Chapter 7 bankruptcy, often called “liquidation bankruptcy,” allows individuals to discharge most unsecured debts while protecting essential assets under Michigan bankruptcy exemptions

• Key Qualification Requirements

  • Michigan Bankruptcy Means Test: Determines eligibility based on income. If your income is below Michigan’s median level for your household size, you automatically qualify. If above, additional calculations assess disposable income after necessary expenses.

  • Debt Type: Chapter 7 is primarily for unsecured debts like credit card balances and medical bills. Secured debts, such as mortgages and car loans, require reaffirmation or surrender.

  • Previous Bankruptcy Filings: You cannot file Chapter 7 if you:

    • Filed Chapter 7 within the past 8 years.

    • Filed Chapter 13 within the past 6 years, unless at least 70% of the repayment plan was completed.

  • Credit Counseling Requirement: Michigan law mandates completion of a court-approved credit counseling course within 180 days before filing.

  • Asset Considerations: Some assets may be liquidated to repay creditors, but Michigan exemptions allow protection of essential property.

• Credit Impact: Bankruptcy remains on credit reports for up to 10 years, affecting future borrowing ability.
• Loss of Non-Exempt Assets: Some assets may be liquidated to repay creditors.
• Eligibility Restrictions: Individuals must pass the Michigan Bankruptcy Means Test to qualify.
• Not All Debts Discharged: Certain obligations, such as student loans and child support, remain unaffected.

• MCL Section 600.2914 – Discharge in bankruptcy and judgment cancellation.
• MCL Section 600.5451 – Michigan bankruptcy exemptions.

Michigan Compiled Laws (MCL) Links

For official Michigan bankruptcy statutes, visit the Michigan Legislature’s MCL Search tool.