Filing Chapter 7 Bankruptcy in Michigan (2026)
Reviewed by DocDraft Legal Team · Michigan · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep is set largely by Michigan. Michigan is a choice state: you may elect either the federal exemptions under 11 U.S.C. 522(d) or Michigan's exemptions, but you cannot mix the two lists. Michigan uniquely offers its own bankruptcy-specific exemption set under MCL 600.5451, whose dollar figures are adjusted for inflation by the state treasurer every three years, most recently effective April 1, 2026. This page explains Michigan's homestead, vehicle, and wildcard figures, the means-test median income, and the two federal bankruptcy courts where Michiganders file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Michigan use state or federal bankruptcy exemptions?
Michigan is a choice state. Under MCL 600.5451, a debtor filing in Michigan may elect either the federal 11 U.S.C. 522(d) exemptions or Michigan's exemptions. Michigan even offers its own bankruptcy-specific set under 600.5451 alongside the general exemptions under 600.6023. You pick one full list and cannot combine federal and state.
Can I keep my house if I file Chapter 7 in Michigan?
Often yes. Michigan's bankruptcy-specific homestead exemption under MCL 600.5451 protects $51,150 of home equity, rising to $76,725 if you or a dependent is 65 or older or disabled, effective April 1, 2026. If your equity fits within that figure, or the comparable federal amount, Chapter 7 generally lets you keep the house.
Can I keep my car if I file Chapter 7 in Michigan?
Usually yes if your equity is modest. Michigan exempts $4,725 of motor vehicle equity under MCL 600.5451(1)(g), effective April 1, 2026. The federal alternative under 11 U.S.C. 522(d)(2) is a separate figure you would use only if you elect the federal list. If your car equity is at or below the figure you claim, the vehicle is protected.
What is the income limit to file Chapter 7 in Michigan?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Michigan are $67,352 for one earner, $83,432 for two, $103,449 for three, and $123,010 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Michigan's Federal-or-State Choice and the MCL 600.5451 Bankruptcy Homestead
Michigan is a bankruptcy choice state, not an opt-out state. Under MCL 600.5451 a debtor filing in Michigan may elect either the federal exemptions in 11 U.S.C. 522(d) or Michigan's own exemptions, but not a mix of the two. What makes Michigan distinctive is that it maintains a bankruptcy-specific exemption set in MCL 600.5451 whose dollar amounts are adjusted for inflation by the state treasurer every three years, most recently effective April 1, 2026, alongside the general exemptions in MCL 600.6023 that any judgment debtor may use. The 600.5451 homestead protects $51,150 of home equity, rising to $76,725 when the debtor or a dependent is 65 or older or disabled. Motor vehicle equity is exempt up to $4,725 under 600.5451(1)(g), household goods are protected up to $775 per item and $5,125 in aggregate, and tools of the trade up to $4,725. Wages are protected under MCL 600.5311, and retirement plans under MCL 600.6023. Michiganders file in one of two federal bankruptcy courts: the U.S. Bankruptcy Court for the Eastern District of Michigan or the Western District of Michigan, based on where they have lived for most of the prior 180 days.
Relevant Laws
Michigan Bankruptcy Exemptions and Homestead (MCL 600.5451)
Michigan's bankruptcy-specific exemption statute. It sets the homestead at $51,150, or $76,725 if the debtor or a dependent is 65 or older or disabled, plus the motor vehicle, household goods, and tools figures, all adjusted for inflation by the state treasurer every three years, most recently effective April 1, 2026.
Michigan General Exemptions and Retirement (MCL 600.6023)
The general exemption statute available to any Michigan judgment debtor, offered as an alternative to the 600.5451 bankruptcy-specific set. It covers household goods, homestead, and retirement plan interests. A debtor who elects Michigan exemptions may use this list instead of the federal 522(d) list.
Michigan Wage Exemption (MCL 600.5311)
Protects a portion of a debtor's earnings from garnishment, which carries into bankruptcy as an exemption for unpaid wages. This is the wage-protection provision Michigan debtors rely on alongside the 600.5451 personal-property figures.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b) lets a debtor elect the federal 522(d) exemptions unless the state has opted out; Michigan has not, so the federal list stays available. Section 707(b) sets the means test measured against state median income.
Regional Variances
Michigan Chapter 7 Exemption Table
Homestead
MCL 600.5451: $51,150 of home equity, rising to $76,725 if the debtor or a dependent is 65 or older or disabled, effective April 1, 2026. These bankruptcy-specific figures are adjusted for inflation by the state treasurer every three years. A debtor who elects the federal list uses the 11 U.S.C. 522(d)(1) homestead instead.
Motor vehicle
MCL 600.5451(1)(g): $4,725 of motor vehicle equity, effective April 1, 2026. Equity above the figure may be reachable by the trustee. A debtor who elects the federal exemptions uses the separate 11 U.S.C. 522(d)(2) vehicle figure instead.
Wildcard
Michigan's own exemptions have no broad cash wildcard. A debtor who elects the federal list under 11 U.S.C. 522(d)(5) gets a wildcard plus any unused homestead amount. This is a common reason Michigan filers with little home equity weigh the federal list against the state list.
Personal property
MCL 600.5451: household goods, furniture, appliances, books, and apparel are exempt up to $775 per item and $5,125 in aggregate, with tools of the trade exempt up to $4,725, effective April 1, 2026. The general set under MCL 600.6023 provides comparable household-goods protection.
Wages
MCL 600.5311 protects a portion of a debtor's unpaid earnings from garnishment, which carries into Chapter 7 as an exemption. Earnings already withheld for support are treated separately. A debtor electing the federal list would instead use the 11 U.S.C. 522(d) provisions.
Retirement
MCL 600.6023 exempts interests in pension, profit-sharing, and retirement plans. ERISA-qualified plans such as most 401(k)s are separately excluded from the bankruptcy estate under federal law, and IRAs receive protection up to the federal cap. Funds in a protected retirement account generally stay yours.
Suggested Compliance Checklist
Confirm the current Michigan means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Michigan median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $67,352 for one, $83,432 for two, $103,449 for three, and $123,010 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your Michigan district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Choose the federal or Michigan exemption list and value your assets
Before preparing your schedules days after startingDecide between the federal 11 U.S.C. 522(d) list and Michigan's exemptions, including the bankruptcy-specific MCL 600.5451 set with its $51,150 homestead and $4,725 vehicle figure. Value your home, vehicle, and personal property so you can match assets to exemptions. You must choose one full list.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Eastern District of Michigan or the Western District of Michigan, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Michigan means-test median income | Check your household size against the U.S. Trustee Michigan median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $67,352 for one, $83,432 for two, $103,449 for three, and $123,010 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your Michigan district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Choose the federal or Michigan exemption list and value your assets | Decide between the federal 11 U.S.C. 522(d) list and Michigan's exemptions, including the bankruptcy-specific MCL 600.5451 set with its $51,150 homestead and $4,725 vehicle figure. Value your home, vehicle, and personal property so you can match assets to exemptions. You must choose one full list. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Eastern District of Michigan or the Western District of Michigan, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help with contested exemptions. | - | Before discharge |
Frequently Asked Questions
Michigan's bankruptcy-specific homestead under MCL 600.5451 protects $51,150 of home equity, rising to $76,725 if the debtor or a dependent is 65 or older or disabled, effective April 1, 2026. These figures are adjusted for inflation by the state treasurer every three years. If your equity fits within the figure, Chapter 7 generally lets you keep the house.
Under MCL 600.5451(1)(g), Michigan exempts $4,725 of motor vehicle equity, effective April 1, 2026. If you instead elect the federal exemptions, 11 U.S.C. 522(d)(2) supplies a separate vehicle figure. You use one full list, not both. Equity above the figure you claim may be reachable by the trustee, who could sell the vehicle.
Michigan's own exemptions do not include a broad cash wildcard like the federal list. If you elect the federal exemptions under 11 U.S.C. 522(d)(5), you get a wildcard plus any unused homestead amount that can protect cash or other property. This tradeoff is a common reason Michigan filers weigh the federal list against the state list.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
Largely yes. Michigan protects a portion of unpaid earnings from garnishment under MCL 600.5311, and retirement plans under MCL 600.6023. ERISA-qualified plans such as most 401(k)s are also excluded from the bankruptcy estate under federal law. Funds already in a protected retirement account generally stay yours through Chapter 7.
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