Many people think Chapter 7 bankruptcy means losing everything. Thankfully, state and federal exemptions let you keep a lot of things. Bankruptcy exemptions allow you to protect your essential property, helping you maintain stability during this transition period. Below are five assets you get to keep even after filing for bankruptcy.
Your house or real property
Michigan’s homestead exemption lets you protect up to $46,125 in home equity—which is much higher than the $27,900 federal limit. This protection applies to your primary residence, which also includes:
- Condominiums
- Mobile homes like RVs
- Houseboats
If you’re 65 or older, the exemption amount increases to $69,200.
Your car
You can protect up to $4,250 in vehicle equity under Michigan’s Chapter 7 bankruptcy laws. This helps ensure you still have a car for work and daily activities. Unlike the homestead exemption, this is lower than the federal government’s $4,450 car equity cap.
Your retirement savings
Michigan safeguards most retirement accounts during bankruptcy up to $1,512,350. This helps preserve your future financial security. Retirement savings you get to keep include:
- 401(k)s
- Individual retirement accounts (IRAs)
- Pension plans
You can also retain annuities, aside from any amount you contributed to it within 120 days of filing bankruptcy.
Your personal things
Michigan exemptions extend to household goods, such as:
- Jewelry
- Kitchen appliances
- Basic furniture
Note that these exemptions have a limit of $700 per item or $4,625 in total. Additionally, your clothing and health aids are fully exempt under state law.
Your work tools
Michigan protects up to $3,075 in tools and equipment necessary for your profession. This helps ensure you can continue earning a living while rebuilding your finances. However, take note that this counts under your household goods total.
Reset your finances with confidence
Chapter 7 bankruptcy provides more protection than most people realize, preserving the essential assets you need for daily life. Michigan’s exemption laws create a foundation for your fresh start—not a barrier.
Consider speaking with a bankruptcy attorney who can help you understand your rights and the filing process, as well as guide you through it.
