Michigan Bankruptcy Laws

When filing bankruptcy in Michigan, it is critical for an individual to take into consideration his or her current property and the laws in place to protect that property. As part of the Bankruptcy Code, each individual has the right to certain bankruptcy exemptions. Exemptions are the tool used to protect real estate, tools of the trade and various other types of assets. Any property that does not fall into one of the exemption categories is confiscated by the bankruptcy court and sold to repay the borrowers creditors.

To protect your property when filing bankruptcy in Michigan, consider the various exemptions in place to protect this property. Below are some of those exemptions. An attorney can help to classify property you own to fit within these exemptions, whenever possible.

• The homestead exemption protects the home and the land around it. In Michigan, up to $3500 in equity is protected. This cannot be more than one lot within the city or 40 acres outside the city.
• Property related to insurance claims is protected. This includes any type of insurance such as disability, health benefits, mutual life, fraternal benefits of society, life insurance policies, annuities and endowments.
• Most pensions are protected, including state employee and public service employee pensions. IRA’s and other requirement plans may be protected.
• Property belonging to a business partnership is protected.
• Personal property such as appliances, household goods and furniture up to a value of $1000 in total is protected.
• Burial plots, church pews, and similar types of property are protected.
• Clothing and most family heirlooms are protected.
• Most public benefits are protected including worker’s compensation, Veteran benefits, Social Security Benefits and unemployment compensation.
• Tools of the trade include arms, tools, implements, materials, vehicles and other values up to $1000 in value are protected.

Filing bankruptcy in Michigan does not allow for excessive property to be kept by the individual during a Chapter 7 bankruptcy. Property not protected under these exemptions may be lost, then. Those with excessive property may wish to consider filing Chapter 13 bankruptcy instead, which protects all assets from creditors.