategy to help you achieve lasting debt relief. Whether you’re seeking Chapter 7 eligibility or exploring alternative solutions, we are committed to guiding you every step of the way toward financial freedom.

Call Kostopoulos Bankruptcy Law at 877-969-7482 for a free consultation today.

Resources:

For more information on the means test and bankruptcy laws in Michigan, visit:

• U.S. Bankruptcy Court – Eastern District of Michigan
• Michigan Legal Help – Bankruptcy Guide
• Consumer Financial Protection Bureau – Bankruptcy Overview
• U.S. Department of Justice – Means Testing Information

Further Reading:

• How Much Does It Cost to File Bankruptcy in Michigan?
• Do You Lose Your Home if You File Bankruptcy in Michigan?
• How Long Does it Take to File Bankruptcy in Michigan?
• What Are Bankruptcy Exemptions in the State of Michigan?