Bankruptcy in Michigan (2026): Exemptions & Means Test

Michigan is one of the states that gives bankruptcy filers a choice: you can use Michigan's own exemptions or the federal bankruptcy exemptions, whichever protects more of your property. Bankruptcy itself is federal law, but the exemptions that decide what you keep, and the means-test income that decides which chapter you can use, are state-specific. Michigan's state exemptions are written in MCL 600.5451 and are adjusted for inflation every three years, so the figures below reflect the amounts in effect for cases filed in 2026, and you should confirm the current numbers before relying on them.

This page is general legal information, not legal advice. It is part of our Bankruptcy by State series.

Does Michigan use state or federal bankruptcy exemptions?

Michigan is not an opt-out state. Under MCL 600.5451, a debtor who files bankruptcy in Michigan may elect to use the Michigan exemptions listed in that statute, but the same section preserves the alternative of claiming the exemptions allowed under federal law. In practice that means a Michigan filer picks one of two complete menus: the state exemptions in MCL 600.5451 or the federal bankruptcy exemptions in 11 U.S.C. 522(d). You cannot mix items from both lists. About a third of states, including Michigan, allow this choice; roughly two-thirds have opted out and force filers onto state law only.

The choice usually turns on home equity. Michigan's state homestead is larger than the federal one, so homeowners with meaningful equity often choose the state set, while renters and filers with little home equity sometimes prefer the federal set because of its larger wildcard. Married couples filing jointly can generally each claim a full set of whichever system they choose, which often doubles the protected amounts.

Michigan homestead exemption

Michigan's state homestead exemption is the headline protection for homeowners, and it is indexed for inflation. The base amounts in MCL 600.5451 were set by the Legislature, and the State Treasurer recalculates them every three years using the change in the consumer price index, rounded to the nearest $25. The adjusted amounts apply to bankruptcy cases filed on or after April 1 following each adjustment.

For cases filed on or after April 1, 2026, the Michigan homestead exemption protects up to $51,150 of equity in a primary residence. The figure rises to $76,725 if the debtor or a dependent of the debtor is 65 years of age or older or is disabled at the time the petition is filed. These amounts replaced the prior figures of $46,125 and $69,200 that applied to cases filed from April 1, 2023 through March 31, 2026, an increase of roughly 10.9 percent. Because the numbers update on a three-year cycle, the next adjustment is expected for cases filed on or after April 1, 2029.

A filer who would rather use the federal system protects up to $31,575 of home equity under 11 U.S.C. 522(d)(1). Homestead protection covers equity, not the full value of the home, so a residence worth far more than the mortgage plus the exemption can leave non-exempt equity that a Chapter 7 trustee may reach. That is one reason homeowners with substantial equity often look at Chapter 13 instead.

Vehicle, wildcard, and personal-property exemptions

Michigan's state exemptions in MCL 600.5451 are also inflation-adjusted and were raised about 10.9 percent for cases filed on or after April 1, 2026. The main categories include:

• Motor vehicle: up to roughly $4,725 of equity in one vehicle after the 2026 adjustment.
• Household goods, furniture, utensils, books, appliances, and jewelry: up to $775 per item, with an aggregate cap of $5,125.
• Tools of the trade and professional property: up to $3,400.
• A computer and accessories, household pets, and certain farm property, each with their own limits.
• Retirement accounts: tax-qualified plans are protected under separate exemptions and under federal law regardless of which menu you choose.

Michigan's state exemption list does not include a large general wildcard. Filers who need to protect cash or extra equity sometimes choose the federal exemptions instead, because 11 U.S.C. 522(d)(5) provides a wildcard of $1,675 plus up to $15,800 of unused homestead exemption. Because the state figures round and update every three years, confirm the current amounts in the Michigan Treasury inflation-adjustment notice before filing.

The Chapter 7 means test in Michigan

The means test screens who can file Chapter 7. The first step compares your household's current monthly income, annualized, to the median family income for a Michigan household of the same size. If your income is at or below the Michigan median, you generally pass and may proceed with Chapter 7. If it is above the median, you complete the longer calculation that subtracts allowed expenses to see whether you have disposable income that should fund a Chapter 13 plan instead.

The U.S. Trustee Program publishes the median figures and updates them periodically. For cases filed on or after April 1, 2026, the Michigan median family income is:

Add $11,100 for each additional person beyond four. These figures apply only to cases filed on or after April 1, 2026. The U.S. Trustee Program revises the median income data roughly twice a year, so confirm the current numbers for your filing date.

Chapter 7 vs. Chapter 13 in Michigan

Chapter 7 is a liquidation. A trustee can sell non-exempt property to pay creditors, but because Michigan's exemptions protect most household property, many Chapter 7 cases are "no-asset" cases where nothing is sold. Most remaining unsecured debt, such as credit cards and medical bills, is discharged in a few months.

Chapter 13 is a reorganization for filers with regular income. You keep your property and repay some or all of what you owe through a three-to-five-year plan. Chapter 13 is often chosen by homeowners who are behind on a mortgage, because the plan can spread out the missed payments and stop a foreclosure while you catch up.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362. The stay immediately halts most collection activity, including foreclosure sales, wage garnishment, repossession, and collection calls, while the case proceeds.

Where you file bankruptcy in Michigan

Michigan is divided into two federal bankruptcy districts. The U.S. Bankruptcy Court for the Eastern District of Michigan sits in Detroit, Flint, and Bay City and covers the eastern and northeastern counties. The U.S. Bankruptcy Court for the Western District of Michigan sits in Grand Rapids and Marquette and covers the western Lower Peninsula and the Upper Peninsula. Which court you file in depends on the county where you live. Before filing, federal law requires you to complete an approved credit-counseling course, and you must complete a debtor-education course before your debts are discharged.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts, but several categories generally survive: most student loans (absent a separate showing of undue hardship), recent income taxes, child support and alimony, and debts from fraud or willful injury. Secured debts like a car loan or mortgage continue if you want to keep the collateral and keep paying.

Because exemption amounts change, and the choice between the state and federal exemption menus and between Chapter 7 and Chapter 13 depends on your full financial picture, many people consult a licensed Michigan bankruptcy attorney before filing.