Will I Automatically Lose Nonexempt Property?

If some of your property exceeds the given exemptions you use when filing for bankruptcy, you will not necessarily lose that property to the bankruptcy estate. You do have the option of turning that property over to the bankruptcy trustee in charge of your case, but you have two alternative options as well. The first applies only to chapter 13 cases, and involves what’s called a liquidation analysis. This analysis is designed to give creditors what they would be entitled if the nonexempt property was liquidated through a chapter 7 bankruptcy. The creditors are eligible to receive the remainder of the liquidated assets after the trustee’s fees and other priority debts have already been settled. The second option can be done in chapter 7 cases, and it involves “buying back” the nonexempt portion of your property from the bankruptcy estate. For instance, if your car’s value exceeds the exemption value by $500, you would have the option to exempt all but the $500 and then arrange to pay the bankruptcy trustee the nonexempt $500. In most cases you should have the option to pay back this excess in smaller installments.

If you are considering filing for bankruptcy and are concerned or confused about what sort of property you can exempt, it would be to your advantage to set up a consultation with a local bankruptcy attorney.

How Much Property Can I Exempt?

When filing for bankruptcy in the state of Michigan you will have two sets of exemptions you can choose from. These sets are the federal exemptions and the state exemptions. Both exemptions dictate how much property you can exempt, but they differ as to what kind of property you can exempt and how much property you can exempt for each specific type of property. One important thing to keep in mind is that you can’t mix and match between different exemption amounts between the two sets of exemptions--you can only pick one set of exemptions when you file. It would therefore be advantageous for you to come up with a list of property you own and how much it’s worth, and then compare between both sets of exemptions to see which set would benefit you the most. In general here’s a quick comparison between the two:

State Exemptions:

Homestead exemption: $40,475 (up to $60,725 if you are older than 65, unlimited if you own home with spouse)

Vehicle exemption: $3,725

Household goods: $4,050

Tools of trade: $2,550

Federal Exemptions:

Homestead exemption: $25,150 (up to $12,575 that isn’t used for this exemption can be added to the wildcard exemption)

Vehicle exemption: $4,000

Household goods: $13,000

Tools of trade: $2,525

Jewelry: $1700

Wildcard exemption: $1,325 (can be up to $13,900 if using leftovers from homestead exemption)

If you are concerned about which set of exemptions would benefit you the most, it would be to your advantage to set up a consultation with a local bankruptcy attorney in order to better understand your options.

How Often Can I File for Bankruptcy?

Both chapters 7 and 13 have specific requirements which determine how often a debtor can file for bankruptcy, which differ depending on which chapter has been previously filed. These requirements are only enforced if in your previous case you received a discharge. For both chapters there is a rule prohibiting those who attempted to file for bankruptcy within the past 6 months and had their case dismissed from attempting to file again. For debtors interested in filing for chapter 7 but have previously filed a chapter 13 bankruptcy there is a 6 year waiting period that can be exempted if the initial chapter 13 plan was a 100% plan or a 70% plan made in good faith with the debtor’s best efforts applied. For debtors interested in filing for chapter 7 who have previously filed a discharged chapter 7 bankruptcy, there is an 8 year waiting period. For debtors interested in filing for chapter 13 who have already previously filed a chapter 13 bankruptcy there is a 2 year waiting period from the date of filing. Since most chapter 13 plans take 3 years to complete, there is the possibility of filing another chapter 13 bankruptcy the day you receive your discharge for your first chapter 13 bankruptcy. Finally, for debtors interested in filing for chapter 13 who have previously filed  chapter 7 bankruptcy, there is a 4 year waiting period before you would be permitted to file.

To better understand if filing for bankruptcy is the right action for you, it is recommended you set up a consultation with a local bankruptcy attorney.