What You Can Keep In Chapter 7 Bankruptcy

Chapter 7 And The Discharge Of Debt

When a person files a Chapter 7 bankruptcy, a trustee is appointed, who becomes the immediate owner of the person's property on the day they file their case. This does not mean the person will lose possession of their property. In fact, the vast majority of people keep their property. The property that a person can keep is called exempted property. Property which is exempt from the trustee's power to take possession of, sell and turn into cash.

An exemption is therefore the bundle of property a person filing bankruptcy may keep from the Chapter 7 trustee to make a "fresh start" in life. Persons who file bankruptcy in Michigan are entitled to elect their scheme of exemptions from those provided under the Federal Bankruptcy Code or Michigan law.

Below is a comparative analysis of some property a person may own and still keep although they have filed bankruptcy. The analysis is not exhaustive and is not intended as legal advice. A discussion of their applicability to the client should be made with an attorney at Charles J. Schneider, P.C. Even those exemptions described as unlimited may be limited under certain circumstances.

Exemptions Available Under The Bankruptcy Code
Item Michigan Federal
1All family pictures, arms required by law, wearingUnlimitedmay be part of #3 below
apparel (excluding furs), burial plots
2All fuel and provisions for 6 monthsUnlimitednone*
3Household goods, furniture, utensils, books, appliances$3,000$9,850
no item mayno item may
exceed $450exceed $475
4Health aidsUnlimitedUnlimited
may be part of $3,000$2,450
under #3
6Pew in place of worship$500none*
7Crops, farm animals and feed for farm animals$2,000none*
8Household Pets$500none*
9One motor vehicle$2,775$2,950
10One Computer and its accessories$500none*
$1,000may be part of #3
or #11
11Tools of trade$2,000$1,850
12Life insurance policy — unmaturedUnlimitedUnlimited
13Life insurance policy with loan valueUnlimited$9,850
14Life insurance payments needed for supportUnlimitedUnlimited
15Lost earnings compensation paymentsNoneUnlimited
16Benefits from stock or mutual life, health, or casualtyUnlimitednone*
insurance for disability
17Govt. benefits: Soc. Sec., Unemployment, Pub. AssistanceUnlimitedUnlimited
18Veterans' benefitsUnlimitedUnlimited
19Disability, illnessUnlimitedUnlimited
20Alimony and child supportUnlimitedUnlimited
22Crime Victims' compensationUnlimitedUnlimited
23Wrongful death paymentsnone*Unlimited
24Personal injury compensation paymentnone*$18,450
25Shares of association, savings & loan, unless homestead$1,000none*
26Qualified retirement accountUnlimitednone*
27Pension, profit-sharing planUnlimitednone*
28Homestead, if debtor, co-debtor or dependents of debtor are$30,000$18,450
less than 65 years of age and not disabled$60,000$36,900
29Homestead, if debtor or dependents of debtor are 65 years$45,000$18,450
of age of older or disabled$90,000$36,900
30Homestead — widow or widower with no childrenUnlimited$18,450
31Real property held as a tenancy by the entirety: providedUnlimited$18,450
there are no joint creditors $36,900
32Bonds, certificates of stock, mortgages, promissory notes,Unlimitednone*
debentures, or other evidences of indebtedness held jointly
as husband and wife
33Wildcard exemption — any property up to $975 plus up tonone$10,225
$9,250 of unused amount from homestead $20,450
*none unless wildcard exemption can be applied

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.