How much property you can keep after filing for bankruptcy depends on which form of bankruptcy you pursue. If you file under Chapter 13 (which requires the gradual repayment of your debts under favorable terms), you may be able to keep all of your property. If you file under Chapter 7, however, the price of a debt discharge will be the liquidation of your non-exempt assets to pay your creditors.
Under an exemption, you can keep certain forms of property, or your equity in that property, up to a certain value, as long as you keep up with any installment payments. If your home equity exceeds the value of your exemption, for example, under Chapter 7 your home will liquidated to satisfy creditors, but you will be entitled to the cash value of your exemption. If your home equity doesn’t exceed the value of your exemption, you can keep your home even after filing for Chapter 7 bankruptcy as long as you keep up with your mortgage payments.
Although the federal government applies certain exemptions, states also have their own rules. In Michigan, you are entitled to choose between the state and federal rules, depending on which set of rules most benefit you. Your attorney can help you determine which rules to choose based on your individual financial circumstances. With this in mind, the following is a list of federal and state bankruptcy exemptions last adjusted by Congress in 2016 – keep in mind that these values change every few years, and that they double when spouses file a joint bankruptcy petition:
Federal Bankruptcy Exemptions
- $23,675 of equity in your residence;
- $3,775 worth of equity in your motor vehicle;
- $12,625 for household goods (up to $600 per item);
- $2,375 for work tools;
- A $1,250 “wild card” exemption for property you can’t otherwise exempt, plus up to $11,850 of any unused home equity exemption;
- Retirement benefits, public assistance, veteran’s benefits, insurance benefits, alimony and child support payments (certain exceptions apply to some of these items); and
- No exemption for wages.
Michigan Bankruptcy Exemptions
The following are the Michigan bankruptcy exemptions
- $37,775 equity in your personal residence (more if you are elderly or disabled);
- $3,500 in real estate equity, even if you don’t live on the property;
- $3,475 worth of equity in your motor vehicle;
- $3,775 for household goods (up to $600 per item);
- $2,525 for work tools;
- $2,525 for crops, farm animals and feed;
- Retirement benefits, public assistance, veteran’s benefits, insurance benefits, alimony and child support payments (certain exceptions apply); and
- No “wild card” exemption; and
Careful analysis of the foregoing exemption rules will reveal that it can matter very much which set of rules you choose. If you have $30,000 in home equity and a regular paycheck, for example, it might make more sense to choose the Michigan rules over the federal rules. On the other hand, it might make more sense to choose the federal rules if you rent an apartment but own thousands of dollars’ worth of household goods.
Contact Attorney Nancy Neal Joyce Today
Attorney Nancy Neal Joyce is an experienced bankruptcy attorney and debt negotiator with a keen understanding of the legal issues involved in a bankruptcy. She can help you through the complexities of the bankruptcy maze with as little loss of your assets as possible, by listening carefully to your story and vigorously representing you in bankruptcy court. Call her Livonia, Michigan office today at (734) 427-7772 to schedule your free initial consultation.
