If you file for bankruptcy in Michigan, the Michigan motor vehicle exemption allows you to protect $3,475 in car equity; more if you are married and filing jointly. Here you’ll find information about the Michigan car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Michigan’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Michigan’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Michigan’s Motor Vehicle Exemption
In Michigan, you can exempt up to $3,475 in equity in one motor vehicle.
The Federal Motor Vehicle Exemptions
Michigan allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.
Can Married Couples Double Michigan’s Motor Vehicle Exemption?
Michigan allows married debtors filing joint bankruptcy to each use the motor vehicle exemption for their own vehicles. For example, if you and your spouse file joint bankruptcy, you can each exempt up to $3,475 in one motor vehicle. If your spouse's vehicle has $3,000 in equity and your vehicle has $4,000 in equity, your spouse can exempt the full value of his or her vehicle's equity, and you can exempt up to $3,475 in your vehicle.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
Michigan's motor vehicle exemption covers motor vehicles only.
Checking Michigan’s Exemption Laws
You can find Michigan’s motor vehicle exemption at Mich. Comp. Laws 600.5451(1)(g).
When the Michigan Exemption Amounts Are Updated
The exemption laws in Michigan change periodically. The amounts change every three years, starting in 2005; the Michigan Department of Treasury website will have updated amounts in 2014. You can find the updated exemption amounts on the website of the Michigan Department of Treasury at www.michigan.gov/documents/BankruptcyExemptions2005_141050_7.pdf.