Bankruptcy is a system of federal law, so the process to file for Chapter 7 bankruptcy or to file for Chapter 13 bankruptcy is nearly identical in every state, including Michigan. However, state law plays an important role, particularly in setting property exemptions, which determine what property you get to keep (if you file for Chapter 7) and how much you have to repay your creditors (if you file for Chapter 13). There are also important resources available to you by state.
Before you file for Chapter 7 or Chapter 13 bankruptcy in Michigan, you will have to complete mandatory credit counseling with an agency that’s been approved by the United States Trustee’s Office. Here’s a list of agencies in Michigan that have been approved to provide this counseling.
Where to File
In Michigan, the bankruptcy courts are located in two districts. In the Eastern District of Michigan, the courts are found in Bay City and Detroit. In the Western District of Michigan, the bankruptcy courts are in Grand Rapids and Marquette. Visit each of those bankruptcy districts' websites to find information on forms, local rules, and more.
Like every other state, Michigan has its own set of property exemptions. (To learn more about how property exemptions work generally and which exemptions you may use, see Bankruptcy Exemptions: What Do I Keep When I File for Bankruptcy?)
In Michigan, you may use either the Michigan state exemptions, or the federal bankruptcy exemptions.
Michigan allows debtors to exempt up to $35,300 of equity in real property or a mobile home. That amount increases to $52,925 if the bankruptcy filer is over 65 or disabled. The property may not exceed one acre in a town, village or city, and 40 acres elsewhere. Minnesota also has a number of personal property exemptions, including up to $3,250 in a motor vehicle, up to $600 in pets, up to $600 in computers, up to $3,552 total for applicances, books, furniture, and the like, and up to $2,350 in tools of the trade. You may exempt a certain amount of wages, some public benefits and pensions, and the property of a business partnership, among other things. Here’s a list of Michigan exemptions.
The Means Test
When you file for bankruptcy, you must compare your income to the median income for a household of your size in Michigan. If your income is less than the median, you will be eligible to file for Chapter 7 and, if you choose to file for Chapter 13, you can use a three-year repayment plan (rather than five years).
Currently, the median Michigan income for a one-person household is over $43,500; these figures change periodically. You can find the most recent amounts on the website of the U.S. Trustee at www.justice.gov/ust. Click on “Bankruptcy Reform,” and then “Means Testing Information.” Or go directly to the Census Bureau table here.
After you file for bankruptcy but before you receive your discharge, you must take a debtor education course. Like the mandatory credit counseling you must take before filing your forms, you must receive debtor education from an agency approved by the U.S. Trustee’s Office. Here a list of agencies approved to provide this course in Michigan.
Getting Help From a Bankruptcy Lawyer
If you're considering bankruptcy, you may want to talk to an experienced Michigan bankruptcy lawyer.