Michigan Bankruptcy Laws and Michigan Bankruptcy Attorney

What Can I Keep?

You can choose one of two "exemption schemes" in Michigan, whichever best suits your circumstances.

Under the first exemption scheme, from Michigan bankruptcy law, you can keep:

• Your home, including co-op or mobile home, to $18,450
• Life insurance payments for person you depended on, needed for support
• Life insurance policy with loan value, in accrued dividends or interest to $9,850
• Un matured life insurance contract, except credit insurance policy
• Alimony, child support needed for support
• Pensions and Retirement Benefits, ERISA - qualified benefits needed for support
• $475 per item in any household goods up to a total of $9,850
• Health Aids
• Jewelry to $1,225
• Lost earnings payments
• Your motor vehicle to $2,950
• Personal injury compensation payments to $18,450, wrongful death payments, crime victims' compensation, public assistance, social security, unemployment compensation, and veterans' benefits
• Tools of trade up to $1,850
• Wild Card - $925 of any property plus up to $9,250 of any amount of unused homestead exemption

Married couples may double the amount of the federal exemptions.

If you choose the second exemption scheme, under Michigan bankruptcy law, you can keep:

• Your home, if you do not have more than $3,500 in equity in the house (today's value less costs of sale less payoff balances on all liens and mortgages)
• Family pictures and clothing
• Food and fuel to last six months
• Household goods, furniture, appliances, utensils, books, up to $1,000 total
• Burial plots; church pew, slip, seat
• 10 sheep, two cows, five swine, 100 hens, five roosters, and hay and grain to last six months
• Arms and accoutrements you're required by law to keep
• Tools of trade and farm equipment, up to $1,000 in value
• Building and loan shares to $1,000 par value if you did not claim a homestead exemption
• Disability, mutual life and/or health benefits; fraternal benefit society benefits; and life, endowment or annuity proceeds if a clause in the policy prohibits the proceeds from being used to pay the beneficiary's creditors
• Private retirement benefits
• ERISA-qualified pension benefits
• Public employees' pensions
• Property of a business partnership
• Alimony and child support
• Crime victim's compensation, veterans', AFDC, social welfare, worker's compensation and unemployment compensation benefits
• 60% of earned but unpaid wages (not less than $15 per week, plus $2 per week for each dependent) if you are a head of household with a family; 40% of earned but unpaid wages (not less than $10 per week) if you are not a head of household with a family

The Michigan bankruptcy law does not wipe out voluntary liens, like mortgages and deeds of trust, or tax liens. So the lender still has the right to foreclose if you do not pay. If you pay, everyone is happy. Remember, the lender does not want the property; it wants you to pay regularly on the loan. Foreclosure is a last resort for the lender if it concludes it can't get the owed money any other way.

If you still owe money on the car, you can choose to reaffirm the debt to the secured lender. Under the new law, you have to reaffirm your car loan within 45 days after the "341 meeting." You no longer have the option of continuing your car payments without reaffirming the loan. Once the loan is reaffirmed, if you default on your payments and the car is repossessed, you are liable for the repossession deficiency.

You also have the option to redeem the car within 45 days of the "341 meeting" by buying it from the secured creditor in a single payment for its present value.

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