Michigan Bankruptcy Exemptions: What You Get to Keep

If you file bankruptcy in Michigan, you get a choice most people do not realize they have: Michigan has not opted out of the federal bankruptcy exemptions, so you may elect either the federal exemption set under 11 U.S.C. § 522(d) or Michigan's own state exemptions. Michigan also offers a distinctive third feature: a separate set of bankruptcy-specific state exemptions under MCL 600.5451 that are adjusted for inflation every three years and that include a homestead exemption far larger than the tiny $3,500 homestead in Michigan's general (non-bankruptcy) law at MCL 600.6023. Because of that, the smartest move is usually to compare all three options before you pick, since you cannot mix federal and state exemptions in the same case.

What an exemption actually does

An exemption is the dollar value of property a bankruptcy filer gets to protect from creditors. In a Chapter 7 case, anything above your exemption limit in non-exempt property can theoretically be sold by the trustee to pay creditors. In a Chapter 13 case, exemptions help set the minimum your unsecured creditors must receive through your repayment plan. The more your assets fit inside the exemptions, the more you keep. This is why choosing the right exemption set in Michigan can change the outcome of your whole case.

The federal set versus Michigan's two state sets

Because Michigan permits the federal exemptions, you are really choosing among three frameworks:

• The federal exemptions (11 U.S.C. § 522(d)). These are uniform nationwide and are adjusted every three years (most recently on April 1, 2025; next on April 1, 2028).
• Michigan's general exemptions (MCL 600.6023 and related statutes). These apply outside bankruptcy too, but the homestead figure is very low.
• Michigan's bankruptcy-specific exemptions (MCL 600.5451). Available only in bankruptcy, with inflation-adjusted figures that the Michigan Department of Treasury recalculates every three years.

You must use one framework consistently, not cherry-pick the best line from each. Married couples filing jointly can generally each claim a full set of the chosen exemptions, which effectively doubles many limits under the federal scheme.

Homestead: protecting your home equity

Michigan's general homestead exemption under MCL 600.6023 protects only about $3,500 of equity in your home, which is almost meaningless for most homeowners. The bankruptcy-specific homestead under MCL 600.5451 is dramatically higher, in the range of roughly $40,000 as of 2026 (and substantially higher, in the neighborhood of $60,000, for filers who are 65 or older or who are disabled), because it is indexed for inflation. The federal homestead exemption is approximately $31,575 after the April 2025 adjustment. These three numbers move on different schedules, so do not rely on any figure here as exact at the moment you file. Confirm the current bankruptcy-specific Michigan amount with the bankruptcy court clerk or the Michigan Department of Treasury, and confirm the federal figure with the official 11 U.S.C. § 522(d) table, before you choose.

A key planning point: if you have little or no home equity, the federal set is often better because its generous wildcard lets you redirect unused homestead value to other property. If you have significant equity, Michigan's higher bankruptcy-specific homestead may protect more of your house.

Motor vehicle exemption

The federal exemptions protect roughly $5,025 of equity in one motor vehicle as of the April 2025 adjustment. Michigan's state exemptions also protect a vehicle, but the protected amount under the bankruptcy-specific statute is smaller (in the low-to-mid thousands) and is inflation-adjusted. Remember the exemption applies to your equity, not the car's sticker price: if you still owe on a loan that roughly equals the car's value, your equity is small and easily exempt either way. Confirm the current Michigan vehicle figure with the court before relying on it.

Personal property and household goods

Both Michigan and the federal scheme protect ordinary household belongings, but they describe them differently. Michigan's statutes specifically protect items such as household goods, furniture, utensils, books, and appliances up to a set aggregate value, plus family pictures, a burial plot, certain church pews, and arms or equipment a member of the military is required to keep. The federal set instead uses a per-item cap and an overall aggregate cap for household goods, plus separate allowances for jewelry and for tools of the trade. In practice, everyday used furniture and clothing have low resale value and are almost always fully exempt under either choice; the harder questions involve high-value single items like a wedding ring, a firearm collection, or expensive electronics.

The wildcard: Michigan's biggest weakness

The federal exemptions include a wildcard of roughly $1,675 that you can apply to any property, plus up to about $15,800 of any homestead exemption you did not use. That combined wildcard is the single most powerful tool for protecting cash, a tax refund, a second vehicle, or other property that the state set leaves exposed. Michigan's state exemptions do not include a comparable broad wildcard. For renters and for homeowners with little equity, this is often the deciding factor in choosing the federal exemptions.

Wages, benefits, and retirement

Tax-qualified retirement accounts such as 401(k)s and IRAs are broadly protected under both Michigan law and federal bankruptcy law, with IRA protection subject to a high inflation-adjusted federal cap. Many public and private benefits are also shielded. Note the federal baseline that protects your paycheck even outside bankruptcy: the federal Consumer Credit Protection Act caps most wage garnishment at 25% of disposable earnings (or the amount above 30 times the federal minimum wage, whichever is less). Bankruptcy's automatic stay stops most garnishments immediately when you file. Federal consumer statutes also continue to apply: the FDCPA limits how third-party debt collectors may contact you, and the FCRA governs how a bankruptcy is reported on your credit file.

How to claim and protect your exemptions

You claim exemptions on Schedule C of your bankruptcy petition, citing the specific statute for each item. Errors here are costly: undervaluing or misclassifying property, or failing to claim an exemption you were entitled to, can let the trustee reach assets you could have kept. The 90-day and 730-day residency rules in 11 U.S.C. § 522(b) also determine whether you may even use Michigan's exemptions or are tied to another state's set if you recently moved. Because the choice of exemption framework is strategic and irreversible within a case, most filers benefit from reviewing the comparison with a Michigan bankruptcy attorney before filing.

Where to verify the current figures

Exemption amounts change, so always check a primary source close to your filing date. The exact bankruptcy-specific dollar amounts are published by the Michigan Department of Treasury and are available from the U.S. Bankruptcy Court for the Eastern and Western Districts of Michigan. The federal figures appear in the official 11 U.S.C. § 522(d) schedule. For broader consumer questions, debt-collection abuse, or to report a scam, contact the Michigan Department of Attorney General, Consumer Protection Team at michigan.gov/ag or its consumer complaint line at 877-765-8388. This article is general information, not legal advice for your specific situation.

Official Michigan Sources

This page is based on Michigan law. Limits and deadlines change — verify the current details directly with the official Michigan sources below. This is general legal information, not legal advice.

• Michigan Department of Attorney General - Consumer Protection — official Michigan agency.
• File a Complaint - Michigan Attorney General Consumer Protection
• Michigan Consumer Protection Act, Act 331 of 1976 (MCL 445.901-445.922)

Federal law also applies. Federal laws like the Fair Debt Collection Practices Act and Fair Credit Reporting Act protect you nationwide, on top of Michigan’s own rules.