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Category: Michigan

What Does Non-Exempt Mean in a Michigan Bankruptcy?

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If you’re a debtor looking into bankruptcy options, you’re certainly concerned about losing assets. For people who want to protect property, a primary question will be: What does non-exempt mean in a Michigan bankruptcy?

Non-exempt property in a Michigan bankruptcy includes assets not protected under state or federal exemptions, such as luxury items, second homes, or high-value collectibles. These assets may be sold in Chapter 7 to repay creditors or calculated into a repayment plan in Chapter 13.

As a Michigan bankruptcy lawyer with extensive experience in Chapter 7 and Chapter 13, I’ve assisted countless clients in understanding and applying exemptions to maximize outcomes. In this article, I’ll break down how exemptions work, what property is not exempt, and important bankruptcy strategies.

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FAQs About Non-Exempt Assets in Michigan Bankruptcy

What is exempt from bankruptcy in Michigan?
In Michigan, exempt property includes assets protected by state or federal bankruptcy laws. Common exemptions include equity in a primary residence under the homestead exemption, one vehicle up to $3,775, necessary clothing, household goods up to $600 per item, tools of the trade up to $2,525, and certain retirement accounts like IRAs and 401(k)s. These exemptions allow filers to retain essential assets necessary for maintaining a basic standard of living.
What is the difference between exempt and non-exempt assets?
Exempt assets are protected under bankruptcy laws and cannot be seized or sold by the trustee to repay creditors. These typically include homes, vehicles, and retirement accounts up to specified limits. Non-exempt assets, on the other hand, fall outside the scope of legal protections and may be sold in Chapter 7 bankruptcy to satisfy debts. Examples of non-exempt assets include luxury items, second properties, or high-value collectibles.
What does exemption mean in bankruptcies?
In bankruptcies, an exemption refers to the legal protection that shields certain assets from being sold to pay creditors. Exemptions allow individuals filing for bankruptcy to retain the essential property needed for daily living and financial recovery. Both federal and Michigan-specific exemptions apply to assets like homes, vehicles, and personal belongings, helping filers start over without losing everything.
What is nonexempt property in Chapter 13?
In Chapter 13 bankruptcy, non-exempt property is not subject to liquidation. Instead, the value of non-exempt assets is considered when creating the repayment plan. Debtors must pay creditors an amount equal to the value of their non-exempt assets over the repayment period. Unlike Chapter 7, Chapter 13 allows individuals to retain all property, including non-exempt assets, as long as the repayment terms are met.

What Are Bankruptcy Exemptions in the State of Michigan?

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Bankruptcy is an option for Michigan residents facing overwhelming debt, but many have concerns about losing assets during the process. There are protections for a filer’s property, so what are bankruptcy exemptions in the State of Michigan?

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FAQs About Bankruptcy Exemptions in Michigan

What property is exempt from creditors in Michigan?
In Michigan, exempt property includes essential assets protected under state or federal bankruptcy laws. Common exemptions cover your primary residence (up to $40,475 in equity), personal vehicles (up to $3,725 in equity), household goods, clothing, and tools of the trade. Retirement accounts, pensions, and certain life insurance policies are also typically exempt.

These protections allow individuals to retain vital assets needed for daily living and future financial recovery. The specific exemptions depend on the chosen exemption system: federal or state.
What is the wildcard exemption in Michigan?
Michigan does not have a "wildcard exemption" under its state-specific bankruptcy exemption laws. A wildcard exemption typically allows filers to protect any property of their choosing, up to a certain value, which is not specifically covered by other exemptions.

However, if you choose to use federal bankruptcy exemptions instead of Michigan’s state exemptions, the federal system does include a wildcard exemption of up to $1,475 in any property, plus up to $13,950 of unused homestead exemption if they don’t use it all for their home.
What money is exempt from bankruptcies?
Certain types of money are exempt from bankruptcy proceedings in Michigan. This includes Social Security benefits, unemployment compensation, disability payments, and pensions. Additionally, child support and alimony payments are typically exempt.

These protections permit individuals to retain access to essential income sources, enabling them to meet daily living expenses during and after bankruptcy. The specifics of these exemptions may vary depending on the exemption system chosen.

Can Military Spouses Get Student Loan Forgiveness in Michigan?

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Many individuals fund educational opportunities through student loans, but people married to active duty service members can face challenges with repayment. The realities of military life present disruptions, prompting husbands and wives to ask: Can military spouses get student loan forgiveness in Michigan?

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FAQS About Student Loan Forgiveness for Military Spouses

Are military spouses eligible for student loan forgiveness?
Yes, military spouses may be eligible for student loan forgiveness through federal programs such as Public Service Loan Forgiveness (PSLF) or Teacher Loan Forgiveness if they meet the specific qualifications. These programs are available to those employed in qualifying public service or education roles. Additionally, some military-specific benefits and state-level programs, such as the Michigan State Loan Repayment Program, may provide further options for reducing or eliminating student loan debt.
Does student loan forgiveness apply to spouse?
Student loan forgiveness programs generally apply to the borrower. However, if a military spouse qualifies for employment-based forgiveness programs, they can benefit from debt relief. While spousal loans are not forgiven as part of another person’s eligibility, shared financial planning can ease household financial stress. Programs like PSLF, IDR forgiveness, or profession-specific options provide opportunities for military spouses to reduce their own educational debt.
Does SCRA apply to spouse's student loans?
The Servicemembers Civil Relief Act (SCRA) typically applies to loans held by active-duty military members, capping interest rates at 6% during service. It does not directly apply to a spouse’s student loans unless they are co-signed by the service member.

However, military spouses may explore other financial relief options, such as deferment, repayment plans, or state-level programs like those available in Michigan, to manage their educational debt.
Can I get financial aid if my husband is in the military?
Yes, military spouses are eligible for various forms of financial aid. Programs like the Post-9/11 GI Bill or My Career Advancement Account (MyCAA) Scholarship provide funding for education or training.

Additionally, spouses may qualify for federal student loans, grants like the Pell Grant, or scholarships specifically designed for military families. In Michigan, there may also be state-level scholarships or financial assistance programs for military spouses seeking higher education opportunities.
What benefits do military spouses get?
Military spouses are eligible for numerous benefits, including education and training support, healthcare coverage through TRICARE, access to base amenities, and employment assistance. Educational benefits include scholarships like MyCAA, student loan deferment, and forgiveness programs like PSLF for qualifying employment.

These resources aim to support military families by reducing financial burdens and facilitating career development. Spouses can also access counseling and legal aid services to address various aspects of military life.

Do Employers Have to Notify Employees of Wage Garnishment in Michigan?

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Wage garnishment can be a stressful situation for employees facing debt collection. If you’re working in Michigan, you may be wondering: Do employers have to notify employees of wage garnishment?

Yes, Michigan employers are generally required to notify employees of a wage garnishment order. Once an employer receives a writ of garnishment from a court, they must provide the employee with details about the garnishment, including the amount being withheld and the creditor involved. Wage garnishments are typically used to satisfy unpaid debts such as child support, taxes, or court judgments.

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How to Stop Wage Garnishment in Michigan

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Facing wage garnishment can be overwhelming, making it difficult to keep up with essential expenses. You may be asking: How can I stop wage garnishment in Michigan?

Understanding Michigan wage garnishment laws is crucial to effectively stopping wage deductions and protecting your income.

To stop wage garnishment in Michigan, you can file an objection with the court within 14 days, negotiate a repayment plan with creditors, or file for bankruptcy to trigger an automatic stay and halt wage deductions immediately.

With decades of experience helping Michigan residents regain financial stability, I’ve guided countless individuals through the legal process to stop wage garnishments. This guide will explain your legal rights, available options, and practical steps to protect your income.

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FAQs About Stopping Wage Garnishment in Michigan

How to Stop a Garnishment in Michigan?
To stop a wage garnishment in Michigan, file an objection with the court within 14 days of receiving the garnishment notice. You can also negotiate a repayment plan with creditors, apply for an exemption, or file for bankruptcy, which triggers an automatic stay that immediately stops garnishments.
How Do I Claim Exemption from Garnishment in Michigan?
To claim an exemption from garnishment in Michigan, file a Claim of Exemption form with the court that issued the garnishment order. You must provide documentation proving that your income qualifies as exempt, such as Social Security benefits, veterans’ benefits, or other protected income sources.
How Do I File an Objection to a Garnishment in Michigan?
To file an objection to a wage garnishment in Michigan, submit an Objection to Garnishment form to the court within 14 days of receiving the garnishment notice. You must attend the court hearing to present your case, providing evidence of financial hardship, improper calculations, or exemptions that apply to your income.
How Long Can Your Wages Be Garnished in Michigan?
In Michigan, wage garnishments last until the debt is fully paid off or the court orders the garnishment to stop. Periodic wage garnishments remain in effect indefinitely unless successfully contested, while non-periodic garnishments (like bank levies) are one-time occurrences that can be reissued if necessary. In addition to wages, other sources of income such as land contract payments can also be subject to garnishment.
How Do You Escape a Wage Garnishment?
To escape wage garnishment in Michigan, you can:





File for bankruptcy, which stops garnishment immediately.



Negotiate a settlement or payment plan with the creditor.



File an objection in court to contest the garnishment.



Claim an exemption if your income qualifies as protected under Michigan law.
How Do I Write a Letter to Stop Wage Garnishment?
A letter to stop wage garnishment should formally request relief based on financial hardship or an alternative repayment plan. It should include:





Your full name and case number.



A statement of financial hardship explaining why the garnishment should be stopped.



A proposed payment arrangement (if applicable).



Supporting documents proving financial hardship or legal exemptions.

This letter should be sent to the court, your employer, and the creditor handling the garnishment.
Can You Be Garnished Without Being Served in Michigan?
No, Michigan law requires creditors to notify you before garnishing wages. You have 14 days to object after receiving notice.
Where Can I Find Help Stopping Wage Garnishment?
You can contact legal aid organizations, debt counseling services, or a bankruptcy attorney for guidance.

How Do You File for Bankruptcy in Michigan?

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Filing for bankruptcy in Michigan might feel overwhelming, but it’s a structured process designed to help you regain financial stability.

Here is a short Answer on How to File Bankruptcy in Michigan.

To file bankruptcy in Michigan, complete credit counseling, pass the means test (for Chapter 7), and file a petition with the bankruptcy court. Submit required financial documents, attend a 341 meeting with creditors, and complete a debtor education course. Eligible debts are discharged after court approval.

If you are just looking for Michigan Bankruptcy related Information, here is a short explanation.

Michigan bankruptcy options include Chapter 7 (liquidation) and Chapter 13 (repayment plan). Exemptions protect certain assets, such as a home ($46,125) and a vehicle ($4,000). Filing requires credit counseling, submitting paperwork to the bankruptcy court, and attending a 341 meeting. Federal exemptions are also available.

With decades of experience as a bankruptcy lawyer helping Michigan residents, I’ve guided countless individuals through bankruptcy to achieve financial relief. I’ll walk you through the essential steps to file for bankruptcy in Michigan and what you need to know to get started.

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FAQs About Filing for Bankruptcy in Michigan

Can I file for bankruptcy without an attorney?
Yes, but hiring an attorney is highly recommended to avoid costly mistakes and ensure a smoother process.
How much does it cost to file for bankruptcy in Michigan?
Chapter 7 costs $338, and Chapter 13 costs $313. Fee waivers are available for low-income filers.
How long does the bankruptcy process take?
Chapter 7 takes 3–6 months, while Chapter 13 involves a repayment plan lasting 3–5 years.
Will I lose all my property in bankruptcy?
No. Michigan's exemptions allow you to protect essential assets, such as your home, vehicle, and personal belongings.
Can filing for bankruptcy stop foreclosure or wage garnishment?
Yes, the automatic stay halts foreclosure proceedings and garnishments immediately upon filing.

Affordable Lawyer for Wage Garnishment in Michigan

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Wage garnishment can feel like a financial crisis, leaving you struggling to cover basic expenses. You may be wondering: How can I stop wage garnishment in Michigan?

To stop wage garnishment in Michigan, you can file an objection with the court within 14 days of receiving the garnishment notice, negotiate with creditors for a repayment plan, or initiate a bankruptcy filing, which triggers an automatic stay that halts all wage deductions immediately.

As an experienced wage garnishment lawyer in Michigan, I’ve helped hundreds of clients protect their income and explore legal strategies to regain financial stability. This guide explains how wage garnishment works, how to stop it, and why hiring a skilled attorney can make all the difference.

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FAQs About Wage Garnishment in Michigan

How Do I File an Objection to Wage Garnishment in Michigan?
To object to wage garnishment, file an Objection to Garnishment form with the court within 14 days of receiving the notice. The court will schedule a hearing, where you can present evidence of hardship, errors in the garnishment, or qualifying exemptions.
How Long Can Wage Garnishment Last in Michigan?
A wage garnishment remains in effect until the debt is fully paid or legally stopped through objection, settlement, or bankruptcy.
Can a Lawyer Help Reduce Wage Garnishment?
Yes, a wage garnishment lawyer can negotiate with creditors to lower your payments or stop garnishment entirely. They can also file objections or bankruptcy petitions to protect your income.
What Is the Maximum Wage Garnishment in Michigan?
In Michigan, creditors can garnish the lesser of 25% of your disposable earnings or the amount exceeding 30 times the federal minimum wage ($217.50 per week). Certain debts, like child support and taxes, may have higher limits.
Can I Get My Garnished Wages Back?
If a garnishment was improper, you may be able to recover garnished wages by filing an objection and proving the error in court. If you file for bankruptcy within 90 days of garnishment, you may also be eligible to recover wages taken during that period.

What Are Chapter 13 Debt Limits in Michigan?

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Chapter 13 bankruptcy is an option to tackle crushing debt, but eligibility is a top factor. To qualify, filers will need to ask a crucial question: What are Chapter 13 debt limits in Michigan?

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FAQs About Michigan Chapter 13 Debt Limits

How Does Chapter 13 Work in Michigan?
Chapter 13 bankruptcy in Michigan allows individuals with regular income to create a repayment plan to pay off their debts over a period of 3 to 5 years. It helps protect assets from liquidation and provides a structured way to manage debts while keeping creditors at bay.
What Happens if You Incur Debt During Chapter 13?
If you incur debt during a Chapter 13 case in Michigan, you must notify the court and trustee. The new debt may be included in your repayment plan, but it could affect your monthly payment or require an amendment to your plan.
What Is the Debt Limit for Chapter 13?
In Michigan, the debt limits for Chapter 13 are $1,257,850 for secured debts and $419,275 for unsecured debts. If your debts exceed this amount, you may need to consider other bankruptcy options, such as Chapter 11.
How Much of My Debt Do I Have to Pay in Chapter 13?
In Chapter 13 bankruptcy in Michigan, the amount of debt you must pay depends on your disposable income, the type of debt, and your ability to repay. Typically, you will repay as much as you can afford considering allowable living expenses. Unsecured creditors may receive a reduced portion of what is owed.
What Is the Highest Chapter 13 Payment?
There is no set "highest" Chapter 13 payment, as payments depend on the debtor’s income, expenses, and the total amount of debt. The monthly payment is structured to fit the debtor's ability to repay while covering secured and unsecured debt. The court will adjust the plan based on financial circumstances.
Can You Make Too Much Money for Chapter 13?
While there is no income cap for Chapter 13, high earners may not qualify if their debts exceed the eligibility limits. In Michigan, Chapter 13 is available to those with less than $2.75 million in combined secured and unsecured debts. High income may also affect the payment plan and debt repayment terms.
What Are Other Eligibility Factors for Chapter 13?
Aside from having regular income and falling under the debt limit, filers must be individuals or married spouses. You must go through credit counseling within 180 days before filing your Chapter 13 petition, and you must wait at least 2 years or more after a previous bankruptcy case.

What Disqualifies You From Filing Chapter 7 in Michigan?

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If you’re struggling with debt, Chapter 7 bankruptcy might seem like a viable solution. But what disqualifies you from filing Chapter 7 in Michigan?

You may be disqualified from Chapter 7 if your disposable income is high enough to repay debts through a Chapter 13 repayment plan. Other disqualifying factors include:

  • Failing the Means Test: If your income exceeds Michigan’s median income and you have enough disposable income to repay debts.
  • Previous Bankruptcy Filings: If you received a Chapter 7 discharge within the last eight years or a Chapter 13 discharge within six years.
  • Fraudulent Activity: If you attempted to hide assets, committed bankruptcy fraud, or misrepresented financial information.
  • Failure to Complete Credit Counseling: You must complete a court-approved credit counseling course before filing.

With decades of experience helping Michigan residents navigate bankruptcy, I’ve assisted countless individuals in determining their eligibility. Let’s break down these disqualifications in detail to help you understand your options.

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FAQs About Chapter 7 Bankruptcy in Michigan

Can I qualify for Chapter 7 if my income is above the limit?
Yes, if you pass the means test, you may still qualify despite having higher income.
What happens if I miss the credit counseling deadline?
Your case may be dismissed, and you’ll need to restart the process after completing counseling.
How does Chapter 13 differ from Chapter 7?
Chapter 13 involves repaying debts over time, while Chapter 7 eliminates most debts through liquidation.
Can I keep my house in Chapter 7 bankruptcy?
If your home equity is within Michigan’s homestead exemption, you can usually keep your house.
What happens if I’m accused of fraud during bankruptcy?
Your case may be dismissed, and you could face fines or criminal charges.
What is non-exempt property in bankruptcy?
Non-exempt property includes assets like high-value vehicles, vacation homes, or luxury items not covered by exemptions.
How long does the Chapter 7 process take?
Most cases are resolved within four to six months.

Is Workers Compensation Considered Income for Bankruptcies in Michigan?

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Bankruptcy can be a smart strategy for many people in debt, but those who receive funds due to a work-related medical condition often have a critical question: Is workers’ compensation considered income for bankruptcies in Michigan?

No, workers’ compensation benefits are not usually considered income in Michigan bankruptcy cases. However, the treatment of workers’ compensation benefits may vary depending on the type of bankruptcy and other factors. 

However, there are some exceptions to the general rule that could put your worker’s compensation benefits at risk. It’s best to work with a Michigan bankruptcy lawyer who can advise you on protecting the financial support you rely on when dealing with a workplace injury or occupational illness.

In addition, you can read on for some background on how workers’ comp benefits are treated in Chapter 7 and Chapter 13 bankruptcy cases.

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FAQs About Bankruptcy and Workers Comp Income

What is considered income for bankruptcies?
In bankruptcy cases, income includes any money received by the filer regularly, such as wages, self-employment earnings, rental income, pension payments, and Social Security benefits. However, workers’ compensation benefits are generally not considered income under federal bankruptcy law.

These benefits are typically exempt from the income calculation used in the means test for Chapter 7 or disposable income assessment in Chapter 13. Accurate reporting is essential for compliance with bankruptcy requirements.
What assets are exempt from Chapter 7 in Michigan?
Michigan law provides exemptions to protect specific assets during Chapter 7 bankruptcy. Common exemptions include:





Homestead Exemption: Protects equity in a primary residence up to a specified limit.



Personal Property Exemptions: Covers clothing, household goods, and furniture up to a certain value.



Vehicle Exemption: Protects the value of one motor vehicle within a statutory limit.



Wage and Benefit Exemptions: Safeguards wages, workers’ compensation, and Social Security benefits.

These exemptions aim to help filers retain essential items and regain financial stability after bankruptcy.
Do you lose retirement accounts in bankruptcies?
Retirement accounts are typically protected in bankruptcy through exemptions under federal and Michigan laws. Accounts like 401(k)s, IRAs, and pension plans are usually exempt from creditors. Traditional and Roth IRAs have a federal exemption limit (currently over $1.5 million), while qualified ERISA accounts are fully protected. Proper filing protects these items.
Is unemployment compensation exempt under Michigan bankruptcy laws?
Unemployment compensation is generally exempt under Michigan bankruptcy laws. State and federal exemptions protect these benefits, so that they are not included in the bankruptcy estate or seized by creditors. Accurate reporting and proper documentation are essential to safeguard these funds during bankruptcy proceedings.
How much equity can I have in my home and still file Chapter 7 in Michigan?
Under Michigan’s homestead exemption, filers can protect up to $40,475 in equity for a primary residence. For married couples filing jointly, this amount increases to $60,725. Michigan residents aged 65 or older or those with disabilities may qualify for additional protections. These limits allow filers to safeguard their homes during Chapter 7 bankruptcy while liquidating other non-exempt assets to repay creditors.
Can you keep your car in Chapter 7 in Michigan?
Yes, Michigan’s vehicle exemption allows filers to protect up to $3,775 of equity in a single motor vehicle. If the filer owes money on the car loan and the equity is below this limit, they can often keep the vehicle by reaffirming the loan or continuing payments. For cars with higher equity, the filer may need to negotiate with the trustee or use other exemptions to cover the excess value and retain the vehicle.

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