STATE EXEMPTIONS

Certain kinds of property are exempt from collection by judgment creditors and can be excluded from the bankruptcy estate under the State Exemption laws.

The State Exemptions include the following:

In General: Anything that’s exempt under state or federal non-bankruptcy law. The Michigan exemption laws, as discussed below, invariably predominate.

Real Estate: Real estate in the names of both husband and wife as tenants by the entirety is exempt from the individual creditors of the individual spouse BUT NOT from joint creditors. Unlike the federal exemptions, this is not limited to a residence but includes all entireties property from commercial buildings to raw land.   If the real estate is a home, then there is an additional homestead exemption of $30,000.  If the debtor is 65 or older or disabled, then the homestead exemption is $45,000.

Personal Property:  The following personal (non real estate) property owned jointly by husband and wife is exempt from the individual creditors of the individual spouse BUT NOT from joint creditors: bonds, certificates of stock, mortgages, promissory notes, evidence of indebtedness. Joint bank accounts are not "evidences of indebtedness" and are not protected by the statute. It is presumed that each spouse owns ½ of the bank account.

Clothes: All clothes excluding furs.

Motor Vehicle:  $2,775 in one motor vehicle.

Household Goods & Jewelry:  $3,000 of household goods, furniture, utensils, books, appliances, and jewelry, not to exceed $450 for any one item. 

Tools of the Trade:  $2,000 of tools, materials and other personal property necessary to earn a living. 

Disability Insurance: Benefits paid by any stock or mutual life or health or casualty insurance company, on account of disability due to injury or sickness of any insured person.

Retirement Plans: With qualifications, includes most IRAs, plans qualified under §401 of the Internal Revenue Code subject to ERISA (pension, profit-sharing, stock bonus, etc), and annuities under §403(b), except for contributions within 120 days of filing bankruptcy, and orders for child support, and orders pursuant to a judgment of divorce or separate maintenance. This is a complex and volatile area.

WARNING: The common practice of making owners the sole participants in ERISA pension and profit sharing trusts may be fatal in bankruptcy. The courts consider the trust unqualified even though the IRS may have given approval.

Life Insurance: Generally, the cash surrender value of all policies owned by the debtor and payable to the spouse or children will be exempt. 

Misc: There are a myriad of lesser miscellaneous exemptions.

Go to Federal Exemptions