December 7, 2017
If you’re having trouble paying bills, or you’ve suffered a setback like job loss, divorce, or illness, bankruptcy can help you get a fresh start. However, sorting out what you need to start the process can be confusing. Read on to learn about resources you can use when filing your Michigan bankruptcy.
(Not sure which type of bankruptcy to file? Start with What Is the Difference Between Chapter 7 and Chapter 13 Bankruptcy?)
Official Bankruptcy Forms
Before the Michigan bankruptcy court wipes out any debt, you must disclose your complete financial picture, including your income, expenses, property, debt, and recent financial transactions. You’ll find fillable, downloadable bankruptcy forms on the official form webpage. Once complete, you’ll visit your bankruptcy court to file the paperwork along with a filing fee or fee waiver and proof that you’ve taken the mandatory counseling course (more below).
Michigan Bankruptcy Information
Bankruptcy is a federal process, but some of Michigan’s laws and procedures will come into play. Here are some helpful resources.
Means Testing and Credit Counseling Information
The U.S. Trustee website has two types of information you’ll need: means testing figures and approved credit counseling providers.
- Means testing information. Not everyone qualifies for Chapter 7 bankruptcy. Your income must pass the “means test.” A family whose income exceeds the median income for Michigan might pass the means test after subtracting certain allowed expenses. The income charts and expense guidelines to complete the test are on the U.S. Trustee’s website (select “Means Testing Information”). In a Chapter 13 bankruptcy case, you’ll make a similar calculation to find the amount of your monthly payment.
- Required course providers. Most filers must take a credit counseling course before filing and a debt management course afterward. The U.S. Trustee maintains an approved provider list. Click on “Credit Counseling & Debtor Education” and scroll down to your bankruptcy district.
Michigan Bankruptcy Courts
Michigan has two bankruptcy districts—Eastern and Western. Each has multiple locations serving various geographical areas. Clicking on the district name will take you to the court’s homepage.
Eastern District of Michigan
- Division locations: Bay City, Detroit, and Flint
- Finding your division: Contact the court clerk.
- Presiding judge: Chief Judge Phillip J. Shefferly
Western District of Michigan
- Division locations: Grand Rapids, Marquette, Kalamazoo, Lansing, and Traverse City
- Finding your division: Contact the court clerk.
- Presiding judge: Scott W. Dales
On the Michigan bankruptcy court website, you can access the district’s local rules and instructions for filing your paperwork on the navbar under “Filing Without an Attorney” or “For Debtors.”
Michigan Bankruptcy Exemptions
You need not worry that you’ll lose everything when you file a bankruptcy case. But, you might not be able to exempt (protect) all of your property, either. Here are some things you should know:
- Exempt property. Your ability to keep your property depends on whether the asset appears on the Michigan or the federal bankruptcy exemption list. As a Michigan resident, you can claim either the Michigan or the federal exemptions, but you can’t mix and match between the two lists.
- Nonexempt property. Property that isn’t on the list is nonexempt. The Chapter 7 bankruptcy trustee will liquidate (sell) it for the benefit of the creditors. The process is different in a Chapter 13 case. You can keep all your property, but you’ll pay the value of the nonexempt assets over three to five years as a part of your Chapter 13 payment.
- Jointly-owned property. Spouses who file a joint bankruptcy in Michigan can double most, but not all, of the amounts on the Michigan exemption list. For instance, Michigan spouses are limited to one homestead exemption.
Here’s a list of commonly used Michigan bankruptcy exemptions. All references to statutes are to the Michigan Compiled Laws (Mich. Comp. Laws) unless otherwise indicated.
- Homestead. Equity up to $38,225. If you are over 65 or disabled, the limit increases to $57,350. The surviving spouse of the owner can claim the exemption. (600.5451(1)(m),(o).)
- Motor vehicle. Equity in one vehicle up to $3,525. (600.5451(1)(g).)
- Household goods and personal property. Household goods such as furniture, utensils, books, appliances, and jewelry valued up to $600 per item and $3,825 total (600.5451(1)(c)); all clothing, other than furs (600.5451(1)(a)(iii)); $650 in computer accessories (600.5451(1)(h)); all family pictures (600.5451(1)(a)(i)).
- Pension and retirement accounts. Most pension and retirement accounts are completely protected. Individual retirement accounts and annuities are fully protected except for amounts contributed within the 120 days prior to filing bankruptcy (600.5451(1)(k)); traditional, simple, or Roth IRAs are protected up to a particular dollar amount (for the most recent figure, see Your Retirement Plan in Bankruptcy) (11 U.S.C. § 522(b)(3)(C)(n)); pension, profit-sharing, stock bonus, or other qualified plan are fully protected with the exception of amounts contributed in the 120 days prior to filing (600.5451(1)(l)).
- Wages. Up to 60% of earned but unpaid wages for the head of household or $15 per week plus $2 per week for each dependent other than the spouse. Others can protect up to 40% or $10 per week. (600.5311.)
- Insurance benefits. Fully protected regardless of the amount (500.2207); benefits paid on behalf of an employer (500.2210); benefits paid by any stock, mutual life, health, or casualty insurance (600.5451(1)(j)).
- Public benefits. Crime victims’ compensation (18.362); unemployment compensation (421.30); Korean War veterans’ benefits (35.977); Vietnam War veterans’ benefits (35.1027); welfare benefits (400.63); worker’s compensation benefits (418.821).
- Tools of trade. Up to $2,550 in tools, implements, materials, and other items necessary to carry on your profession, trade, occupation, or business (600.5451(1)(i)).
The state of Michigan periodically adjusts the amounts in its exemption list. You’ll want to make sure you have the most recent information by checking for updates with Michigan Department of Treasury in the Economic Reports section.
This overview provides some—but not all—of the necessary information needed in a bankruptcy case. Be aware that the court will hold you responsible for knowing the law. If you don’t plan to hire an attorney, consider purchasing a do-it-yourself book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D. for additional information on your bankruptcy matter.