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Bankruptcy Exemptions

     The bankruptcy code allows each person who files bankruptcy to keep certain assets such as household goods and furnishings, your home and car, jewelry and pensions considered essential for the debtor's fresh start after bankruptcy. Exemption limitations on equity apply to each of the exemptions. That property is the debtor's "exempt property." Generally, bankruptcy law allows married couples filing jointly to each claim a full set of exemptions.

     In determining the value of your property fair market value as of the day of filing bankruptcy not the purchase price is used. Nonexempt property must be transferred to the trustee for sale and distribution to your creditors. Equity is the difference between the value of the property and what is owed on the property. For example, a house valued at $200,000 with a loan of $190,000 has an equity value of only $10,000. home (16K)

     Most Chapter 7 cases are considered "no-asset cases." The debtors give up nothing to the trustee for the following reasons: The equity in the particular property owned by the debtor is less than the available exemptions. For example, most house hold good have very little market value. Most pensions and IRA's are fully exempt.

     In Michigan, the debtor can elect between State exemptions or the Federal exemptions provided under the bankruptcy code. In joint filings both the husband and wife must use the same exemption table. In other words, one party cannot elect to use the State exemptions and the other party uses the federal exemptions. Determining which exemption table to use depends on many factors. A skilled attorney can guide you on which exemptions are correct for your filing.

     The next two pages outline the Federal and State exemptions

Bankruptcy Exemptions

Federal Exemptions
     Below is a list of the major Federal bankruptcy exemptions available to individual debtors. 80649_3423 (24K)
  • The debtor's aggregate interest, not to exceed $20,200* in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
  • The debtor's interest, not to exceed $3,225 in value, in one motor vehicle.
  • The debtor's interest, not to exceed $475 in value in any particular item or $10,775 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
  • The debtor's aggregate interest, not to exceed $1,350 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
  • The debtor's aggregate interest in any property, not to exceed in value $800 plus up to $10,250 of any unused amount of the exemption provided under paragraph (1) of this subsection.

Bankruptcy Exemptions

  • The debtor's aggregate interest, not to exceed $1,850 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.
  • The debtor's aggregate interest, not to exceed in value $9,850 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
  • Social security benefit, unemployment compensation, or a local public assistance benefits.
  • Veterans' benefit
  • Alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
  • Personal injury compensation payments to $20,200, wrongful death payments, crime victims' compensation, public assistance, Social Security, unemployment compensation, and veterans' benefits
  • Tools of trade up to $20,200
  • Wild card - $1,075 of any property plus up to $10,125 of any amount of unused homestead exemption

Bankruptcy Exemptions

Michigan Exemptions

Under Michigan bankruptcy laws, you can keep:
  • Household goods, furniture, appliances, utensils, books, up to $3,450 total (maximum $525 per item)
  • Your home, if you do not have more than $34,450 ($51,650 if elderly or disabled) in equity in the house (today's value less costs of sale less payoff balances on all liens and mortgages)
  • Burial plots; church pew, slip, seat
  • Family pictures and clothing
  • Tools of trade and farm equipment, up to $2,300 in value
  • Building and loan shares to $1,150 par value if you did not claim a homestead exemption
  • Private retirement benefits
  • ERISA-qualified pension benefits
  • Property of a business partnership
  • Alimony and child support
  • AFDC, social welfare, worker's compensation and unemployment compensation benefits
  • Crime victim's compensation, veterans
     Federal and Michigan exemptons may not be mixed. A debtor must select only one of the two options available. There are other potential exemptions available to certain individuals.The above lists are not intended to be inclusive. At Macomb Legal services, your bankruptcy attorney will advise you on which option is best for your particular case.
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Debt Relief Agency

We are a Macomb County Law Firm as well as a Debt Relief Agency helping people file for bankruptcy relief under the United States Bankruptcy Code.

Information

Information provided on Legal issues and bankruptcy questions are frequently complex and individual. The information contained here is intended to be educational only: it is not legal advice nor does it create an attorney client relationship between the viewer and the firm.