Michigan Bankruptcy Laws

The state of Michigan is divided into two bankruptcy districts: Michigan Eastern Bankruptcy Court and Michigan Western Bankruptcy Court. These courts serve the entire state of Michigan . Michigan bankruptcy provides troubled debtors with a fresh start because bankruptcy protects consumers against lawsuit from creditors. The protection under Michigan bankruptcy law is extended after you attend the mandatory credit counseling required under the new bankruptcy laws and you file your case with the Court. Until then, credit card debt creditors can still continue to collect on the debts, and your lender can still proceed with the foreclosure if you're behind on your mortgage.

Michigan Bankruptcy Exemptions
According to the Lawyers.com website, you can choose from two exemption schemes: federal or Michigan state. Under the federal scheme, you can keep:

• Your home, including co-op or mobile home, to $20,200
• Life insurance payments for person you depended on, needed for support
• Life insurance policy with loan value, in accrued dividends or interest to $10,775
• Unmatured life insurance contract, except credit insurance policy
• Alimony, child support needed for support
• Pensions and Retirement Benefits, ERISA - qualified benefits needed for support
• $525 per item in any household goods to $10,775
• Health Aids
• Jewelry to $1,350
• Lost earnings payments
• Your motor vehicle to $3,225
• Personal injury compensation payments to $20,200, wrongful death payments, crime victims' compensation, public assistance, social security, unemployment compensation, and veterans' benefits
• Tools of trade to $20,200
• Wild Card - $1,075 of any property plus to $10,125 of any amount of unused homestead exemption

Married couples may double the amount of the federal exemptions.

Under Michigan bankruptcy laws, 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
• 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
• 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

NOTE: These are the major bankruptcy exemptions. Check with your bankruptcy lawyer for a full exemptions list.

New Bankruptcy Law Changes - Outlines major changes you should know about in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), also known as the new bankruptcy laws.

This is important! The new bankruptcy law requires all debtors to fulfill two education requirements: a credit counseling course prior to filing and a financial management course before obtaining a discharge. Failure to complete either of these courses and file the appropriate certificates with the court will prevent a successful bankruptcy. The Chapter 13 Trustee will offer the required courses to Chapter 13 debtors, but Chapter 7 debtors are required to take the courses on their own.

Find a U.S. Trustee Approved Pre-Bankruptcy Counseling Provider and Post-Filing Debtor Education Provider.