Here is some bad news for some future Chapter 7 filers in Michigan. The Census Bureau’s Median Family Income Data accessible through the “Means Testing Information” page has been updated. The U.S. Trustee Program will apply the updated data to all cases filed on or after November 1, 2011. Overall, it makes it a little easier for the single wage earner to file a Chapter 7 but a little bit harder for a household size of two or more.
Updated Median Income Numbers
The new numbers in Michigan:
- 1 Earner: $43,677
- 2 People: $50,079
- 3 People: $58,467
- 4 People: $70,237
- Add $7,500 for each person in the household over four.
IRS Housing and Utility Standards
If you are over the median household income, you have to “pass” the means test to show that you are not abusing the system. Basically, if you make enough money, you are expected to pay something back to the creditors, even if it is less than the full amount. The means test has standard numbers developed by the IRS that determine the food, clothing, housing, transportation, and utilities. A quick review will show no relationship to reality but what can you do? Rules are rules. The IRS’s Local Standards for Housing and Utilities accessible through this page have been updated. The revised standards will apply to cases filed on or after November 1, 2011. I haven’t reviewed the impact overall as these are adjusted county by county and I am in Wayne County and service the Downriver and Taylor, Michigan areas.
Increased Filing Fees
To top it off, the filing fees in bankruptcy also went up nationally. Effective November 1, 2011, the filing fee for a Chapter 7 will increase from $299 to $306. A Chapter 13 will increase from $274 to $281. While this is only a $7.00 increase, it adds up with all the other costs and expenses which makes it more difficult for the people that need the most help to afford it.
The bottom line is if you want to file a Chapter 7 and your family size is two or more, better hurry up and file.
To find out more about bankruptcy and whether it is a smart, financial tool for you to reorganize your finances, please read my free ebook, The Bankruptcy Book: The Truth About Ending Your Bill Problems And Getting Back The Good Credit You Deserve.