There are many contributing factors that are associated with financial hardship. The most common reasons include heavy debt, sudden unemployment, divorce, foreclosure, or serious illness.

In fact, the average credit card debt in Michigan is a whopping $4,929 per person. In addition, foreclosure rates are also as staggering, one out of every 3,078 MI homes is currently in foreclosure.

If you find yourself struggling with similar situations, then you are probably struggling with other personal issues that come with dealing with debt. The fear of losing your automobile, home or your money can drain a person physically. You have probably even considered Claiming Bankruptcy .

If you are thinking “Can I File Bankruptcy?” you are surprisingly not alone. Just under a million people file bankruptcy each year in the United States. Bankruptcy is a device established by the US Government to help struggling Americans find relief from substantial debt. You may want to consider filing bankruptcy if it’s best for you.

What Is Bankruptcy?

Bankruptcy provides people with the opportunity to lift their financial burden while still working with lenders in a legal capacity. It is started by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or by spouses jointly. When the bankruptcy is over, the filer will ‘exit’ with a fresh new start.

Throughout the bankruptcy process, a trustee is appointed to oversee the deatils of the case. His or her duties will vary and depend on whether the individual has filed for Chapter 13 or Chapter 7 bankruptcy.

Did you know that Michigan ranks #12 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 365 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

Individuals or couples in Michigan, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information

Chapter 7

The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.

Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation

Chapter 13

If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to retain his or her valuable assets over a 3- to 5-year period.

In order to determine which type of bankruptcy a person will file, they will have to determine their ability to repay under the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

For those who do not qualify for a Chapter 7 filing, he or she will be able to file for Chapter 13, as described above.

What Are Bankruptcy Exemptions?

Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.


  • Real property, including condominium, up to $37,775 (if over 65 or disabled, up to $56,650). Spouse or child of deceased owner may claim the exemption. Unmarried co-owners and spouses may not double. Tenancies by the entirety are exempt without limit as to debts of one spouse.

Personal Property

  • Clothing; household goods, furniture, jewelry, appliances, utensils and books up to $600 each or $3,775 total; food and fuel to last six months; family pictures; church pew, slip or seat up to $650 for the entire family (cannot double); professional prescribed health aids; motor vehicle up to $3,475; household pets up to $650; crops, feed and animals up to $2,525; computer and accessories up to $650; burial plots and burial rights.


  • 60% of earned but unpaid wages for the head of household; 40% for others; subject to following minimums: $15 per week plus $2 per week for each dependent other than the spouse for the head of household; $10 per week for others.


  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
  • IRAS and Roth IRAs to $1,283,025. (This amount is set by federal law. See Federal Bankruptcy Exemptions for updates on this dollar amount.)
  • Firefighters, police officers.
  • Judges and probate judges.
  • Legislators.
  • Public school employees.
  • State employees.
  • ERISA-qualified benefits as well as IRAs and Roth IRAS, except contributions within last 120 days.

Public Benefits

  • Crime victims’ compensation.
  • Vietnam veterans’ benefits.
  • Veterans’ benefits for WWII veterans.
  • Korean War veterans’ benefits.
  • Welfare benefits.
  • Workers’ compensation.
  • Unemployment compensation.

Tools of Trade

  • Tools, implements, materials, stock, apparatus, and other things needed to carry on an occupation up to $2,525 total.
  • Arms and accouterments you are required to keep.


  • Life insurance.
  • Trust funds or life insurance policies that are employer-sponsored.
  • Insurance proceeds held by an insurer.
  • Fraternal benefit society benefits.Disability, mutual life, or health benefits.

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

You are not required by law to hire a lawyer to declare bankruptcy. Individuals are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.

Filing Bankruptcy without an Attorney

A simple Chapter 7 proceeding that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that may not require an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

In most cases, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy attorney is there to represent you and not the creditors.

An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in MI, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In Michigan

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In Michigan

United States Courthouse
111 First Street
Bay City,MI 48708
Michigan Eastern Bankruptcy Court

Goodyear Building
226 West Second Street
Flint,MI 48502
Michigan Eastern Bankruptcy Court

West Fort Street
211 West Fort Street
Detroit,MI 48226
Michigan Eastern Bankruptcy Court

United States Post Office and Courthouse
202 West Washington Street
Marquette,MI 49855
Michigan Western Bankruptcy Court

Division Avenue, N.
1 Division Avenue, N.
Grand Rapids,MI 49503
Michigan Western Bankruptcy Court


Additional Michigan Resources

Foreclosure Help Program

Disability SSDI Benefits