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What Are the Exemptions for Bankruptcy in Michigan?

If you face overwhelming debt, you may be considering filing for bankruptcy to remove this burden and get a fresh start. Bankruptcy can relieve many types of debt, but it’s important to understand that not all property is exempt from the bankruptcy process. However, in Michigan, certain exemptions allow you to protect some of your assets during bankruptcy proceedings.

When filing for bankruptcy in Michigan, you’ll have your choice between two sets of bankruptcy exemptions: federal and state-specific. The state adjusts dollar amounts periodically to account for inflation. You must choose one set of exemptions when filing for bankruptcy; you cannot mix and match between the two. Let’s take a closer look at some of the most common exemptions available in Michigan. 

Homestead Exemption

The homestead exemption protects equity in your primary residence. In Michigan, you can exempt up to $46,125 in equity for your home or other property covered by the homestead exemption. If you are over 65 or disabled, this exemption increases to $69,200. Remember that this exemption applies only to your primary residence, not vacation homes or investment properties.

Vehicle Exemption

You can exempt up to $4,250 in equity in Michigan for one motor vehicle. If your car is worth less than this amount, you can keep it during bankruptcy. If your car is worth more than the exemption amount, the trustee may sell it to pay off your creditors, but you will receive the exemption amount from the sale proceeds.

Personal Property Exemptions

Michigan law allows you to exempt certain personal property items from the bankruptcy process. These exemptions include:

  • All clothing, with the exception of furs
  • Up to $800 in family pets
  • Up to $800 in computers and accessories
  • Up to $3,075 in farm animals, feed, and crops
  • Up to $3,075 in tools of the trade (items necessary for your job)
  • Up to $4,625 in household goods (limited to $700 per item)

These exemptions can help you protect essential items during the bankruptcy process, allowing you to maintain a basic standard of living.

Retirement Account Exemptions

In a majority of cases, retirement accounts such as 401(k)s, IRAs, and pension plans are exempt from bankruptcy. This means you can keep these accounts intact, providing financial security for your future. However, there may be limitations on contributions made to these accounts shortly before filing for bankruptcy.

How a Michigan Bankruptcy Attorney Can Help

If you are considering filing for bankruptcy in Michigan, having a knowledgeable advocate on your side is crucial. The bankruptcy attorneys at Marrs & Terry, PLLC, understand the challenges you face and is committed to providing personalized, compassionate guidance throughout the bankruptcy process. With over two decades of experience, our attorneys can help you work through the complexities of Michigan bankruptcy law, protect your assets, and achieve a fresh start. 

Don’t let overwhelming debt control your life any longer. Contact Marrs & Terry, PLLC, today to schedule a consultation and learn how we can help you take the first steps toward financial freedom.