To file Chapter 7 bankruptcy in Michigan, your household income generally has to fall at or below the state median for your household size, and if it doesn’t, you can still qualify by passing a second calculation that factors in your expenses and debts. For cases filed on or after April 1, 2026, the Chapter 7 bankruptcy income limits in Michigan start at $67,352 for a single earner and rise to $123,010 for a household of four. Earning above those figures does not automatically disqualify you.
Michigan Median Income Figures for 2026
The U.S. Trustee Program publishes median family income figures for every state using Census Bureau data, and the court applies whichever set was in effect on the exact date your petition was filed. For Michigan cases filed on or after April 1, 2026, the annual thresholds are:
- One earner: $67,352
- Household of two: $83,432
- Household of three: $103,449
- Household of four: $123,010
- Each additional person beyond four: add $11,100
If your annualized income lands at or below the figure for your household size, you’ve passed the first part of the means test and don’t need to go further.1U.S. Trustee Program/Dept. of Justice. Census Bureau Median Family Income By Family Size These numbers change regularly, so confirm the current figures on the Department of Justice’s means testing page before you file.2United States Department of Justice. Means Testing
How Your Income Is Actually Measured
The number compared against the median is not what you earn today. It’s called “current monthly income,” and it’s the average of all gross income you received during the six full calendar months before your filing date, multiplied by twelve.3United States Courts. Official Form 122A-1 Chapter 7 Statement of Your Current Monthly Income
Nearly every dollar that came in during that window counts: wages, salary, tips, bonuses, commissions, business revenue, interest, dividends, and rental income. Regular contributions from a non-filing spouse or partner toward household expenses count too. The main exception is Social Security benefits, which are excluded entirely.4Office of the Law Revision Counsel. 11 USC 101 – Definitions That exclusion often helps retirees and people receiving disability benefits qualify even when their monthly cash flow looks substantial.
The six-month lookback cuts both ways. If a well-paid job ended last month but you held it for the four months before that, the average can still push you over the median. If your income recently jumped, waiting to file can hurt. Timing the petition around that six-month window is one of the more consequential choices you’ll make.
When the Income Test Does Not Apply at All
Three categories of filers skip the means test entirely, no matter what they earn.
Debts That Are Mostly Business
The means test applies only when your debts are primarily consumer debts. If more than half of your total debt came from running a business, the court can’t use the means test to block your Chapter 7 case.5United States Courts. Chapter 7 – Bankruptcy Basics This matters for self-employed Michigan residents and small business owners whose income may look high while they carry heavy commercial obligations.
Disabled Veterans
If you’re a disabled veteran and your debt was incurred primarily while you were on active duty or performing a homeland defense activity, no form of means testing applies. The VA disability rating percentage doesn’t matter; any service-connected disability qualifies. You’ll need documentation of both the disability and the fact that the debt arose during the qualifying service period.6Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
Reservists and National Guard Members
National Guard members and reservists called to active duty after September 11, 2001 for at least 90 days get a 540-day exemption after their service ends. During that window, the means test does not apply.6Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
If Your Income Is Above the Michigan Median
Earning above the median moves you to the second part of the means test on Official Form 122A-2. Most above-median filers still qualify here. The form subtracts a mix of standardized allowances and actual expenses from your income to see whether you truly have money left over to repay creditors.
IRS National and Local Standards
The IRS publishes National Standards that set fixed allowances for food, clothing, housekeeping supplies, and personal care, and you get those amounts regardless of what you actually spend.7Internal Revenue Service. National Standards Food Clothing and Other Items Separate national allowances cover out-of-pocket healthcare costs, with higher amounts for filers age 65 and older; if your actual healthcare spending is higher, you can deduct the difference.8Internal Revenue Service. National Standards Out-of-Pocket Health Care
Local Standards cover housing, utilities, and transportation, and they vary by county within Michigan. A filer in Wayne County may receive a different housing allowance than someone in a rural county. Transportation deductions include both vehicle operating costs and ownership costs for car loans or leases.
Actual Expenses and Secured Debt Payments
You can also deduct certain actual expenses on top of the standard amounts: mandatory payroll deductions like taxes and involuntary retirement contributions, term life insurance, childcare, and educational expenses for children with special needs. Payments on secured debts, such as your mortgage and car loan, are deducted based on the total amount contractually due over the 60 months after filing, divided by 60.9United States Courts. Official Form 122A-2 Chapter 7 Means Test Calculation
The result is your monthly “disposable income.” Filers with large mortgages, car payments, or high local living costs often see that number fall to zero or close to it even though their gross income exceeded the median. Every deduction has to be documented with pay stubs, tax returns, or billing statements, and the U.S. Trustee can audit the figures and throw out unsupported numbers.
When the Court Presumes Abuse
If your monthly disposable income multiplied by 60 crosses a set threshold, the court presumes your Chapter 7 filing is abusive. The thresholds, adjusted effective April 1, 2025, are:
- Automatic presumption: projected five-year disposable income of $17,150 or more.
- Conditional presumption: projected five-year disposable income of at least $10,275 if that amount would cover at least 25% of your nonpriority unsecured debts.
The lower threshold controls.6Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13 In practical terms, disposable income of roughly $286 or more per month tends to trigger a presumption.10Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
When the presumption applies, the U.S. Trustee notifies the court that the case appears abusive. You can rebut it by showing “special circumstances,” such as a serious medical condition, an impending layoff, or a call to active military duty. These claims must be documented specifically; general statements of hardship won’t do. If you can’t overcome the presumption, your case will be dismissed, or you can convert it to a Chapter 13 repayment plan that stretches creditor payments over three to five years.
Even when the math doesn’t trigger a presumption, the court keeps authority to dismiss a Chapter 7 case if granting relief would still be an abuse under a broader look at your finances.6Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13 Aggressive deductions or strategic timing can still backfire.