If you are a “high earner” – meaning your household income exceeds the MEDIAN INCOME established by the US Census Bureau and relied on by the US Bankruptcy Court – you may have to file a CHAPTER 13 BANKRUPTCY.
The MEDIAN INCOMES* for Michigan households were just adjusted on May 1, 2012 and the average for North East Michigan is as follows:
1 person household $45,056
2 person household $51,660
3 person household $60,313
4 person household $72,454
* Add $7,500 for each individual in excess of 4. Also remember that household size is based on “head in beds” – not dependents like the IRS.
BUT – even if your household exceeds the MEDIAN INCOME we still may be able to AVOID FILING A CHAPTER 13 BANKRUPTCY if we can make the proper calculation in the MEANS TEST.
The MEANS TEST became a part of the BANKRUPTCY process with the reforms of 2005 (THE BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT).
Unless you are exempted from taking the MEANS TEST – most individual debtors filing for bankruptcy relief are required to complete either Official Bankruptcy Form 22A or 22C (Statement of Current Monthly Income and calculations). Bankruptcy Form 22A is the for CHAPTER 7 and Form 22C is the for CHAPTER 13. The calculation is complex and is used to determine whether you have the “means” or “money” to file a CHAPTER 13 BANKRUPTCY repayment plan.
We enter income and expense information and then make calculations using the information entered. Some information comes from your records and other information needed to complete the forms comes from the Census Bureau and the Internal Revenue Service (IRS).
We go the extra mile and try to “legally” and “ethically” get you to pass the means test. Most people prefer filing a CHAPTER 7 as opposed to a CHAPTER 13. A Chapter 7 proceeding takes approximately 4 months from start to finish – while a Chapter 13 proceeding (a repayment plan) takes anywhere from 36 Months (3 years) to 60 Months (5 years).
Call today and let’s crunch some numbers and determine what your options are. You can schedule an office consult or we can do a consult online through GO TO MEETING.
Our State of the Art Computer system allows us to serve all of the Counties and Cities in the North East Michigan including: Saginaw (Saginaw, Frankenmuth, Chesaning, St. Charles, Hemlock, Shields, Freeland, Carrollton ); Bay (Bay City, Essexville, Auburn, Kawkawlin, Linwood, Pinconning, Standish); Midland (Midland, Sanford, Edenville, Wixom Lake); Gratiot (Ithaca, Alma, St. Louis, Breckenridge); . Isabella (Mount Pleasant, Shepherd, Coleman); Gladwin (Gladwin, Beaverton, Rhodes); .Clare (Clare, Farwell, Harrison); Roscommon (Roscommon, Prudenville, Houghton Lake, Higgins Lake, St. Helen); Crawford (Grayling); Otsego (Gaylord); Cheboygan (Cheybogan); Presque Isle (Rogers City); Montmorency (Atlanta); Alpena (Alpena); Oscoda (Mio); Ogemaw (West Branch, Skidway Lake, Prescott); Alcona (Alcona, Harrisville); Iosco (Oscoda, Au Sable, East Tawas, Tawas, Whittemore, Alabaster); Arenac (Au Gres, Standish); Tuscola (Caro, Reese, Richville, Mayville, Millington, Akron, Fairgrove, Cass City); Huron (Bad Axe, Sebawing, Bay Port, Pigeon, Caseville, Pinnebog, Port Austin, Harbor Beach)
* The U.S. Census Bureau uses the following definitions of median and mean income:
| Median income is the amount which divides the income distribution into two equal groups, half having income above that amount, and half having income below that amount. Mean income (average) is the amount obtained by dividing the total aggregate income of a group by the number of units in that group. The means and medians for households and families are based on all households and families. Means and medians for people are based on people 15 years old and over with income. |