Michigan Bankruptcy Exemptions

You can protect property in a Michigan bankruptcy using either Michigan's exemption laws or the federal bankruptcy exemptions.

By , Attorney · University of the Pacific McGeorge School of Law

Michigan bankruptcy exemption laws protect property in bankruptcy and are essential to a fresh start. When you file, the Michigan bankruptcy exemptions will let you keep what you need to work and live. However, exemptions protect essential assets only, not unnecessary luxury goods.

To prevent a costly property loss, you'll want to understand the exemptions available under Michigan, and what happens to property you can't protect with an exemption. In this article, you'll also learn whether you've lived in Michigan long enough to use Michigan bankruptcy exemptions.

Using Exemptions When Filing for Bankruptcy in Michigan

Michigan filers are fortunate because they have two exemption choices, the state or the federal bankruptcy exemptions. You'll want to review each list carefully and compare it to the property you own because you can't use exemptions from both lists. If you decide to use Michigan's state exemptions, you can also use the federal nonbankruptcy exemptions.

Choosing an Exemption List in a Michigan Bankruptcy

To help you make an informed choice, we've charted the Michigan and federal exemption sets and explained key differences. You'll also find Michigan and federal exemption links you can use to review the exemption statutes.

Exemption Caution: The state exemptions have not been updated and should not be relied on but only used as a general guide. Some state exemption amounts could be higher, and your state could have changed the law by adding new or deleting old exemptions. Verify exemption availability through research or by consulting a local bankruptcy lawyer.

Michigan Bankruptcy Exemptions

Amounts adjust periodically.

Federal Bankruptcy Exemptions

Additional exemptions exist. Amounts valid between April 1, 2022, and March 31, 2025.

Homestead Exemption

  • $46,125 individuals
  • $69,200 if 65 years plus or disabled
  • spouses cannot double

Mich. Comp. Laws §§ 600.5451(1) (m), (n),(o)

  • $27,900 individuals
  • $55,800 for spouses who co-own property
  • tenancy by the entirety protection allowed in some jurisdictions

11 USC § 522(d)(1)

Motor Vehicle Exemption

  • $4,250

Mich. Comp. Laws §§ 600.5451(g)

  • $4,450

11 USC § 522(d)(2)

Tools of the Trade Exemption

  • $3,075

Mich. Comp. Laws §§ 600.6023(1)(e)

  • $2,800

11 USC § 522(d)(6)

Wildcard Exemption

  • none

11 USC § 522(d)(5)

Personal Property Exemptions

  • $700 per item / $4,625 total for household goods and furniture, utensils, books, appliances, and jewelry
  • food and fuel to last six months
  • family pictures
  • church pew, slip or seat up to $800 for the entire family (no doubling)
  • professionally prescribed health aids
  • household pets up to $800
  • crops, feed, and animals up to $3,075
  • computer and accessories up to $800
  • burial plots and burial rights
  • clothing
  • arms and accouterments required by law
  • farm animals and feed (limits apply)

Mich. Comp. Laws §§ 600.5451(1)(c)-(f), (h); 600.6023(1)(a)-(d)

  • $700 per item / $14,875 total for animals, crops, clothing, appliances and furnishings, books, household goods, and musical instruments.
  • jewelry up to $1,875
  • health aids
  • lost earning payments
  • personal injury recoveries to $27,900 (excludes pain and suffering and pecuniary loss)
  • wrongful death recoveries for a person on whom you depended
  • alimony and child support needed for support

11 USC §§ 522(d)(3)-(6),(9)-(11)

Retirement Accounts

  • individual retirement account
  • pension, profit-sharing, stock bonus, or another ERISA-qualified plan
  • traditional, SIMPLE, or Roth IRA
  • more protections in "Federal Nonbankruptcy Exemptions" below

Mich. Comp. Laws §§ 600.6023(1)(j),(k); 11 U.S.C. § 522

  • tax-exempt retirement accounts
  • IRA and Roth IRA up to $1,512,350

11 USC §§ 522(b)(3)(C),(b)(3)(C)(n)

Note: These retirement accounts are exempt under the federal rules even if the filer uses state exemptions.

Available Federal Exemptions

Federal Nonbankruptcy Exemptions

Federal Bankruptcy Exemptions

Where to Find Statutes

Michigan Compiled Laws

United States Code

Other Michigan Bankruptcy Exemptions

Below, you'll find more Michigan exemptions. However, it's not an exhaustive list. Also, as with all laws, exemption laws can change. Be sure to check for current amounts and read the statute for qualification requirements (we haven't included them here).

Michigan Pension Exemptions

  • 38.559, 38.1643, 38.1683 - Firefighters, police officers.
  • 38.1057, 38.1683 - Legislators.
  • 38.1346, 38.1683 - Public school employees.
  • 38.1683 - State employees.
  • 38.2308, 38.1683 - Judges and probate judges.

Michigan Public Benefit Exemptions

  • 18.362 - Crime victims' compensation.
  • 35.926 - Veterans' benefits for WWII veterans.
  • 35.977 - Korean War veterans' benefits.
  • 35.1027 - Vietnam veterans' benefits.
  • 400.63 - Welfare benefits.
  • 418.821 - Workers' compensation.
  • 421.30 - Unemployment compensation.

Michigan Insurance Exemptions

  • 500.2207 - Insurance benefits.
  • 500.2209 - Life insurance benefits.
  • 500.2210 – Employer-provided insurance benefits.
  • 500.4054 - Insurance proceeds held by an insurer.
  • 500.8181 - Fraternal benefit society benefits.

Miscellaneous Michigan Exemptions

  • 449.25 - Particular business partnership property.
  • 11 USC 541(b)(5)-(6) – Up to $6,825 in an education IRA and up to $6,825 in pre-purchased tuition credits.

Important retirement benefit note. Federal law lets all filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 U.S.C. 522(b)(3)(C); (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)

Our Michigan Bankruptcy Exemption Analysis

Individual filers who own a home will likely fare better using Michigan's exemptions. However, because you can double the federal exemptions, married homeowners who aren't 65 or disabled can protect more equity using the federal bankruptcy exemptions.

Filers who don't own a home will likely protect more property using the federal list because of the higher motor vehicle and tools of the trade exemptions and the generous wildcard exemption.

How to Verify Available Exemptions in Michigan

Almost everyone who files for bankruptcy benefits from meeting with a bankruptcy lawyer. A local bankruptcy attorney will ensure a smooth and uneventful bankruptcy by complying with filing requirements and helping you protect all possible property.

What Are the Michigan Bankruptcy Exemption Timing Rules?

It's tempting to move to a state with significantly more generous bankruptcy exemptions when filing for bankruptcy. But it doesn't work that way. To prevent people from abusing the system, filers must live in the state for at least two years. Otherwise, they must use the previous state's exemptions. Here's how it works.

  • If you've made your permanent home (your "domicile") in your current state for at least two years, you can use the state's exemptions (or the federal exemptions if allowed).
  • If your domicile hasn't been in the same state for two years, the rules get more complicated, so prepare yourself. It sounds so strange we'll explain it in three different ways so that you know you didn't read it wrong. Here goes: You'll choose the state you lived in the longest during the 180 days immediately before the two years before filing.

Did you get that? If not, here's a way to figure it out. Count back two-and-a-half years. Then ask yourself where you lived the longest during the first six months of that two-and-a-half-year period.

Still confused? Let's try an example. Suppose you planned to file on January 1, 2022. Your two-and-a-half-year period would start July 1, 2019, and you'd qualify to use the exemptions of whichever state you resided in the most from July 1, 2019, through December 31, 2019. You wouldn't have to file your case there, but you'd use that state's exemptions. Hopefully, that helps!

Special Homestead Exemption Rules

The homestead exemption protects your ownership interest in your home. You'll need to read your state's homestead statute to determine the specifics, such as the amount of equity and acreage covered, whether the exemption protects a manufactured home, and if you need to file a homestead exemption with the county clerk. But in all states, the property must be your residence.

What Happens to Property You Can't Exempt in a Michigan Bankruptcy?

It will depend on the chapter you file. In Chapter 7 bankruptcy, you lose property not covered by an exemption. The bankruptcy trustee responsible for managing your case will sell the property for the benefit of your creditors.

In Chapter 13 bankruptcy, you can keep all your property. However, that luxury comes at a price. You'll pay your creditors the value of any property not covered by an exemption in your Chapter 13 repayment plan.

For example, say you own a car outright worth $3,000, and your state has a vehicle exemption of up to $5,000. Here's what would happen in each chapter.

  • Chapter 7 Bankruptcy. If you file for Chapter 7 bankruptcy, you will get to keep your car because the exemption would protect the equity fully. In the same example, if your vehicle were worth $15,000, the bankruptcy trustee would sell your vehicle, pay you $5,000 for the exemption, and distribute the rest to your unsecured creditors.
  • Chapter 13 Bankruptcy. In Chapter 13, you wouldn't need to pay extra to your creditors through your repayment plan. However, if the car were worth $15,000, you'd need to pay your creditors at least $10,000 (minus sales costs) through your plan.

Keep in mind that these examples don't take into account a vehicle loan. You'll find more information about protecting financed homes and cars in a Michigan bankruptcy below.

How Do You Protect a Financed Home or Car in a Michigan Bankruptcy?

Many wonder if they can wipe out a home mortgage or car loan and keep the property without paying for it. The simple answer is "No." If you still owe a balance on your mortgage or car loan, you must pay as agreed to prevent the lender from foreclosing or repossessing the property.

Why? Because when you purchased it, you gave the lender a property "lien." The lien created a secured debt, allowing the lender to take back the property if you don't pay as agreed, even in bankruptcy.

Protecting Financed Property in Chapter 7 Bankruptcy

Chapter 7 doesn't have a mechanism that will allow you to catch up on a mortgage or car payment over time. So, the mortgage or car payment must be current. You'll lose the property if you're behind on the payment and file for Chapter 7.

The lender will ask the bankruptcy court to allow the lender to proceed with foreclosure or repossession during the bankruptcy or wait until Chapter 7 ends.

A few more vehicle protection options exist in Chapter 7. Learn more about how to file for bankruptcy without losing a car.

Protecting Financed Property in Chapter 13 Bankruptcy

You don't lose property in Chapter 13. However, before the bankruptcy judge approves or "confirms" your plan, you must prove you earn enough to make the monthly payment and pay the late payments by the end of the three- to five-year plan.

Some filers can pay less on financed property if they qualify to reduce an auto loan to the car's value or strip a junior mortgage, credit line, or lien from a home. Learn more about catching up on arrearages in Chapter 13 and how mortgages work in bankruptcy.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help you find the answers you need.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite, or consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill.

More Bankruptcy Information

Bankruptcy Forms and Document Checklist

Chapters 7 and 13 Bankruptcy Form List

Bankruptcy Document Checklist

You'll find fillable, downloadable bankruptcy forms on the U.S. Courts bankruptcy form webpage. The forms relating to this article topic include the following:

Schedule A/B: Property

Schedule C: The Property You Claim as Exempt

Statement of Intention for Individuals

More You Might Like

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Can I Use My Credit Card Before I File for Bankruptcy?

Should I Ignore a Debt Collector's Calls and Letters?

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

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