Chapter 13 bankruptcy in Michigan works by putting your disposable income into a court-supervised repayment plan that runs three to five years, letting you keep your house, car, and other property while you catch up on what you owe. The moment you file, creditors have to stop calling, garnishing, foreclosing, and repossessing. In exchange, every dollar you can spare goes to the trustee each month, and the plan has to satisfy specific tests before a judge will approve it.
Who Can File in Michigan
Chapter 13 is only for individuals, not businesses. You need a regular income steady enough to fund monthly plan payments, which can come from wages, self-employment, pensions, Social Security, disability benefits, or child support you receive.1United States Courts. Chapter 13 Bankruptcy Basics
Your debts must fall within federal limits. For petitions filed between April 1, 2025 and March 31, 2028, unsecured debts cannot exceed $526,700 and secured debts cannot exceed $1,580,125.1United States Courts. Chapter 13 Bankruptcy Basics Above those ceilings, Chapter 11 becomes the alternative.
Two prerequisites catch a lot of filers off guard. You must have filed all federal and state income tax returns for the four tax years before your filing date; a missing return can get your case dismissed at the outset. And you must complete a credit counseling briefing from an approved nonprofit within the 180 days before you file.2Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor If you can’t get an appointment in time, the court may allow up to 30 days after filing (with a possible 15-day extension for cause), but the course still has to happen.
How Long Your Plan Lasts
Plan length turns on how your household income compares to Michigan’s median. Below the median, the plan runs three years unless the court approves longer for cause. At or above the median, the plan must run five years. Nothing goes past five years.1United States Courts. Chapter 13 Bankruptcy Basics
As of November 2025, Michigan’s median annual income figures are:
- One earner: $65,625
- Household of two: $81,293
- Household of three: $100,797
- Household of four: $119,856
Add $11,100 for each additional household member beyond four.3U.S. Department of Justice. November 1, 2025 Median Income Table The Justice Department updates these numbers periodically, so confirm the current figures before you file.
What You Can Keep: Michigan Exemptions
Chapter 13 lets you keep your property, but exemptions still drive your monthly payment. The “best interests of creditors” test requires that unsecured creditors receive at least as much through your plan as they would if your nonexempt assets were liquidated in a Chapter 7 case.4Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan The more nonexempt equity you have, the higher your plan payments have to be.
Michigan requires debtors to use the state’s exemptions rather than the federal bankruptcy exemptions. The main protections:
- Homestead: up to $30,000 in home equity, or $45,000 if you or a dependent is 65 or older or disabled.
- Motor vehicle: up to $2,775 in one vehicle, subject to periodic inflation adjustment.
- Household goods: up to $450 per item and $3,000 total.
- Tools of trade: up to $2,000.
- Computer: up to $500 for one computer and its accessories.
- Household pets: up to $500.
Michigan has no wildcard exemption you can apply to any property of your choice.5Michigan Legislature. MCL 600.5451 The state treasurer adjusts these dollar amounts every three years for inflation, so the current figures may be higher than the base amounts in the statute.
Filing the Petition
You file in the U.S. Bankruptcy Court for the Michigan district where you live. The Eastern District covers Detroit, Flint, and most of the eastern Lower Peninsula. The Western District covers Grand Rapids, Kalamazoo, the western Lower Peninsula, and the Upper Peninsula.
The petition is a stack of forms giving the court a complete financial picture: schedules of assets and debts, current income, monthly expenses, a statement of financial affairs, and your credit counseling certificate. The filing fee is $313, and the court can allow installment payments.
The Automatic Stay
Filing triggers the automatic stay immediately. Creditors can’t collect debts, garnish wages, repossess property, foreclose, or even call you.6Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay A creditor can ask the court to lift the stay, but until a judge agrees, everything stops.
Repeat filers get less protection. If you had a bankruptcy dismissed within the past year, the stay in your new case expires after 30 days unless the court extends it. With two or more dismissals in the past year, you get no automatic stay at all unless you convince the court to impose one.6Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
The 341 Meeting
After filing, the court appoints a Chapter 13 trustee to administer your case. The trustee convenes a meeting of creditors, called the 341 meeting, where you answer questions under oath about your finances and your proposed plan.7Office of the Law Revision Counsel. 11 U.S. Code 341 – Meetings of Creditors and Equity Security Holders Creditors may attend, though most don’t. The trustee’s focus is whether your income figures are accurate and whether your plan is realistic.
How the Repayment Plan Works
You file the plan shortly after your petition. It spells out how much you pay each month, to whom, and for how long. Different classes of debt get very different treatment.
Priority Debts
Certain obligations must be paid in full through the plan with no negotiation. Domestic support obligations like child support and alimony come first, followed by specific tax debts and other claims designated as priority under federal law.8Office of the Law Revision Counsel. 11 USC 507 – Priorities If the plan doesn’t cover these in full, the court won’t confirm it.
Secured Debts and the Cramdown Limits
Secured debts are backed by collateral, so keeping the house or the car means the plan has to deal with them. Mortgage arrears are typically cured over the life of the plan while you keep making regular monthly mortgage payments directly. Car loans either continue under original terms or receive different treatment.
Chapter 13’s cramdown lets you reduce the balance on certain secured loans to match the collateral’s current market value, most commonly on underwater car loans.4Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan Two limits matter. You cannot cram down a car loan on a vehicle you bought within 910 days (roughly two and a half years) before filing. And you cannot cram down a mortgage on your primary residence.9Office of the Law Revision Counsel. 11 USC 1322 – Contents of Plan Investment property mortgages can be modified, but the home you live in is protected from modification by a specific carve-out in the Bankruptcy Code.
Unsecured Debts
Credit card balances, medical bills, and personal loans sit at the bottom. What these creditors receive depends on your disposable income after priority and secured obligations, with the best-interests test setting the floor. In many Michigan Chapter 13 cases, unsecured creditors receive only a fraction of what they’re owed, and the remaining balance is discharged when the plan ends.
Trustee Fee
The Chapter 13 trustee takes a percentage of every plan payment to run the trustee’s office. Federal law caps this at 10% of plan payments, though the actual percentage varies by district and may be lower.10Office of the Law Revision Counsel. 28 U.S. Code 586 – Duties; Supervision by Attorney General Build it into your monthly number.
What It Costs
The court filing fee is $313, payable in installments if needed. Attorney fees in Michigan Chapter 13 cases are often handled through the plan itself rather than paid entirely upfront. Both the Eastern and Western Districts set presumptive “no-look” fees the court approves without detailed billing justification, generally in the range of $3,500 to $5,000 depending on district and complexity. Many attorneys collect a portion before filing and fold the rest into plan payments, which makes Chapter 13 more accessible than it might otherwise appear.
When Life Disrupts the Plan
Three to five years is long enough for something to go wrong. Job losses, medical emergencies, and other disruptions can put payments out of reach.
The usual first move is a plan modification: asking the court to adjust the payment amount or extend the plan (up to the five-year cap) based on changed circumstances. This is routine and generally the trustee’s preferred outcome.
If modification won’t work, you can convert to Chapter 7, shifting from repayment to liquidation of nonexempt assets. You have the right to convert at any time. You lose the repayment structure and nonexempt property may be sold, but the case ends faster.
Dismissal closes the case without a discharge. The stay lifts, you’re still liable for your original debts minus what was paid through the plan, and creditors resume collection.
A hardship discharge is available in narrow circumstances when you can’t complete payments through no fault of your own. Three conditions all have to be met: the failure isn’t your fault, unsecured creditors have already received at least what they would have in a Chapter 7 liquidation, and further modification isn’t practical.11Office of the Law Revision Counsel. 11 USC 1328 – Discharge A hardship discharge is narrower than a regular Chapter 13 discharge and more closely resembles the scope of a Chapter 7 discharge.
Getting Your Discharge
Making the last payment doesn’t automatically produce a discharge. Two things still have to happen.
You have to complete a financial management course (also called debtor education) from a provider approved by the U.S. Trustee Program. This is separate from the pre-filing credit counseling and must be taken after you file.12United States Courts. Credit Counseling and Debtor Education Courses The certificate goes into the case file.
If you owe domestic support obligations, you must certify that you’re current on all post-petition support payments.13United States Courts. Chapter 13 Debtors Certifications Regarding Domestic Support Obligations and Section 522(q) Falling behind on child support or alimony at the end of the plan can block the discharge you’ve spent years working toward.
The Chapter 13 discharge itself is somewhat broader than the Chapter 7 version. It can discharge debts for willful and malicious injury to property (not to a person), debts incurred to pay nondischargeable taxes, and debts arising from property settlements in divorce.1United States Courts. Chapter 13 Bankruptcy Basics Some debts survive anyway, including domestic support obligations, most student loans, criminal restitution and fines, debts for personal injury or death caused by drunk driving, and certain tax debts.11Office of the Law Revision Counsel. 11 USC 1328 – Discharge
Credit and Borrowing While the Case Is Open
A Chapter 13 filing stays on your credit report for seven years from the filing date. The initial hit to your score is significant, though it eases over time as you rebuild.
During the case, you generally cannot take on new debt without court or trustee approval. That’s broader than most people expect. It covers credit cards, personal loans, car leases, refinancing, student loans for yourself or a family member, payday advances, rent-to-own contracts, and even borrowing against a retirement account. The only exception is a genuine emergency involving life, health, or property. Unauthorized new debt can get your case dismissed and cost you everything you’ve paid in.
If you need new credit for a legitimate reason, such as replacing a car that’s died, you request permission through the trustee. The request has to identify the lender, loan amount, repayment terms, and the effect on your ability to keep funding the plan. If the trustee refuses, you can ask the bankruptcy judge through a formal motion filed by your attorney.