The first thing most people want to know when fling bankruptcy is how much property they are allowed to keep. The answer depends on what types of property you have, how much that property is worth, and the bankruptcy exemptions that you can use. Exemptions allow you to keep a certain amount of your property so that you can make a fresh start after the bankruptcy. In a Chapter 7 bankruptcy, if you can exempt an asset, the bankruptcy trustee cannot sell it to pay your creditors.
In Michigan, you have the choice of using the federal exemption statutes or Michigan exemptions. There are countless reasons why you may choose one exemption statute over the other. For example, the federal exemptions system allows a wildcard exemption that can be used to exempt any piece of property, on top of specific exemptions for items such as your home and car. This exemption may be necessary if you own and want to keep a valuable asset such as a boat or jewelry. On the other hand, Michigan exemptions allow an individual a greater amount of equity protection for the home. Therefore, an individual with significant equity in their homestead may benefit from utilizing Michigan law. The best way to determine which exemption statute is best for you is to speak with an experienced attorney.
It is important to remember that both the federal system and Michigan allow you to keep a certain amount of equity in your house and your personal property such as your car or money in the bank. Thanks to exemptions, most Chapter 7 filers keep all or most of their property and are able to start rebuilding financial security!
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