Filing for bankruptcy is never an easy decision to make but sometimes it really is the best option for you. It can be difficult to try to pay back your creditors and you don’t want to lose most of your personal property during the process. Michigan has laws in place to protect individuals from losing their personal property to bankruptcy, which is known as bankruptcy exemptions. Michigan allows their residents to choose between using state or federal exemptions.
For state exemptions, Michigan has certain laws in place for specific items that are protected but only up to a certain amount. For instance, your house and car can be protected under the exemptions so that you do have to sell it. However, if you do not protect certain items or if items exceed the amount state exemption allows, you will then most likely be forced to sell those items in order to pay off creditors.
To understand Michigan’s state exemptions, you must first determine the equity you have on your property because there is an exemption limit applied to equity. To determine equity, you must find the difference between the value of your property and the amount owed on that property. If the property was obtained by a loan and you are still paying it off, then equity is still covered by exemptions. However, if the exemptions do not cover your entire equity, the trustee is allowed liquidate the asset but you will still receive cash from the value of your exemption.
Michigan already determined which property can be exempt and exemption limits for each type. A few examples include the homestead exemption, motor vehicle exemption, household goods and personal property. For the homestead exemption, your residence equity is protected up to $37,775. Your vehicle equity is protected up to $3,475 but it can only be applied to one vehicle. The state will also protect household goods from furniture to appliances to jewelry and each item is protected up to $600 or a total of $3,775. Michigan’s exemptions attempt to protect you from losing all your personal property.
To learn more about other Michigan exemptions and equity limits, you will want to contact a qualified bankruptcy attorney. Attorney Matthew J. Vivian can provide you with honest legal advice and has the skills and experience to help you become financially free. Contact Vivian Law Firm today for a free initial consultation!