Every year, numerous Michigan residents find themselves struggling to manage their finances. When debt gets out of control it is easy to feel defeated and hopeless. Fortunately, achieving debt relief may be possible by utilizing bankruptcy law. How does one know what type of bankruptcy to file, though?
As has been mentioned before in this column, there are two types of personal bankruptcy: Chapter 13 and Chapter 7. Chapter 13 is meant for those individuals who have sufficient enough disposable income to make payments to creditors, but they need help achieving a more affordable payment schedule. Chapter 7 is meant for those individuals who lack the funds to make payments and are looking for debt discharge.
In order to figure out what type of bankruptcy one qualifies for, it is necessary to take something called a means test. All the means test does is compare a person's income to the state median income. So, to take this test, one has to be prepared with a list of income from all available sources, including:
- Bonuses and tips
- Unemployment pay
- Retirement payouts
- Disability pay
- Alimony and child support
Some income may be excluded from the calculation. Select individuals may be able to skip the means test and file for Chapter 7 regardless of their income level. One's attorney can provide more information on both of these topics.
Bankruptcy law can be challenging to understand. Figuring out which type of bankruptcy one may file is made simpler with the means test. Michigan residents can turn to an experienced attorney to gain access to a means test and seek further assistance with their debt relief needs.