Will I lose everything if I file for bankruptcy in Michigan?

No, you will not "lose everything" in bankruptcy. In fact, for some of you, you might not lose anything at all.

The bankruptcy code gives petitioners, those filing for bankruptcy, certain property exemptions so they are not left with nothing post bankruptcy. In the state of Michigan, you may choose between Michigan's exemption or Federal exemptions. These two exemptions, although somewhat similar, can lead to varying results. For example, Under Michigan's exemption set you can get a homestead exemption of $35,300, while only a $21,625 exemption under the federal option. However, the Michigan exemption option only allows for $3,525 for household items, while under the federal option you can exempt up to $11,525.

Other exemptions:

Motor Vehicles:
Federal - $3,450
Michigan - $3,250

Jewelry:
Federal - $1,450
Michigan - None

Computer:
Federal - None
Michigan - $600

Life Insurance:
Federal - $11,525
Michigan - None

Crops, farm animal, feed:
Federal - None
Michigan - $2,350

A huge benefit to using the Federal option is the "wild card" exemption. The wild card exemption can be worth up to $11,975 depending on how much of their homestead exemption the petitioner used.

Any Michigan bankruptcy lawyer should understand the difference between the two options and be able to advise you on how you should proceed in order to maximize the protection given to your estate.

If you have any question and would like to give us a call, contact us at our Grand Rapids, Michigan law office at (616) 717-5734.