Michigan Bankruptcy Laws
Federal and state laws protect the process of going through bankruptcy. These laws vary according to state and can be rather complicated. Prior to making a decision about bankruptcy, be certain you know all the facts about how the laws in your state will apply to you. Talk to a local bankruptcy attorney to get answers. If you fill out the free form below, you can get a free case evaluation with an attorney in your area.
Michigan bankruptcy laws are designed to protect those deep in debt from litigation, while working to pay back creditors as much as possible.
Michigan Bankruptcy Exemptions
Under Michigan’s bankruptcy protection, debtors must choose between one of two exemption schemes. The federal plan protects the following:
- Up to $20,200 for your home
- Wrongful death, crime victims’ compensation, or public benefits or compensation
- ERISA qualified benefits and retirement benefits
- Life insurance payments you receive from someone you depended on, like a parent
- Up to $20,200 for personal injury compensation
- Up to $10,775 in a loan value life insurance policy
- Alimony or child support
- Up to $10,775 for household goods, $550 per item
- Life insurance contract that has not matured
- Up to $3,225 for a vehicle
- Up to $1,350 for jewelry
- Health aids
- Lost earnings payments
- Up to $10,125 of the value of unused homestead exemption, applied toward other property
- Up to $20,200 for tools of the trade
- Up to $1,075 for any property as a wild card
Under the state plan, debtors may keep:
- Up to $34,450 in equity in your home
- Clothing and family pictures
- Up to six months worth of food and fuel
- Church pew or seat and burial plot
- Up to $2,300 for farm animals, crops, and feed
- Up to $3,450 in household goods, utensils, books, furniture, and appliances
- Private retirement benefits
- ERISA qualified pensions
- Public employee’s pensions
- Mutual life, health and disability benefits
- Benefits from fraternal benefit society
- Annuity or endowment proceeds if clause in the policy prohibits use to pay creditors
- Any arms or military equipment required by law
- Up to $2,300 for farm equipment and tools of the trade
- Alimony or other support payments
- Business partnership property
- Public benefits or compensations
- 60 percent of earned but unpaid wages for head of household with a family, 40 percent with no family involved
Michigan Chapter 7 Bankruptcy Law
Under Chapter 7 bankruptcy, debtors must sell any non exempt assets to pay down debts. Any remaining debt is eliminated. Some debts, like child support payments or student loans, are still the debtor’s responsibility. This form of bankruptcy requires the debtor to pass the means test.
Michigan Chapter 13 Bankruptcy Law
Those who cannot file Chapter 7 must file Chapter 13. Under Chapter 13 bankruptcy, the trustee creates a repayment plan that the debtor must follow while benefiting from court protection.
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