Bankruptcy Laws Michigan
There are three primary differences between bankruptcy in the different states. First, each bankruptcy district has its own local rules, which govern forms, procedure and deadlines. Second, the Chapter 7 means test is based on the state median income, which varies. Thus, someone who might qualify for this chapter in another state might not do so in Michigan. Finally, each state has the option of using standard federal property exemptions or creating its own list. Otherwise, the bankruptcy code is uniform across the country.
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Identification
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Because the U.S. Constitution gives the federal government jurisdiction over bankruptcy, such proceedings are filed at a U.S. Bankruptcy Court. Each state has at least one Bankruptcy Court District; Michigan has two. The Eastern District has courthouses in Bay City, Detroit, and Flint. The Western District has divisional offices in Grand Rapids, Kalamazoo, Lansing, Traverse City and Marquette. See the Additional Resources below for more information about the specific addresses of these locations and the counties they serve.
Means Test
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The official data for median annual income are published each year by the U.S. Census Bureau. To file for Chapter 7, a debtor must pass a means test based on the median annual income for households of the same size in their state. In 2009, the median income for a single wage earner in Michigan was $44,703; for a family of two, $53,575; for three, $63,339; and for four, $76,312. For each additional member of a household in excess of four, add $6,900 to calculate the median income. If the median income is more than the debtor's annualized monthly income (average monthly income for the previous three months multiplied by 12), he or she qualifies for Chapter 7 in Michigan.
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Filing
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Each district in Michigan has its own local rules, available on its website, which should be reviewed prior to filing for bankruptcy. Both the Eastern and Western Districts have mandatory electronic filing via the Case Management/Electronic Case Filing system (CM/ECF), though the Eastern District can grant permission to file on paper ("over the counter") by request. In the Eastern District, a debtor has up to 15 days from the date the petition is filed to submit the required schedules, statements and supporting documents.
Fees
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In Michigan, the Bankruptcy Courts of both Districts will accept initial petitions and supporting documents without the payment of the filing fee, the amount of which varies. The fee can be waived if the debtor can show a hardship and files the official application. It can also be requested that the fee be paid in installments, but the deadline to make this formal request is 15 days in the Eastern District and seven days in the Western District. If the fees are not paid, or an installment plan is not approved by this time, the court can dismiss the case.
Exemptions
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Michigan allows bankruptcy debtors to use federal exemptions. Alternatively, they can use the state's exemptions, which include a homestead up to $31,900, property of a business partnership, pensions, public benefits, insurance benefits and certain annuity proceeds. The personal property that is exempt from liquidation includes household appliances (up to $475 to a total of $3,200), burial plots, clothing, crops and farm animals (up to $2,125), pets (valued to $525), $2,950 toward a motor vehicle and food and fuel for six months. The head of a household can also keep 60 percent of earned but unpaid wages plus $2 per week for each dependent (other than a spouse). Tools of a trade necessary for work are exempt up to $1,000 in value.
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References
Resources
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