Before filing for bankruptcy, you want to know whether you can keep valuable property—especially your home. If you qualify to use the Michigan homestead exemption, you'll be able to protect some equity in your house. In this article, we explain:
For more information, read How to File for Bankruptcy in Michigan. Not only does it explain the process, but you'll find helpful checklists and a link to an interactive bankruptcy quiz. Or, for a comprehensive bankruptcy guide, try What You Need to Know to File for Bankruptcy.
Under the Michigan exemption system, each homeowner and the homeowner's dependents can exempt up to $40,475 of equity covered by the homestead exemption. If the homeowner has a disability or is 65 or older, the exemption amount increases to $60,725.
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).
The homestead exemption applies to your principal residence only. It could include your house, condominium, co-op unit, mobile home, motor home, boat or other watercraft, or manufactured home. The homestead exemption also applies to appurtenances to the property. If the property is outside a city, village, or recorded plat, the homestead can include up to 40 acres. If the property is inside a city, village, or recorded plat, the exemption applies to one lot or parcel.
In Michigan, the homestead exemption is automatic. You don't have to file a homestead declaration to claim the homestead exemption in bankruptcy.
In Michigan, you can use either the state exemption system or the federal bankruptcy exemption system. You can't pick and choose different exemptions from each system, however. You must use all state exemptions or all federal exemptions.
The federal bankruptcy homestead exemption amount is $25,150 (as of April 2020). (11 U.S.C. §522(d)(1), (5).) The exemption can be used for homes, condos, co-ops, mobile homes, and burial plots. Unlike Michigan's homestead exemption, married couples can double this exemption.
A homestead held as tenants by the entirety in Michigan is fully exempt in bankruptcy under the Michigan exemption law other than with regard to a joint debt owed by both 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 2020; figures will change again in April 2023. You can find the most recently updated figures at the Michigan Department of Treasury in the Economic Reports section.
Updated April 16, 2020