June 26, 2017
In bankruptcy, a homestead exemption protects equity in your home. Here you’ll find specific information about the homestead exemption in Michigan.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see Bankruptcy Exemptions.
Under the Michigan exemption system, each homeowner and his or her dependents may exempt up to $38,225 of interest in property covered by the homestead exemption. If the homeowner is age 65 or older or is disabled, the exemption amount increases to $57,350.
In some states, if a married couple files bankruptcy together and they own the property together, each spouse can use the full exemption amount, thereby doubling the available exemption. In Michigan, spouses who own property together cannot double the homestead exemption. However, if the spouses own the property as tenants by the entirety, they might be able to protect the entire value of the property (see below).
In Michigan, the homestead exemption applies to real property, including your house, condominium, co-op unit, mobile home, motor home, boat or any other watercraft, or manufactured home to which you hold title and that you use as your principal residence. The homestead exemption also applies to appurtenances to the property. If the property is outside a city, village, or recorded plat, the homestead includes up to 40 acres. If the property is inside a city, village, or recorded plat, the exemption includes one lot or parcel.
In Michigan, you can use either the state exemption system or the federal bankruptcy exemption system (but you can’t pick and choose different exemptions from each system – you have to use all state exemptions or all federal exemptions.)
The federal bankruptcy homestead exemption amount is $23,675. The exemption may be used for homes, condos, co-ops, mobile homes, and burial plots. Married couples can double this exemption. You can find the federal bankruptcy homestead exemption at 11 U.S.C. §522(d)(1), (5). (Because these numbers change periodically, get the most recent figures by reading The Federal Bankruptcy Exemptions.)
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)
In Michigan, the homestead exemption is automatic. You don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy.
If property is held as a tenancy in the entirety, the property is jointly owned by a married couple as a single marital entity, not as two separate individuals.
A homestead held as tenants by the entirety in Michigan is fully exempt in bankruptcy under the Michigan exemption law except with regard to debt that is joint between the spouses. Because of the complexity, if you hold title in this manner, you should consult with an attorney before filing for bankruptcy.
Michigan's homestead exemption is found in the Michigan Compiled Laws at Mich. Comp. Laws 600.5451(1)(m)-(o). To learn how to find state statutes, check out Laws and Legal Research. The Michigan exemption statute can be found at the Michigan Legislature.
The Michigan Department of Treasury adjusts the Michigan exemption amounts every three years for inflation, starting in 2005. The last adjustment was in April 2017; the next adjustment will be in April 2020. You can find the most recently updated figures at the Michigan Department of Treasury in the Economic Reports section.