Are you considering filing for Chapter 7 or Chapter 13 bankruptcy in Michigan? If you are, you must first complete a credit counseling course, fill out a bankruptcy petition and additional forms, and file the documents with the proper Michigan bankruptcy court.
Because bankruptcy procedure is established mostly by federal law, for the most part, the general filing process in Michigan is similar to that in other states. However, you’ll need to include some Michigan-specific information in your bankruptcy forms and the bankruptcy exemptions available to you depend upon Michigan law.
(For more articles on the filing process, see Filing for Bankruptcy.)
Here’s what you need to know if you are filing for bankruptcy in Michigan.
Before you file Chapter 7 or Chapter 13 bankruptcy, you must complete a credit counseling course from an approved agency. You must complete the course within the six-months before you file your case, or your certificate of completion will expire and you will have to complete the course again. You must also take a debtor education course before you receive your discharge in bankruptcy. (To learn more about this requirement, including the rare exceptions, see Credit Counseling & Debtor Education Requirements in Bankruptcy.)
Michigan has its own exemptions that determine how much property you can protect when you file a Chapter 7 bankruptcy and play a role in how much you repay unsecured creditors in Chapter 13 bankruptcy. (To learn more, see our Bankruptcy Exemptions area.)
Michigan also allows you to use the federal bankruptcy exemptions, but you are not permitted to use both state and federal exemptions – you must choose either all state or all federal exemptions.
To learn about Michigan’s exemptions for your home and car, see The Homestead Exemption in Michigan and The Motor Vehicle Exemption in Michigan. For a list of other common exemptions in Michigan, see Michigan Bankruptcy Exemptions.
Special note: In 2011 the Bankruptcy Appellate Panel of the Sixth Circuit ruled that Michigan's bankruptcy-only exemption scheme is unconstitutional. That case is on appeal. In the meantime, it's unclear whether all courts are bound by this decision, or just those in the Western District. Consult with a local bankruptcy attorney to find out what exemptions are available to you.
In addition to the bankruptcy petition and schedules listing your property, income, debts, and assets, you must also complete a complex calculation referred to as the “means test” (for Chapter 7) and a similar calculation for Chapter 13.
For more information about each of the official forms, see Completing the Bankruptcy Forms.
When you file for bankruptcy in Michigan, you must refer to the median income for a household of your size in Michigan and determine whether your household income falls above or below the median. If your income is below the median, you are eligible to file for Chapter 7 and, if you plan to file under Chapter 13, you can opt to repay your debt over three years instead of five. This is called the means test.
If your income is above Michigan’s median income, you may still qualify for Chapter 7, but you won’t know until you provide additional information about your expenses and secured debt payments. Most Chapter 13 filers also have to provide this information.
For information about each of these forms, including how to complete them, see:
Here’s how to find the Michigan-specific figures for these means test forms:
Michigan median income figures. The median income for a single-person household is $43,677, $50,079 for a household of two, and more for larger families. These figures change periodically, so check here for the most current figures for each household size.
Example. Ben’s annual income is $45,000. He lives with a roommate, with whom he splits expenses, but he and his roommate keep their finances completely separate and each pay their own expenses. Ben will not automatically pass the means test because his income is above $43,677, but after inputting information about his payroll deductions, such as taxes and medical and life insurance, car and mortgage payments, and other expenses, he may still qualify to file under Chapter 7.
Michigan standard deduction figures. Forms 22A and 22C list categories of living expenses such as your mortgage or rent, food, and childcare. For some of those categories (like childcare), you provide the actual amount of your monthly expense. For others, you deduct a predetermined amount -- sometimes that figure is a national standard and other times the number varies by county or region.
You can find all of the Michigan county and region-specific figures you’ll need for Forms 22A and 22C on the U.S. Trustee’s website at www.justice.gov/ust. Click on “Bankruptcy Reform” and then “Means Testing Information.”
Example. Housing and utility expense standards vary by county. If you live in Mackinac County, your mortgage or rent deduction is $663 for a two-person household. If you live in Marquette County, the deduction is $757. You can find housing expense standards for each Michigan county here.
Some judicial districts and bankruptcy courts require bankruptcy filers to complete additional “local forms.” To find out if your court requires additional forms, contact the bankruptcy filing clerk. Some courts post these forms online on the court’s website. (Below you’ll find links to Michigan’s bankruptcy courts.)
There are two federal judicial districts in Michigan (see below for links). You can file in either:
You can use the Court Locator tool on the U.S. Trustee’s website to find bankruptcy court locations and websites. The two district bankruptcy courts in Michigan are: