When you file for bankruptcy, you can keep certain assets designated by law as exempt. Michigan residents can choose between the state or federal bankruptcy exemptions.
Review the types of property you can retain if you live in Michigan and decide to file for bankruptcy because you have debt you cannot pay.
If you own a home, you can keep up to $40,475 in equity. The exemption increases to $60,725 for individuals who have a disability or are age 65 or older. Unlike other Michigan exemptions, you cannot double this amount if you and your spouse will both file for bankruptcy.
Michigan also allows these bankruptcy exemptions:
- Up to $3,725 in motor vehicle equity
- Personal items such as clothing, books, household goods, appliances, utensils, jewelry and furniture worth no more than $625 per item and $4,050 total
- Up to six months of fuel and food supplies
- Family church pew
- Medical devices
- Family portraits
- Pets worth up to $700
- Burial rights and plots
- Farm animals, feed and crops worth up to $2,700
- Computer equipment worth up to $700
- Qualifying pension funds and retirement accounts, such as an IRA or 401(k)
- Public benefits, including welfare, unemployment compensation and workers’ compensation
- Life insurance and disability benefits
Understanding these exemptions can help you decide whether filing for bankruptcy in Michigan is right for you. You should also compare the Michigan bankruptcy exemptions to the federal bankruptcy exemptions to see which make more sense for you. You cannot mix and match between the two options; you must select one or the other.