How to File Bankruptcy in Michigan: Means Test and Exemptions

To file bankruptcy in Michigan, you complete a pre-filing credit counseling session, run the means test to determine whether you qualify for Chapter 7 or need Chapter 13, prepare a full set of financial schedules, choose between Michigan’s state exemptions and the federal exemptions, and file your petition in either the Eastern or Western District of Michigan with the required fee. After filing, you’ll deal with a court-appointed trustee, attend a meeting of creditors, finish a second financial management course, and receive your discharge. Chapter 7 cases typically close in about three to four months. Chapter 13 cases run three to five years.

Take the Pre-Filing Credit Counseling Course

Before you can submit a petition, you must complete a credit counseling session with an agency approved by the U.S. Trustee Program. The session reviews your budget, your debts, and whether an alternative to bankruptcy could work. You can take it online, by phone, or in person, and it usually runs about an hour.1United States Department of Justice. Credit Counseling and Debtor Education Information

The agency issues a certificate when you finish. That certificate must be filed with your petition, and it expires 180 days after issuance. File without a valid certificate and the court will dismiss your case.2United States Bankruptcy Court for the District of Columbia. Notice to All Debtors About Prepetition Credit Counseling Requirement If yours has aged out, retake the course.

Run the Means Test to Decide Between Chapter 7 and Chapter 13

The means test decides which chapter you can use. It first compares your household income over the six months before filing to Michigan’s median income for a household your size.3United States Department of Justice. Means Testing The most recent figures published by the U.S. Trustee Program set Michigan’s annual median income thresholds at:

  • One earner: $65,625
  • Two-person household: $81,293
  • Three-person household: $100,797
  • Four-person household: $119,856
  • Each additional person: add $11,100

These figures update periodically, so verify against the current table before filing.4U.S. Trustee Program. Census Bureau Median Family Income By Family Size Income below the median means you’re presumed eligible for Chapter 7.

Earning above the median doesn’t automatically disqualify you. A second calculation subtracts allowed expenses from your income to test whether you have enough left over to repay creditors. If disposable income comes out low enough, Chapter 7 is still available. If not, you file under Chapter 13.

Chapter 7 is a liquidation that eliminates most unsecured debts in a few months. Chapter 13 is a court-supervised repayment plan. Plan length depends on income: below Michigan’s median, the plan runs three years unless the court approves longer; above the median, it generally must last five years, and no plan can exceed five years. In Chapter 13, you must start making payments to the trustee within 30 days of filing, even before the court confirms the plan.5United States Courts. Chapter 13 – Bankruptcy Basics

Pull Your Financial Documents Together

Bankruptcy paperwork demands a full accounting. Gaps or errors create problems down the line, so start early. You’ll need:

  • A complete list of creditors with names, addresses, account numbers, and balances. Pull recent statements and collection letters.
  • An asset list covering real estate, vehicles, bank accounts, retirement accounts, and valuable personal property, with current market value estimates and backup documents like deeds, titles, and statements.
  • Pay stubs covering the 60 days before filing, plus records of any other income such as Social Security, unemployment, or freelance work.
  • Your most recently filed federal and state tax returns.
  • Monthly expense records: rent or mortgage, utilities, insurance, food, transportation, and other regular costs.

This information populates the Voluntary Petition and Schedules A through J, which cover your property, debts, income, and expenses.6United States Courts. Bankruptcy Forms

Choose Michigan or Federal Exemptions

Exemptions decide what property you keep. Michigan lets filers choose between the state exemptions under MCL 600.5451 and the federal exemptions in 11 U.S.C. ยง 522(d). Pick the set that protects more of your property, but use one complete set. You can’t mix individual exemptions from both.

Michigan’s state exemptions include a homestead exemption of up to $30,000 in equity in your primary residence, rising to $45,000 if you or a dependent is 65 or older or has a disability at the time of filing.7Michigan Legislature. Michigan Code MCL 600.5451 – Bankruptcy Exemptions For renters or people with significant equity in property other than a home, the federal exemptions can offer more overall protection. Comparing both sets carefully is one of the most consequential decisions in the whole process.

You claim your chosen exemptions on Schedule C. If no one objects within the court’s deadline, those exemptions become final.8Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions

File in the Right District and Pay the Fee

Michigan has two federal bankruptcy districts, Eastern and Western. File in whichever district covers the county where you lived for the greater part of the 180 days before filing. If you moved between districts during that window, file where you spent more of those 180 days.9Office of the Law Revision Counsel. 28 USC 1408 – Venue of Cases Under Title 11

The Chapter 7 filing fee totals $338: a $245 filing fee, a $78 administrative fee, and a $15 trustee surcharge. Chapter 13 totals $313.10United States Courts. Bankruptcy Court Miscellaneous Fee Schedule Chapter 7 filers whose household income is below 150% of the federal poverty guidelines can apply for a fee waiver, or they can ask to pay in installments. Chapter 13 filers can pay in installments but aren’t eligible for a full waiver.

An attorney can file electronically for you. Filing without a lawyer is allowed but risky, because small errors in the means test, exemptions, or schedules can cost you property or get your case dismissed. Chapter 13 in particular carries substantially more procedural complexity than Chapter 7.

What Happens the Moment You File

Filing triggers the automatic stay. Creditors must stop all collection activity immediately: no calls, no letters, no wage garnishment, no repossession, no foreclosure.11Office of the Law Revision Counsel. 11 U.S. Code 362 – Automatic Stay The stay gives you room to breathe while the case moves forward.

The stay has limits. It doesn’t stop criminal proceedings, most tax audits, or collection of domestic support like child support and alimony. If you had a prior bankruptcy case dismissed within the past year, the stay in the new case automatically expires after 30 days unless the court extends it. If two or more prior cases were dismissed in the past year, no stay takes effect at all unless you ask the court to impose one.12United States Bankruptcy Court. The Effect of Repeat Filing on the Automatic Bankruptcy Stay

Meet Your Trustee and Attend the 341 Meeting

The court appoints a bankruptcy trustee shortly after filing. In Chapter 7, the trustee reviews your petition, verifies your information against documents like tax returns and pay stubs, and determines whether any non-exempt assets can be sold to pay creditors. In Chapter 13, the trustee collects your plan payments and distributes them.

Roughly 21 to 40 days after filing, you attend the 341 meeting of creditors. Creditors rarely appear. The trustee runs the meeting, places you under oath, and asks questions about your petition, assets, debts, and financial history. Michigan bankruptcy courts often conduct these meetings by video or telephone. Attendance is mandatory. Miss it and your case is dismissed.13Office of the Law Revision Counsel. 11 U.S. Code 341 – Meetings of Creditors and Equity Security Holders Most meetings last 10 to 15 minutes when the paperwork is in order.

Complete the Debtor Education Course

After filing but before discharge, you must complete a second course focused on personal financial management. This is different from the pre-filing credit counseling, and it must come from an approved provider. It covers budgeting, money management, and responsible use of credit going forward.

In a Chapter 7 case, the certificate proving you finished must be filed within 60 days after the first date set for the 341 meeting. Miss the deadline and the court closes your case without issuing a discharge. The requirement is waived only in narrow circumstances, such as incapacity or active military duty in a combat zone.1United States Department of Justice. Credit Counseling and Debtor Education Information

Receive Your Discharge

The discharge is the court order that eliminates your personal liability for qualifying debts. In Chapter 7, the court typically enters it about 60 days after the first date set for the 341 meeting, assuming no objections and a completed debtor education course. From filing to case closure usually runs 80 to 100 days.14United States Bankruptcy Court Western District of Missouri. Chapter 7 Bankruptcy Case Timeline

In Chapter 13, the discharge comes at the end of the repayment plan, after three to five years of payments. You won’t receive it until all plan payments are complete and you’ve certified that you’re current on domestic support obligations like child support.5United States Courts. Chapter 13 – Bankruptcy Basics

Once the discharge is entered, listed creditors are permanently barred from collecting. If a creditor keeps pursuing you, you can bring the violation back to the bankruptcy court.

Debts That Survive the Discharge

Not every debt is wiped out. Federal law keeps specific categories alive regardless of chapter:15United States Bankruptcy Court – Northern District of Florida. What Debts Are Not Dischargeable?

  • Child support and alimony survive completely.
  • Recent income taxes generally can’t be discharged. Older tax debts may qualify if the return was filed on time, at least three years have passed since the tax was due, the IRS assessed it more than 240 days before filing, and there was no fraud or evasion.
  • Student loans survive unless you file an adversary proceeding within the bankruptcy and prove undue hardship. Courts commonly weigh whether repayment prevents a minimal standard of living, whether your situation is likely to persist, and whether you’ve made good-faith efforts to repay.
  • Debts from fraud or misrepresentation remain your responsibility.
  • Debts for personal injury or death caused by driving while intoxicated are non-dischargeable.
  • Most criminal fines and restitution survive.
  • Creditors you leave off your schedules may not be discharged if they didn’t learn of the case in time.

Luxury purchases over $800 to a single creditor within 90 days of filing, and cash advances totaling more than $1,100 within 70 days of filing, are presumed non-dischargeable as spending in bad faith on the eve of bankruptcy.

Credit Reporting and Anti-Discrimination Protections

A bankruptcy filing can stay on your credit report for up to 10 years from the date the court enters the order for relief, which in most cases is the filing date.16Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports In practice, the three major credit bureaus typically remove a Chapter 13 filing after seven years, although the statute permits ten. Scores usually begin recovering within a year or two of discharge, especially with secured credit cards or small installment loans.

Federal law also blocks certain kinds of discrimination based on bankruptcy. Government agencies cannot deny you employment, terminate you, or refuse a license solely because you filed. Private employers cannot fire you or discriminate in employment on that basis alone, although the statute does not explicitly bar private employers from refusing to hire because of a bankruptcy filing.17Office of the Law Revision Counsel. 11 U.S. Code 525 – Protection Against Discriminatory Treatment Student loan programs, both government-run and privately guaranteed, cannot deny you a loan or grant solely because of a past bankruptcy.

These protections don’t stop lenders or landlords from weighing your overall financial picture. A bank can decline a loan based on creditworthiness, and a landlord can factor a bankruptcy into a rental decision alongside other criteria. The law prevents using the filing as the sole reason for adverse treatment, not as one factor among many.