June 26, 2017
If you file for bankruptcy in Michigan, the Michigan motor vehicle exemption allows you to protect $3,525 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, read Motor Vehicle Exemption in Bankruptcy .)
Michigan’s motor vehicle exemption plays a large role in determining whether the bankruptcy trustee can take your vehicle to repay your unsecured creditors (such as past-due support arrearages, back taxes, credit card accounts, medical bills, and personal loans). 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 more than the applicable exemption amount and the trustee can get funds to repay creditors after sales costs, the trustee is likely to sell your car. 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, if you're behind on your payment and can't quickly bring it current, the lender might 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?
By contrast, if you're behind on your vehicle payment, you might be able to get extra time to catch up if you qualify to file a Chapter 13 bankruptcy.
In Michigan, you can exempt up to $3,525 in equity in one motor vehicle.
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.
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 a joint bankruptcy, you can each exempt up to $3,525 in one motor vehicle. If your spouse's vehicle has $3,000 in equity in her car and you have $4,000 in equity in yours, your spouse can exempt the full $3,000 of the vehicle's equity, but you'll be limited to exempting the maximum exemption amount of $3,525 in your vehicle.
Michigan's motor vehicle exemption covers motor vehicles only.
You can find Michigan’s motor vehicle exemption at Mich. Comp. Laws 600.5451(1)(g).
The exemption laws in Michigan change periodically. The amounts change every three years, starting in 2005; the Michigan Department of Treasury last updated amounts in 2017. You can find the updated exemption amounts on the website of the Michigan Department of Treasury.