Filing for Chapter 7 bankruptcy offers you a chance to shed some of your burdensome debts and get a fresh start financially. However, this option isn’t available to everyone in Michigan. You have to meet certain rules to qualify for Chapter 7 bankruptcy, and you may not be able to file again if you were given a bankruptcy discharge in the past few years.

Marrs & Terry can help if you have questions about filing for Chapter 7 bankruptcy in Michigan or whether you qualify. Our attorneys understand the stress and frustration that crushing debt can cause and want to help you find a way forward. We’ve compiled a guide to who qualifies for Chapter 7 bankruptcy in Michigan and some reasons why the courts might deny your petition. Read on below.

Qualifying for Chapter 7 Bankruptcy in Michigan

Only individuals, married couples, and sole proprietorships can file for Chapter 7 bankruptcy. Furthermore, Chapter 7 bankruptcy is only available to people with few financial resources. Wealthier individuals or families might have to file under Chapter 13 if they want to find a way to ease their debts.

To qualify for Chapter 7 bankruptcy in Michigan, you must pass a “means test.” Part one of the test is to determine whether your income is higher than the Michigan median income for your household size. If your income is lower than the median, you may file for Chapter 7. If your income is higher than the median, you must proceed to part two of the means test.

Part two of the means test requires that you deduct allowable monthly expenses you’re your current monthly income. The remaining money is your disposable income. If your disposable income is below a certain dollar amount, you may file for Chapter 7. If your income is too large to qualify you for a Chapter 7 bankruptcy, you might have to file for Chapter 13 or find another way to reduce your debts.

Reasons Why the Courts Might Deny Your Chapter 7 Bankruptcy Petition

Aside from not passing the means test, there are a few other reasons why the courts might deny your Chapter 7 bankruptcy petition, such as:

  • Previous Bankruptcy Discharge: If you received a Chapter 7 discharge within the past eight years or a Chapter 13 discharge within the past six years, the courts will most likely deny your petition.
  • Fraud or Misrepresentation: Any attempt to hide assets, provide false information, or commit fraud can lead the courts to deny your petition.
  • Non-Cooperation: Failing to provide required documents, attend meetings, or comply with court orders can result in a denied petition.
  • Recent Luxury Purchases: Making significant luxury purchases or cash advances shortly before filing might be seen as an abuse of the bankruptcy system.
  • Insufficient Documentation: Incomplete or inaccurate paperwork, including missing schedules or statements, can cause the courts to deny your petition.

How Our Bankruptcy Attorneys Can Help You Avoid a Denied Petition

At Marrs & Terry, we can guide you through the Chapter 7 bankruptcy process to help you avoid common pitfalls that could lead to a denied petition. Our experienced team can help you complete the required credit counseling course, accurately prepare and file all necessary documents, and fully disclose your financial situation. We’ll also assist you in passing the means test and advise against any actions the courts might see as fraudulent or abusive.

By working closely with us, you’ll receive the necessary support and knowledge to work through the bankruptcy process smoothly and successfully secure your fresh financial start. Call Marrs & Terry today at 734-663-0555 or complete our contact form for a consultation.