{"id":286856,"date":"2021-04-19T15:35:57","date_gmt":"2021-04-19T20:35:57","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/bankruptcy\/bankruptcy-laws-by-state\/michigan-bankruptcy-exemptions-and-law.html"},"modified":"2026-08-06T08:39:12","modified_gmt":"2026-08-06T13:39:12","slug":"michigan-bankruptcy-exemptions-and-law","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/bankruptcy-laws-by-state\/michigan-bankruptcy-exemptions-and-law.html","title":{"rendered":"Michigan Bankruptcy Exemptions and Law"},"content":{"rendered":"\n
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Michigan Bankruptcy Exemptions and Law<\/h1>\n\n
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\n By Balrina Ahluwalia, Esq.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

Michigan bankruptcy<\/span> allows residents to eliminate or restructure debt through Chapter 7 or Chapter 13. To qualify, filers<\/span> must pass an income means test<\/span> or meet debt limits before filing in federal court. Initiating a case triggers an automatic stay<\/span> that halts creditor collections, foreclosures<\/span>, and wage garnishments<\/span> while shielding exempt property.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Considering filing for bankruptcy can feel overwhelming, but it\u2019s often the first real step toward getting your life back on track. For many Michiganders, bankruptcy can stop wage garnishment<\/span><\/a>, prevent repossession<\/span>, and give you room to breathe when bills keep piling up. Before you decide if it\u2019s right for you, it\u2019s important to understand how Michigan\u2019s bankruptcy<\/span> rules work.<\/p>\n

This guide covers key information you\u2019ll want to know about filing for bankruptcy<\/a> in Michigan. We address how state and federal laws<\/span> work together to shape your property rights and your options. We\u2019ll also cover important details like Michigan\u2019s exemptions, income limits, and protections for your assets and financial future.<\/p>\n

If you\u2019re facing mounting debt and wondering whether bankruptcy makes sense for you, touch base with a lawyer. A solid Michigan <\/span>bankruptcy<\/span> attorney<\/span><\/a> can help you understand the related pros and cons, along with debt relief<\/span> alternatives. Most offer initial consultations<\/span> free of charge.<\/p>\n

In the interim, let\u2019s start with some basic background information.<\/p>\n

Legal Framework<\/h2>\n

The U.S. Bankruptcy Code<\/span>, which is a federal law<\/span>, governs bankruptcy. States often establish their own bankruptcy rules about which property is exempt from bankruptcy. Michigan has its own exemption rules, but you also have the option to use the federal exemption system<\/a> instead. You\u2019ll have to choose one or the other for all of your exemptions.<\/p>\n

In general, exempt property is protected from creditors, and you won\u2019t lose it during bankruptcy. To understand the exemption process in Michigan, let\u2019s examine the two most common types of consumer bankruptcy<\/a>.<\/p>\n

Chapter 7 Bankruptcy<\/span><\/h3>\n

This is sometimes known as liquidation<\/span> bankruptcy. To qualify for Chapter 7<\/a>, your income must fall below the state\u2019s median or pass a means test<\/span><\/a>.<\/p>\n

In a Chapter 7 case, you\u2019ll turn over your non-exempt property<\/span> to a bankruptcy trustee<\/span><\/a>. The trustee will sell these assets to repay your creditors. You can typically use your state exemptions in a Chapter 7 bankruptcy<\/span><\/a> to protect certain assets. Successful completion of a Chapter 7 bankruptcy<\/span> usually takes about three to four months. While your debts may be discharged under Chapter 7, it will have a negative effect on your credit rating that can last for years.<\/p>\n

Chapter 13 Bankruptcy<\/span><\/h3>\n

Also known as reorganization<\/span>, Chapter 13 allows you to restructure your debts if you need additional time to pay them off. In most cases, you\u2019ll make one monthly payment according to a court-approved repayment plan<\/span> that helps you get rid of some or all of your debt.<\/p>\n

Chapter 13<\/a> is popular with homeowners because it usually allows them to keep their homes. It also helps you to pay certain debts that can\u2019t be wiped out in Chapter 7, like tax debts<\/span> and most student loans<\/span>. These bankruptcies typically take three to five years to complete<\/a> and carry less of a ding to your credit than Chapter 7.<\/p>\n

The Automatic Stay<\/span><\/h3>\n

One key benefit of either type of bankruptcy<\/span> is the automatic stay<\/span><\/a>. The court issues this order when you file your bankruptcy petition<\/span>. It stops most collection actions, including court proceedings and foreclosures<\/span>, while you work things out with your creditors through the bankruptcy process<\/span><\/a>.<\/p>\n

Secured vs. Unsecured Debt<\/span><\/h2>\n

If you\u2019re thinking of filing for bankruptcy, knowing the difference between\u00a0secured<\/a>\u00a0and\u00a0unsecured debt<\/span> is important<\/a>. Let\u2019s take a closer look at both.<\/p>\n

Unsecured Debt<\/span><\/h3>\n

When you have unsecured debt<\/span>, a creditor has no right to seize any of your property for nonpayment. This is the debt that is most likely to be eliminated in bankruptcy<\/a>.<\/p>\n

The most common type of unsecured debt<\/span> is credit card<\/span> debt, but medical bills<\/span> and court judgments also qualify. Some unsecured debt<\/span>, like child support<\/span> obligations<\/a>, must be repaid in full and cannot be discharged in Chapter 7.<\/p>\n

Secured Debt<\/span><\/h3>\n

Your debt to a creditor is secured when they have the right to repossess your property if you don\u2019t pay. Home mortgages, car loans<\/span><\/a>, and property liens are the most common types of secured debt<\/span>.<\/p>\n

Debt in Chapter 7<\/h3>\n

When you choose to file Chapter 7<\/span><\/a> bankruptcy<\/span>, much of your unsecured debt<\/span> will be eliminated. Creditors who hold secured debt<\/span> have the option of seizing your property for failure to pay.<\/p>\n

If you are filing <\/span>Chapter<\/span> 7 bankruptcy<\/span> and want to keep property used to secure a debt, you\u2019ll often have three options:<\/p>\n