Chapter 7 bankruptcy is a legal process that allows you to eliminate most of your unsecured debts by liquidating or selling off property. Under Michigan law, certain property qualifies as “exempt,” meaning you can keep it instead of having to sell it to pay your creditors. Property exemptions allow you to retain your home, car, and other essential items, making it easier to rebuild after bankruptcy.

Personal Property Exemptions in Michigan

Michigan’s personal property exemptions cover a range of belongings, usually items you need to maintain your household and livelihood. The exemption amounts adjust every three years to account for inflation; the most recent update happened in 2023. In Michigan, the current types and inflation-adjusted amounts of personal property you can exempt during Chapter 7 bankruptcy include the following.

Homestead

Michigan’s homestead exemption allows you to protect up to $46,125 in equity for your primary residence. If you are 65 or older or disabled, this exemption increases to $69,200.

Motor Vehicles

Michigan law allows you to exempt up to $4,250 for the value of one motor vehicle. This can help you keep a reliable car for commuting to work or managing daily errands.

Household Goods, Furniture, and Jewelry

You can protect up to $700 per item in household goods, such as furniture and appliances, and up to $4,625 total for all household goods combined.

Clothing

Everyday apparel is exempt from the bankruptcy estate. You can retain all necessary clothing without a specific monetary limit. However, luxury items such as furs do not qualify for this exemption.

Work Tools and Equipment

If you rely on tools or equipment for your job, you can exempt up to $3,075 worth of these items. This includes any materials or stock you use in your trade or profession.

Health Aids

Medically necessary devices like prescribed health aids are entirely exempt. You can keep any item a medical professional prescribes for your health and well-being without a limit on its value.

Farm Animals and Crops

If you farm, you can protect up to $3,075 worth of crops, farm animals, and feed necessary to sustain those animals.

Household Pets

You can exclude up to $800 for pets, such as cats or dogs, that are part of your household.

Religious Items

If you occupy a seat or pew in a place of worship, you can exempt up to $800 for your interest in it. This applies whether you or your family reserves or regularly uses the seat.

Insurance Benefits

Benefits you receive from life, health, or casualty insurance policies due to disability or injury are exempt. This includes both current and future payments under the insurance policy.

Retirement Accounts

Individual Retirement Accounts (IRAs), Roth IRAs, and certain qualified pension plans are exempt from bankruptcy proceedings. There is no dollar limit on the exemption of these accounts, provided the contributions fall within the tax-deductible limits.

Contact a Michigan Bankruptcy Attorney Now

If you’re considering Chapter 7 bankruptcy and want to understand how Michigan’s property exemptions can protect your assets, contact Marrs & Terry, PLLC. Our team can answer your questions and manage every detail of the bankruptcy process while you focus on moving forward. Contact us today to arrange your initial consultation and take the first step toward a fresh financial start.