How Exemptions Work In Michigan
Michigan offers its residents a choice of exemptions between the federal system and state bankruptcy exemptions. For those with real estate Michigan exemptions might be an attractive option because of his generous homestead exemption. For those without real estate the federal exemptions might be a better bet because of its generous wildcard exemption and more higher limits for vehicles and personal property generally.
The main set of exemptions for Michigan are found in the Michigan Compiled Laws Annotated § 600.5451. Michigan is unusual in that it has a this separate set of exemptions under state law, specifically to be used in federal bankruptcy proceedings, while still maintaining another set of exemptions used in state collections generally.
Michigan exemption law is not as generous as some states with a homestead exemption of $46,125 and a $4,625 personal property, and $4,250 motor vehicle exemption.
If you have a lot of personal property and no real estate. The Federal exemptions, which are available in Michigan, might be a better bet because of the wildcard exemption. But if you own real estate, the Michigan homestead exemption is more generous than the federal homestead exemption.
Other Listings of Michigan Exemptions
Both Nolo, and UpSolve also review Michigan bankruptcy exemptions.
Since UpSolve is targeted for people without real estate, so it assumes you will use the federal exemptions in Michigan if you go to its here, but has a more nuanced discussion for those with real estate here.
Exemptions in Chapter 7 and Chapter 13
You can protect property covered by an exemption regardless of whether you file for Chapter 7 or 13. But each chapter treats nonexempt property—things not covered by an exemption—differently.
- In Chapter 7 bankruptcy, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors.
- In Chapter 13 bankruptcy, you keep everything you own. However your repayment plan must pay the value of the nonexempt property equity, or your disposable income, whichever is more.
The different approaches ensure that creditors receive the same amount regardless of the chapter filed.
Sources of Exemption Laws
Bankruptcy law is federal, but the laws regarding debts, collection, and property have traditionally resided in state law.
State Exemption Laws
Every state has its own set of exemptions laws.
These laws specify what kinds of property are "exempt from attachment" by a creditor in those states. These laws informally known as "exemption laws."
Where State Exemption Laws Are Found
State exemption laws are often are collected under one section of a statute or chapter of the state statutes, but miscellaneous exemption provisions commonly exist throughout the laws of a state — in various provisions about pensions, insurance, and government benefits, for example.
Federal "Non-Bankruptcy" Exemptions
In addition to your state exemptions, various kinds of federal benefits, retirement accounts and other things are exempt under federal law, separate and apart from the Federal Bankruptcy Code — Title 11 of the United States Code (11 U.S.C.).
In all but 19 states, you must use these laws to protect your property, like your car and your house.
Federal Bankruptcy Exemptions Under Section 522 —
an Alternative System Available in 19 States
In 19 states you have the option of using the Federal Bankruptcy Exemptions found in (11 U.S.C. Section 522(d)) Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, New Mexico, Texas, Vermont, Washington, Wisconsin.
Which exemptions system you should choose may depend on the particular facts of your situation, where you live, and what kinds of property you own.
We have categorized state and federal exemptions by category
Real Estate: Homestead
Doubling Exemptions for Joint Filers?
When a married couple files for bankruptcy jointly, federal law and the laws of many states allow them each to claim the full amount of an exemption.
(11 U.S.C. § 522.) Because a couple gets to claim twice the amount available to those who file alone, this practice is informally known as “doubling.”
Not all states allow doubling, however. (California, for example, does not.) And some states allow married couples to double only certain exemptions (for example, they might be able to double personal property exemptions but not the homestead exemption). In the charts that follow, we indicate exemptions that cannot be doubled (and states that don’t allow doubling at all). Unless you see a note stating that you cannot double, assume that you can.