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.
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Exemptions Available Under the Bankruptcy Code |
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Item |
Michigan |
Federal |
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1 |
All Family pictures, arms required by law, wearing |
Unlimited |
may be part of #3 below |
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apparel (excluding furs), burial plots |
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2 |
All fuel and provisions for 6 months |
Unlimited |
none* |
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3 |
Household goods, furniture, utensils, books, appliances |
$3,000.00 |
$9,850.00 |
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$6,000.00 |
$19,700.00 |
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no item may |
no item may |
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exceed $450.00 |
exceed $475.00 |
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4 |
Health aids |
Unlimited |
Unlimited |
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5 |
Jewelry |
none |
$1,225.00 |
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may be part of $3,000.00 |
$2,450.00 |
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under #3 |
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6 |
Pew in place of worship |
$500.00 |
none* |
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$1,000.00 |
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7 |
Crops, farm animals, and feed for farm animals |
$2,000.00 |
none* |
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$4,000.00 |
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8 |
Household Pets |
$500.00 |
none* |
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$1,000.00 |
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9 |
One motor vehicle |
$2,775.00 |
$2,950.00 |
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$5,550.00 |
$5,900.00 |
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10 |
One Computer and its accessories |
$500.00 |
none* |
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$1,000.00 |
may be part of #3 |
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or #11 |
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11 |
Tools of trade |
$2,000.00 |
$1,850.00 |
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$4,000.00 |
$3,700.00 |
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12 |
Life insurance policy - unmatured |
Unlimited |
Unlimited |
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13 |
Life insurance policy with loan value |
Unlimited |
$9,850.00 |
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$19,700.00 |
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14 |
Life insurance payments needed for support |
Unlimited |
Unlimited |
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15 |
Lost earnings compensation payments |
None |
Unlimited |
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16 |
Benefits from stock or mutual life, health, or casualty |
Unlimited |
none* |
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insurance for disability |
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17 |
Govt. benefits: Soc. Sec., Unemployment, Pub. Assistance |
Unlimited |
Unlimited |
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18 |
Veterans' benefits |
Unlimited |
Unlimited |
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19 |
Disability, illness |
Unlimited |
Unlimited |
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20 |
Alimony and child support |
Unlimited |
Unlimited |
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21 |
Pensions |
Unlimited |
Unlimited |
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22 |
Crime Victims' compensation |
Unlimited |
Unlimited |
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23 |
Wrongful death payments |
none* |
Unlimited |
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24 |
Personal injury compensation payment |
none* |
$18,450.00 |
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$36,900.00 |
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25 |
Shares of association, savings & loan, unless homestead |
$1,000.00 |
none* |
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exemption |
$2,000.00 |
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26 |
Qualified retirement account |
Unlimited |
none* |
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27 |
Pension, profit-sharing plan |
Unlimited |
none* |
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28 |
Homestead, if debtor, codebtor or dependents of debtor are |
$30,000.00 |
$18,450.00 |
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less than 65 years of age and not disabled |
$60,000.00 |
$36,900.00 |
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29 |
Homestead, if debtor or dependents of debtor are 65 years |
$45,000.00 |
$18,450.00 |
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of age of older or disabled |
$90,000.00 |
$36,900.00 |
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30 |
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Unlimited |
$18,450.00 |
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$36,900.00 |
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31 |
Real Property held as a tenancy by the entirety: provided |
Unlimited |
$18,450.00 |
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there are no joint creditors |
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$36,900.00 |
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32 |
Bonds, certificates of stock, mortgages, promissory notes, |
Unlimited |
none* |
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debentures, or other evidences of indebtedness held jointly |
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as husband and wife |
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33 |
Wildcard exemption - any property up to $975.00 plus up to |
none |
$10,225.00 |
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$9,250.00 of unused amount from homestead |
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$20,450.00 |
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*none unless wildcard exemption can be applied |
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