Keeping Property When Filing Bankruptcy in Michigan
You wo n’t lose everything in bankruptcy. You ‘ll use your state bankruptcy exemption laws to protect your property. We list the significant exemptions below, but inaugural, understanding the following will help you maximize what you ‘ll keep in your event .
- Exempt and nonexempt property. You can keep property protected by an exemption or “exempt” property. When a bankruptcy exemption doesn’t cover the property, you’ll either lose it in Chapter 7 or have to pay for it in the Chapter 13 repayment plan.
- Choosing state or federal exemptions. You can choose whether you use the state exemption list or the list of federal bankruptcy exemptions, but you can’t mix and match exemptions from both sets. Filers who use state exemptions can also use the federal nonbankruptcy exemptions.
- Doubling exemptions. Spouses filing together can double some but not all exemption amounts if both own the property. Spouses cannot double the homestead exemption.
- Retirement accounts all filers can protect. You can keep your tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans and traditional and Roth IRAs to $1,512,350 per person (for cases filed between April 1, 2022, and March 31, 2025). (11 U.S.C. 522(b)(3)(C); (n).) Learn more about retirement accounts in bankruptcy.
Michigan’s Bankruptcy Exemption List
here are some commonly-used Michigan bankruptcy exemptions.
Reading: Filing for Bankruptcy in Michigan
Michigan Homestead Exemption
You ‘ll be able to protect up to $ 40,475 in fairness in your residency. If you are over 65 or disabled, the limit increases to $ 60,725. Spouses filing together can not double these amounts. ( Mich. Comp. Laws §§ 600.5451 ( 1 ) ( thousand ). )
The surviving spouse of the owner can claim the homestead exemption. Debtors who hold property in occupancy by entirety can protect equity against individual debts but not joint debts ( spill the beans to an lawyer about this security ). ( Mich. Comp. Laws §§ 600.5451 ( 1 ) ( n ), ( o ). )
Learn more about qualifying for the Michigan homestead exemption in bankruptcy .
Michigan Motor Vehicle Exemption
Filers can protect up to $ 3,725 of equity in a motor vehicle. ( Mich. Comp. Laws § 600.5451 ( 1 ) ( gigabyte ). ) Find out how the motive vehicle exemption works in a chapter 7 subject .
Michigan Pension and Retirement Account Exemptions
Most pension and retirement accounts are wholly protected. Most individual retirement accounts and annuities, american samoa well as ERISA-qualified pension, profit-sharing, and stock bonus plans, are fully protected except for amounts contributed within the 120 days before filing for bankruptcy. ( Mich. Comp. Laws §§ 600.5451 ( 1 ) ( joule ) ( thousand ). )
here are some specific protections :
- Firefighter and police officer benefits. (Mich. Comp. Laws §§ 38.559, 38.1683.)
- Legislative member retirement benefits. (Mich. Comp. Laws §§ 38.1057, 38.1683.)
- Public school employee retirement benefits. (Mich. Comp. Laws §§ 38.1346, 38.1683.)
- State police retirement benefits. (Mich. Comp. Laws §§ 38.1346, 38.1683.)
- State employees’ retirement benefits. (Mich. Comp. Laws § 38.1683.)
- Judges’ retirement benefits. (Mich. Comp. Laws §§ 38.2308, 38.1683.)
Michigan Personal Property Exemptions
- Burial grounds. (Mich. Comp. Laws § 128.112.)
- Milk or cream sales proceeds. (Mich. Comp. Laws § 600.4031.)
- Wages up to 60% of earned but unpaid wages for the head of household or $15 per week plus $2 per week for each dependent other than the spouse; others can protect up to 40% or $10 per week. (Mich. Comp. Laws § 600.5311.)
- Family pictures. (Mich. Comp. Laws § 600.5451(1)(a)(i).)
- Arms and accouterments required to be kept by law. (Mich. Comp. Laws § 600.5451(1)(a)(ii).)
- Clothing other than furs. (Mich. Comp. Laws § 600.5451(1)(a)(iii).)
- Family cemetery lot, tombs, and burial rights. (Mich. Comp. Laws § 600.5451(1)(a)(iv).)
- Professionally prescribed health aids. (Mich. Comp. Laws § 600.5451(1)(a)(v).)
- Six-month supply of provisions and fuel. (Mich. Comp. Laws § 600.5451(1)(b).)
- Household goods such as furniture, utensils, books, appliances, and jewelry valued at up to $4,050 total. ($625 per item limit) (Mich. Comp. Laws § 600.5451(1)(c).)
- Seat, pew, or slip to $700. (Mich. Comp. Laws § 600.5451(1)(d).)
- Farm animals, feed, and crops to $2,700. (Mich. Comp. Laws § 600.5451(1)(e).)
- Household pets to $700. (Mich. Comp. Laws § 600.5451(1)(f).)
- Computer and accessories to $700. (Mich. Comp. Laws § 600.5451(1)(h).)
- Tools, implements, materials, and other items necessary to carry on your profession, trade, occupation, or business to $2,700. (Mich. Comp. Laws § 600.5451(1)(i)).
Michigan Public Benefit Exemptions
- Crime victims’ compensation. (Mich. Comp. Laws § 18.362.)
- Veterans’ benefits. (Mich. Comp. Laws §§ 35.977, 35.1027.)
- Welfare benefits. (Mich. Comp. Laws § 400.63.)
- Worker’s compensation benefits. (Mich. Comp. Laws § 418.821.)
- Unemployment compensation. (Mich. Comp. Laws § 421.30.)
Michigan Insurance Exemptions
- Fraternal benefit society benefits. (Mich. Comp. Laws § 500.8181.)
- Insurance benefits fully protected regardless of the amount. (Mich. Comp. Laws § 500.2207.)
- Insurance benefits paid on behalf of an employer. (Mich. Comp. Laws § 500.2210.)
- Insurance benefits paid by any stock, mutual life, health, or casualty insurance. (Mich. Comp. Laws § 600.5451(1)(j).)
extra exemptions exist and amounts adjust sporadically. The Michigan exemption statutes can be found at the Michigan Legislature web site. Check for updates with the Michigan Department of Treasury in the Economic Reports department.
Preventing Bankruptcy Exemption Problems
Exempt your property carefully. The bankruptcy trustee —the court-appointed official assigned to manage your case—will review the exemptions. A regent who disagrees with your exemptions will probable try to resolve the issue colloquially. If abortive, the regent will file an objection with the bankruptcy court, and the judge will decide whether you can keep the property .
Example. Mason owns a rare, classic car deserving $ 15,000, but the state fomite exemption does n’t cover it wholly. Believing that the car qualifies as art—at least in his mind—Mason exempts it using his state ‘s outright artwork exemption. The trustee disagrees with Mason ‘s word picture and files an protest with the court. The judge will probably decide the vehicle does n’t qualify as art .
purposefully making inaccurate statements could be considered deceitful. Bankruptcy fraud is penal by up to $ 250,000, 20 years in prison, or both .
Qualifying for Bankruptcy in Michigan
If you ‘ve never filed for bankruptcy before, you ‘ll meet the initial prerequisite. differently, check whether enough time has passed to allow you to file again. The waiting period varies depending on the chapter previously filed and the chapter you plan to file. Learn more about multiple bankruptcy filings .
You ‘ll besides need to meet particular chapter qualifications .
You’ll qualify for Chapter 7 bankruptcy if your family ‘s arrant income is lower than the median income for the like size family in your state. Add all arrant income earned during the last six months and multiply it by two. Compare the figure to the income charts on the U.S. Trustee ‘s web site ( choose “ Means Testing Information ” ).
Want an easily way to do this on-line ? Use the Quick Median Income Test. If you find that you make besides much, you even might qualify after taking the second separate of the “ means test. ” If, after subtracting expenses, you do n’t have enough remaining to pay into a chapter 13 plan, you ‘ll qualify for chapter 7 .
Qualifying for Chapter 13 can be an expensive proposition because the extra benefits come at a hefty price, and many people ca n’t afford the monthly payment. To qualify, you ‘ll pay the larger of :
- your priority nondischargeable debt
- the value of nonexempt property, or
- your disposable income.
Find out more about calculating a chapter 13 bankruptcy payment .