Michigan's Bankruptcy-Only Exemption System Struck Down

The Sixth Circuit Bankruptcy Appellate Panel has held that Michigan's bankruptcy-specific exemptions (found in Mich. Comp. Laws §600.5451) are unconstitutional.

The Sixth Circuit Bankruptcy Appellate Panel has held that Michigan's bankruptcy-specific exemptions (found in Mich. Comp. Laws §600.5451) are unconstitutional. The case is In re Schafer, B.A.P. Case No. 10-8030 (B.A.P. 6th Cir. 2011). Under this ruling, Michigan bankruptcy filers can use the federal bankruptcy exemptions or the Michigan non-bankruptcy exemptions (found in Mich. Comp. Laws § 600.6023).

The Bankruptcy Appellate Panel's ruling in In re Schafer affects bankruptcy cases in Kentucky, Michigan, Ohio, and Tennessee, but it's at odds with settled bankruptcy law in other parts of the U.S., so the issue may eventually end up before the U.S. Supreme Court.

For now, if you plan to file bankruptcy in Michigan, consult with a local bankruptcy attorney to determine which exemption system you should use (you can use Nolo's Lawyer Directory to find a local bankruptcy attorney).

You can find the Michigan bankruptcy-specific exemptions and the Michigan non-bankruptcy exemptions on the Michigan legislature's website: bankruptcy-only exemptions and non-bankruptcy exemptions.