Michigan Bankruptcy Exemptions: Homestead, Property, and Federal Options

If you file bankruptcy in Michigan, you choose between two complete sets of asset protections: the Michigan state exemptions or the federal exemptions under 11 U.S.C. § 522(d). Michigan bankruptcy exemptions let a single filer in 2026 shield up to $51,150 in home equity, $4,725 in vehicle value, and the full balance of an IRA with no dollar cap. The federal list protects less home equity but adds a wildcard that can cover property Michigan’s list leaves exposed. Every dollar figure below reflects the amounts effective for cases filed on or after April 1, 2026.

Choosing Between State and Federal Exemptions

Michigan has not opted out of the federal exemption system, so filers can pick whichever list works better for their situation.¹ It is all-or-nothing. You use one list for everything. Cherry-picking the homestead from one and the vehicle from the other is not allowed.

Married couples filing jointly must agree on a single system. If they cannot, federal law defaults them to the federal exemptions.² That default catches some couples off guard when the Michigan list would have protected more home equity. Settle the question before filing.

The 730-Day Residency Rule

To use Michigan’s state exemptions, you must have lived in Michigan for the entire 730 days (two full years) before your filing date. If you moved more recently, you may be stuck with the exemptions from your prior state or with the federal list.² If the residency formula leaves you without any state’s exemptions available, federal law lets you elect the federal list as a safety net.

Michigan Homestead Exemption

The homestead exemption protects equity in your primary residence under MCL 600.5451(1)(m). For a single filer, the 2026 limit is $51,150. If you or a dependent are 65 or older, or have a documented disability at the time of filing, that figure rises to $76,725.³ Equity means market value minus mortgage and lien balances. If your equity sits under the limit, the trustee generally cannot force a sale.

When equity exceeds the exemption, the trustee can sell the home, pay you the exempt amount, cover the costs of sale and any mortgage balance, and distribute what remains to creditors. In practice, if the surplus is small after sale costs and real estate commissions, trustees often decide a sale is not worth the effort.

Property size depends on location. Rural homesteads can include up to 40 acres with the dwelling. Within a city or recorded town plat, the exemption covers a single lot. You must actually occupy the residence as your home. A rental property, vacation cabin, or investment house does not qualify.

Tenancy by the Entirety for Married Couples

Michigan married couples have access to an additional protection under MCL 600.5451(1)(n). Property held as tenancy by the entirety, a form of joint ownership available only to married spouses, is fully exempt from the bankruptcy estate when only one spouse’s debts are at issue.¹ This covers real estate and can extend to bank accounts and other property titled jointly as a married couple.

The protection disappears for joint debts. If both spouses signed for a mortgage, a credit card, or any other obligation, the shared creditor is not blocked by tenancy by the entirety. Knowing which debts belong to one spouse alone and which are joint is essential before deciding whether one spouse should file individually. For couples where the serious debt is on one person, an individual filing combined with tenancy by the entirety can sometimes preserve the home entirely, regardless of equity.

Personal Property You Can Keep

Michigan’s personal property exemptions cover the belongings that keep daily life functional. The amounts below took effect April 1, 2026.³

Motor vehicle: up to $4,725 in value for one vehicle. If your car is worth more, the trustee can sell it, pay you $4,725, and distribute the rest. Leased vehicles with no equity are generally not at risk.
Household goods and furniture: up to $775 per item and $5,125 total across all household goods, furniture, utensils, books, appliances, and jewelry.
Computer: up to $875 for one computer and its accessories.
Household pets: up to $875 in value.
Clothing: all wearing apparel except furs is exempt with no dollar cap.
Family pictures and health aids: fully exempt regardless of value.
Crops, farm animals, and feed: up to $3,400 combined.

These values reflect what the property would sell for at a liquidation sale, not what you paid. Used furniture and electronics lose value fast. A couch bought for $1,200 might fetch $150 at auction, well under the per-item cap. Trustees rarely bother with ordinary household contents unless something is genuinely valuable, such as jewelry or collectibles.

Tools of the Trade

Michigan protects up to $3,400 in tools, equipment, materials, and other items you need to carry on your profession or business under MCL 600.5451(1)(i).³ This covers hand tools for a mechanic, a laptop for a freelance designer, or reference materials for a professional library. The item must relate to work you actually do. A hobbyist woodworker cannot claim a table saw under this exemption unless woodworking is their livelihood. The $3,400 limit applies to everything combined, not to each item.

Retirement Accounts

Retirement is where Michigan’s state list really pulls ahead. Under MCL 600.5451(1)(k), all individual retirement accounts, including traditional IRAs and Roth IRAs, are fully exempt from the bankruptcy estate with no dollar cap.¹ The federal list caps IRA protection at $1,711,975.² For most filers that federal cap is more than enough, but anyone with substantial IRA balances should know the difference.

One catch under Michigan law: contributions made to an IRA within 120 days before filing are not protected.¹ This blocks last-minute cash dumps to shelter money from creditors. Funds in the account longer than 120 days are safe.

Employer-sponsored plans like 401(k)s, 403(b)s, and profit-sharing plans that qualify under ERISA are also fully protected under Michigan law.¹ These plans carry separate federal protections as well, so they are effectively untouchable regardless of which exemption system you choose.

Protected Income and Benefits

Certain income streams are shielded from the trustee. Disability insurance benefits paid by a life, health, or casualty insurance company are exempt under MCL 600.5451(1)(j), though this protection does not extend to debts incurred for necessities after the benefits started.¹ Social Security payments, unemployment compensation, and veterans’ benefits are protected under federal law and cannot be seized by a bankruptcy trustee.

Wages earned but not yet paid at the time of filing follow federal garnishment rules: at least 75% of your disposable earnings, or 30 times the federal minimum wage (whichever leaves you more), is protected. Disposable earnings means pay after legally required deductions like taxes and Social Security, not take-home after voluntary deductions like health insurance premiums.

When the Federal List Beats Michigan

The federal exemption list, adjusted most recently on April 1, 2025, is worth comparing against Michigan’s numbers before you file.⁴

Homestead: federal $31,575 against Michigan’s $51,150. Michigan wins for homeowners with real equity.
Motor vehicle: federal $5,025 against Michigan’s $4,725. Small edge to federal.
Household goods: federal allows $800 per item with a $16,850 aggregate against Michigan’s $775 per item and $5,125 aggregate. Valuable furniture, electronics, or jewelry fare much better on the federal list.
Tools of the trade: federal $3,175 against Michigan’s $3,400. Slight Michigan edge.
Wildcard: the federal list includes a $1,675 wildcard that can protect any property, plus up to $15,800 of any unused homestead exemption. Michigan has no wildcard at all.

The wildcard is the decision driver for many filers. If you rent or have minimal home equity, Michigan’s homestead does little for you, while the federal wildcard can shelter cash, tax refunds, bank account balances, and anything else that falls outside specific categories. If you own a home with $40,000 or more in equity, Michigan’s higher homestead is usually the better play. Running the numbers both ways before filing is the single most valuable exercise in the process.

Filing Prerequisites and Fees

Every individual debtor must complete a credit counseling course from a provider approved by the U.S. Trustee Program before filing. A separate debtor education course is required after filing but before discharge. These are two different courses and cannot be done at the same time.⁵ Missing either blocks your discharge.

Court filing fees for 2026 are $338 for Chapter 7 and $313 for Chapter 13. Filers who cannot afford the fee can request installment payments or, in Chapter 7 cases, apply for a fee waiver based on income. Attorney fees for a standard Chapter 7 typically run between $1,000 and $3,000 depending on complexity.

Michigan’s exemption amounts adjust for inflation every three years, with the next adjustment scheduled for April 1, 2029. If you are filing close to that date, confirm the current figures against the Michigan Department of Treasury’s published notice so your schedules match.

1
Michigan Legislature. Michigan Compiled Laws 600.5451 – Bankruptcy; Exemptions From Property of Estate
2
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
3
Michigan Department of Treasury. Inflation Adjustments Bankruptcy Exemptions – 2026
4
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
5
United States Courts. Credit Counseling and Debtor Education Courses