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Michigan Bankruptcy
Michigan Bankruptcy Questions
While much of the regulation around bankruptcy is the same around the US, Michigan Bankruptcy laws do have some specific differences that favor the individual or business declaring.
Below you’ll find a brief explanation of the differences between a bankruptcy in Michigan vs elsewhere, then more general frequently asked questions about declaring bankruptcy in general.
These are not meant to substitute for talking with a bankruptcy attorney but are designed to answer the most basic questions before you connect with us.
Michigan Bankruptcy Exemptions:
Michigan has its own set of bankruptcy exemptions that debtors can use to protect certain property from being seized during bankruptcy.
Debtors in Michigan can choose between the federal exemptions and the Michigan state exemptions, but they cannot mix and match.
Some key Michigan state exemptions include:
- Homestead Exemption: Up to $40,475 of equity in a primary residence, or up to $60,725 if the debtor is over 65 or disabled.
- Motor Vehicle Exemption: Up to $3,725 in equity in a motor vehicle.
- Personal Property Exemption: Up to $600 in value in household goods, furnishings, appliances, and up to $3,725 in jewelry.
- Tools of Trade Exemption: Up to $2,775 in tools, implements, materials, and books used in the debtor’s trade or profession.
- Any other factor considered by the court to be relevant to a particular child custody dispute.
Wage Garnishment Limits:
Michigan follows federal law, which limits the amount that can be garnished from wages to the lesser of 25% of disposable income or the amount by which disposable income exceeds 30 times the federal minimum wage. However, Michigan law also protects up to 60% of wages if the debtor is the head of household.
Chapter 13 Debt Limits:
As of recent updates, Michigan Bankruptcy rules follow federal guidelines, but it’s important to check for any state-specific interpretations or adjustments that may apply when you start considering your options.
There are nuances in Chapter 13 bankruptcy, for example, that can make a big difference in your outcome and changes do occur.
Residency Requirements:
To use Michigan’s state exemptions, a debtor must have been a resident of Michigan for at least 730 days before filing. If this residency requirement is not met, the debtor must use the exemptions of the state where they lived for the majority of the 180-day period before the 730 days.
Michigan-Specific Procedures:
Michigan bankruptcy courts may have specific local rules and procedures that debtors and attorneys must follow. These can include filing requirements, mandatory forms, and court-specific processes for hearings and meetings of creditors. Not completing these can have negative consequences, so make sure you’re working with a bankruptcy lawyer with experience in the state.
Automatic Stay Provisions:
In Michigan, as in other states, the filing of a bankruptcy petition triggers an automatic stay that halts most collection actions against the debtor. This includes stopping foreclosure proceedings, which is particularly relevant given Michigan’s high foreclosure rates.
Michigan Bankruptcy Courts:
Michigan is divided into two federal judicial districts for bankruptcy purposes: the Eastern District and the Western District. Each district has its own bankruptcy court, and cases are filed based on the debtor’s county of residence.
Understanding these Michigan-specific nuances can help individuals and businesses navigate the bankruptcy process more effectively. It’s always advisable to consult with a bankruptcy attorney here at The Smart Law Group to ensure compliance and optimal use of available protections.
Steven J. Cohen
Bankruptcy Attorney specializing in Chapters 7, 11 and 13