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?)
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).
Bankruptcy is a federal process, but some of Michigan’s laws and procedures will come into play. Here are some helpful resources.
The U.S. Trustee website has two types of information you’ll need: means testing figures and approved credit counseling providers.
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.
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 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.
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.”
You don't need to 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:
Your ability to keep your property depends on whether the asset appears on Michigan or the federal bankruptcy exemption list. As a Michigan resident, you can claim either Michigan or federal exemptions, but you can’t mix and match between the two lists.
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.
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.
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.