One of the most common myths about bankruptcy is that you are required to give away all of your belongings. In reality, there are certain exemptions and items that you are allowed to keep during bankruptcy. For example, Michigan has a distinct group of items that a person is allowed to keep while navigating the bankruptcy process. To determine what items you are allowed to keep when filing for bankruptcy as well as answer the many questions that arise about the bankruptcy process, many people find it helpful to obtain the assistance of a seasoned bankruptcy lawyer. It is also helpful to understand some of the basics about Michigan’s homestead exemption.
The Amount Allowed Under Michigan’s Homestead Exemption
In accordance with the Michigan exemption law, homeowners as well as dependents are allowed to exempt up to $38,225 of interest in property. In cases in which the homeowner is 65 years of age or older (or the homeowner is disabled), the amount is increased to $57,350. While some states recognize that couples who file for bankruptcy and own property together are able to use the full exemption amount, married couples in Michigan who own property together are unable to double the homestead exemption. Despite these limitations, since 2005, the Michigan Department of Treasury has adjusted the exemption amount every few years. Currently, these amounts are scheduled to be adjusted against in 2020. This homestead exemption will apply to various types of real property that you might own in Michigan including houses, condominiums, co-op units, mobile homes, water vehicles, or any other type of home you own and use as your principal residence. If the property has associated land, the homestead exemptions also includes 40 acres. If the property is located in a city, the exemption includes one lot.
The Option of Federal Bankruptcy Exemptions
In the state of Michigan, when you declare bankruptcy, you have the option to select either state or federal bankruptcy exemptions. Currently, the federal bankruptcy exemption is $23,750. Much like Michigan’s bankruptcy exemption, this federal exemption can be used for houses, condominiums, co-op units, mobile homes, water vehicles, or any other type of home. Unlike Michigan’s exemption, under the federal exemption, married couples are able to double this exemption. Much like Michigan’s exemption numbers, though, these numbers change frequently, which is why it is often important to contact a knowledgeable bankruptcy attorney before proceeding through the bankruptcy process.
Contact an Experienced Bankruptcy Attorney
The bankruptcy process is particularly complex and if you are not familiar with bankruptcy laws in Michigan, it is often in your best interest to obtain the assistance of a skilled bankruptcy attorney. At Resnick Law, we have years of experience in helping individuals navigate the bankruptcy process. Contact our law office today to schedule an initial free consultation.
(image courtesy of Joss Woodhead)