Michigan Property / Asset Exemptions
Will I lose all of my property if I file for bankruptcy?
Countless debtors have been deterred from even considering the possibility of filing for bankruptcy because they think that they will lose everything in the process. Numerous myths and misconceptions about bankruptcy have left people wondering what is and isn't true, so the Michigan bankruptcy lawyer at Hensel Law Office, PLLC would like to set the record straight. First and foremost, it is important to understand that you are protected by state and federal bankruptcy laws. This means that certain assets are exempt from consideration and/or inclusion in the bankruptcy process. As such, you can rest easier knowing that you will not be forced to forfeit your possessions in order to obtain relief from your unmanageable debt. Rather, you will be given the opportunity to keep your valuable assets safe.
Difference Between State & Federal Bankruptcy Exemptions
When filing for bankruptcy in Michigan, you will need to determine what type of exemption system you would like to claim. Since filers can choose to abide by state or federal bankruptcy exemptions, you must figure out which system is most accurately aligned with your best interests. For example, Michigan bankruptcy exemptions allow for you to protect up to $35,500 of your homestead's equity, while federal exemptions only protect a maximum of $22,975. In regard to other personal assets, however, federal exemptions may allow for a greater level of protection. For example, state exemptions protect the equity of your motor vehicle up to $3,250, while federal exemptions protect up to $3,675. As such, it is recommended that you make this decision under the guidance of an attorney.
Types of Property / Asset Exemptions in Michigan
If you have chosen to claim state bankruptcy exemptions, you will need to understand just how much of your property you will be able to protect. Since this process may require you to liquidate certain assets and use the proceeds to repay creditors, it is imperative that you are fully informed before making this decision. Under state laws, you would be able to protect the following assets:
Home / Condo Exemptions
- Up to $35,500 in homestead equity would be protected
- Up to $53,925 would be protected if over 65 or disabled
Motor Vehicle Exemptions
- Up to $3,250 in equity would be protected for one vehicle
Personal Property Exemptions
- Up to $3,525 would be protected for household goods
- This includes furniture, appliances & jewelry
- Up to $600 in equity would be protected for computer accessories
- There is no limit on the amount of clothing that you can keep
Pension / Retirement Exemptions
- Individual Retirement Accounts & Annuities are fully protected
- $1,095,000,000 is protected for Traditional, Simple & Roth IRA's
- Up to $5,475 is protected for Education IRA's
- The head of the household can protect up to 60% of earned wages
- Other household members can protect up to 40% of earned wages
- Insurance benefits are fully protected, regardless of the amount
Contact Our Michigan Bankruptcy Lawyer Today
If you have questions about whether to claim state or federal bankruptcy exemptions, it is imperative that you discuss your case with a Michigan bankruptcy attorney at Hensel Law Office, PLLC. Our firm has been assisting the residents of Sterling Heights and all surrounding areas for several years, so you can trust that your case is in competent hands when you come to us for help. Call our office today at (888) 258-0651 to take advantage of a free initial consultation.