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Michigan Bankruptcy Exemptions



Michigan Bankrupcty Exemptions Summary

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Homestead

Real property including condo to $40,475, $60,725 if elderly or disabled; property cannot exceed 1 lot in town, village, city, or 40 acres elsewhere; spouse or children of deceased owner may claim homestead exemption. Spouses or unmarried co-owners may not double.

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Personal Property

Appliances, utensils, books, furniture, & household goods, to $625 each, to $4,050 total
Building & loan association shares to $1,175 par value, in lieu of homestead
Clothing; family pictures
1 computer & accessories to $700
Crops, farm animals, and feed for the farm animals to $2,700
Food & fuel to last family for 6 months
Church pew, slip, seat for entire family to $700
Household pets to $700
Professionally prescribed health aids
Tools, implements, materials, stock, apparatus, or other things needed to carry on occupation to $2,700 total

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Michigan Bankruptcy Exemptions

Michigan Offers a Choice of Federal or State Exemptions

Michigan law allows you to use the exemptions found in the U.S. bankruptcy code (11 U.S.C. § 522(d)) or the exemptions provided under Michigan law. However, you cannot mix and match exemptions from the federal bankruptcy code and state law. You must choose one system or the other.

However, if you use the state law exemptions, there are a few U.S. 'non-bankruptcy' exemptions (that is, exemptions that exist outside of federal bankruptcy code) that you can use in addition to your state law exemptions. The four most significant non-bankruptcy exemptions are for:

  • Wages (a general cap on what percentage of your wages can be garnished)
  • Social Security benefits
  • Civil Service benefits, and
  • Veterans Benefits

Other non-bankruptcy exemptions mostly deal with various benefits to government and military personnel, with a few odd laws regarding specially regulated labor markets such as railroad workers, merchant sailors, and longshoremen.

NOTE: Federal Exemption amounts listed below reflect the April 1, 2019 adjustment for inflation every three years, and therefore do not match the figures shown in the federal exemption statutes. Click here for the April 1, 2019 inflation adjustments to Federal bankruptcy exemption amounts, published in the Federal Register.

Special Notes regarding Michigan exemptions:

IMPORTANT:
Please be advised that the Sixth Circuit on August 20, 2012 ruled that Michigan's bankruptcy-only exemptions (found in Section 600.5451) are constitutional. Some earlier cases had held otherwise. The issue is now settled. Michigan's bankruptcy only exemptions CAN be used. See In re Schafer, 689 F.3d 601 (6th Cir. 2012)

Note that a lower court opinion from another Michigan Bankruptcy Court ruled that debtors could use the the exemptions in Michigan's "bankruptcy only" exemption statute, as well as any other exemptions found in other Michigan statutes, such as exemptions for life insurance. (See In re Sasasak, 426 B.R. 680.)

2017 INFLATION ADJUSTMENTS FOR BK-ONLY EXEMPTIONS:
Under Michigan law, bankruptcy-only exemption amounts are adjusted for inflation on April 1, every three years (starting in 2005) by the Michigan Department of Treasury. These amounts have already been adjusted, so the amounts listed in the statutes are not current. The most recent adjustment was published January 27, 2017 and applies to bankruptcies filed on or after April 1, 2017.
Michigan inflation-adjusted exemption amounts for 2017 can be found here
or by going to www.michigan.gov/treasury and typing "bankruptcy exemptions" in the search box.

Can you double exemptions for joint filers? (General principles)

If you are married and filing together, you and your spouse must use the same law; one cannot use federal law while the other uses state law. However, the exemption law chosen applies separately to each spouse. Thus, it is generally possible to double the amount of state law exemptions, Cheeseman v. Nachman, 656 F.2d 60 (4th Cir. 1981) (married couple filing a joint petition was entitled to double the Virginia homestead exemption), unless state law (e.g. California) specifically prohibits a couple from doubling certain exemptions. See First National Bank v. Norris, 701 F.2d 902 (11th Cir. 1984)(Alabama); Granger v. Watson, 754 F.2d 1490 (9th Cir. 1985)(California).

Disclaimer

Disclaimer

Citations and links to primary law and secondary sources are provided for those who wish to do further research. Every effort has been made to make this information up to date and accurate, but laws can and do change without notice. Persons relying on this information are responsible for confirming its timeliness and accuracy before relying on it. (This information was updated for April 2019.)

Also bear in mind that these brief summaries do not list every detail or exception to these exemptions. For example, there are often exceptions for collection of child support debt and/or taxes. These listings are designed to inform you of laws that exist for your benefit, so that you may exercise what rights you may have.

Finally, this website is intended to provide information only. It cannot answer whether your property does or does not qualify for a specific exemption.

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Michigan Homestead Exemption

Almost every state provides protection for equity in the family home, and many states have increased the amount of protection in recent years. Seven states offer unlimited protection. Most states are not as generous.

Federal Law Residency Requirement

Under the 2005 bankruptcy law, you must be have lived in the state for at least 40 months (three years and four months) before you can claim any homestead protection greater than $160,375. (If your state's exemption offers less than this amount, the law is irrelevant to you.) .

IF you are moving to another state, OR you moved to Michigan within in the last two years, click here.


Michigan Exemptions

  • MI Exemptions
  • Real property including condo to $40,475, $60,725 if 65 or older or disabled; property cannot exceed 1 lot in town, village, city, or 40 acres elsewhere; spouse or children of deceased owner may claim homestead exemption. Spouses or unmarried co-owners may not double.
    Mich. Comp. Laws § 600.5451 (1)(m)
    Vinson v. Dakmak, 347 B.R. 620 (E.D. Mich 2006) (unmarried co-owners of homestead must share single exemption even if they file separate bankruptcies)
    In re Lindstrom, 331 B.R. 267 (E.D. Mich. 2006) (spouses may not double exemption in joint filing)

Federal Exemptions


Home Valuation tool

Just add your street address to get an estimate of the value of your house, and all others in your neighborhood. (Note: Does not serve all areas, and valuations are imperfect estimates only.)

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Tenancy by Entirety Exemption

Tenancy by the Entirety (TBE) is a form of property ownership, based on traditional English common law, that is still recognized in about 1/2 of states and the most common form of martial property ownership in many of them.

It protects property that is jointly owned by a married couple as an "entirety" -- which is to say, as a single marital entity, not as individuals.

Tenancy by the Entirety (TBE) was originally conceived as a debt shield -- a way of protecting wives and children from being left homeless and penniless as a result of the debts of a husband. Under the English common law TBE doctrine, a husband could not sell property owned by "the entirety", or give it away, or pledge it as security for a loan without the consent of his wife.

Today, 25 states still recognize some form of tenancy by the entirety, but they differ on the extent to which the property is exempt.

Special notes about Michigan Tenancy by the Entirety Exemptions: Michigan's TBE law provides strong protection for such ownership in real estate and certain types of personal property against the debts of the other spouse. It is recognized in case law and statute.

However, The US Supreme Court held in U.S.v Craft that fedreral taxing authorities have power to attach a single spouse's survivorship interest, but courts have not allowed bankrupcty trustees to claim this power, on the ground that taxing authorities have unique powers.

Michigan Exemptions

Federal Exemptions

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Michigan Insurance exemptions

Virtually all states protect life insurance proceeds in some manner or another. Some restrict it to proceeds paid to a dependent. Many states also protect the cash-value or loan-value of insurance policies.

If a substantial amount of your assets are in life insurance, you may want to consult a professional to determine the extent to which those policies are exempt.

Michigan Exemptions

Federal Exemptions

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Miscellaneous other exemptions for Michigan

This category covers items like partnership property, alimony & support payments.

Michigan Exemptions

Federal Exemptions

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Michigan Pensions & Retirement Savings Exemptions

The new federal bankruptcy law now automatically exempts a virtually all tax-exempt pensions and retirement savings accounts from bankruptcy, even if you are using state law exemptions. 11 U.S.C. § 522(b)(3)(C). (See Help Topic: Special Rules For Retirement Accounts.)

The law protects up to $1,283,025 of any pension or retirement fund that qualifies forspecial tax treatment under Internal Revenue Code sections 401,402, 403, 408, 408A, 414, 457, or 501(a).

Special notes about Michigan Pension Exemptions:

Federal Exemptions

Michigan Exemptions

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Michigan Personal Property Exemptions

This category covers your car, your non-retirement bank accounts, and most of your other personal possessions, other than your house.

States vary widely on how generous they are in this area. Some exemptions may be for any combination of property up to an aggregate amount. Other exemptions apply only to specific items, such as jewelry.

Remember that an exemption will not protect your car from being repossessed by the holder of the car loan you used to purchase the vehicle if you pledged the vehicle as security for the loan. To keep the car, you will have to pursue other options such as 'redemption' or 'reaffirmation.' See the help topics and How to File for Chapter 7 Bankruptcy for more on this.

Michigan Exemptions

Federal Exemptions

Auto Valuation Tools:

Both of these websites offer interactive tools to determine the current value of your used car.

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Michigan Public Benefits Exemptions

Most states exempt public benefits, consistent with the notion that such benefits are intended as a safety net for the recipient.

Michigan Exemptions

Federal Exemptions

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Michigan Tools of Trade Exemptions

These are the things you use to make a living. An automobile or truck can be a tool of trade if you use it as such. Commuting to work doesn't count, but if driving is a necessary component of transacting your business, you can claim your vehicle is a tool of trade.

Michigan Exemptions

Federal Exemptions

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Michigan Wage Garnishment Laws

Most states have a wage garnishment law. In some states, wage garnishment laws can be used in bankruptcy as an exemption to protect income that you had coming due, but not yet received, as of the day you filed, for work you had already done -- so called "earned but unpaid wages".

In some states, the wage garnishment law protects not only wages owed to you, but also wages already in your possession and saved over time preferably holding it in a separate bank account. In other states wage garnishment laws do not protect wages once they are they are in your possession.

Michigan Exemptions

  • Head of household may keep 60% of earned but unpaid wages (no less than $15/week), plus $2/week per nonspouse dependent; if not head of household may keep 40% (no less than $10/week)
    Mich. Comp. Laws § 600.5311

Federal Exemptions

  • Minimum 75% of disposable weekly earnings or 30 times the federal hourly wage, whichever is more; bankruptcy judge may authorize more for low-income debtors. NOTE: Declared not a bankruptcy exemption by numerous Federal courts
    15 U.S.C. § 1673
  • None
    11 U.S.C. § 522 (d)

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Michigan Wild Card Exemption

Most, but not all, states allow a so-called "wild-card" exemption that can apply to any property. The wild card exemption can be of particular help if one or more of your other exemptions falls short of protecting your equity. You may split your wild card exemption amount over multiple items and stack it atop other exemptions as needed to protect exposed equity.

Michigan Exemptions

Federal Exemptions


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