If you’re exploring bankruptcy in Michigan, understanding the homestead exemption is critical. In April 2025, the state raised this exemption significantly. Here’s what Livonia residents should know—and why it matters.
What Is the Michigan Bankruptcy Homestead Exemption?
The homestead exemption lets you protect equity in your principal residence during a Chapter 7 or Chapter 13 filing. Michigan offers higher protection than federal exemptions for your primary residence, thanks to a recent increase in our exemption amount.
What is an exemption, generally, Michigan or Federal?
In brief, an exemption is the amount of equity you are allowed to retain in any given type of property from the bankruptcy estate that you create legally when you file for bankruptcy. There are different exemptions and amounts for different types of property. If the dollar value of an exemption exceeds the fair market value of the property to which you are attaching it in your bankruptcy petition, that property will be fully excluded from the bankruptcy estate.
This means that a Chapter 7 Trustee cannot take the property from you and that its value will not affect the amount you have to pay monthly in a Chapter 13 payment plan.
This articles discusses the exemption for your homestead, or primary residence, only. There are other exemptions for automobiles, jewelry, retirement accounts, and more.
Federal vs. Michigan Exemptions?
When you file for bankruptcy in Michigan, you must choose whether to use the Michigan exemptions or the Federal exemptions arising from the US Bankruptcy Code. You cannot mix and match between them.
Thus, expert guidance from a Livonia bankruptcy attorney is a must. Although the newly increased Michigan homestead exemption may protect your home, they may offer less protection than the Federal exemptions in other ways. This is always a fact-specific review.
2024–2025 Exemption Increase
Previously, the Federal exemptions offered a much stronger homestead exemption than did Michigan’s exemptions, except in certain cases. However, in late 2024, Michigan passed House Bill 4901, updating the homestead exemption and more:
- Joint filers can now exempt up to $125,000 per debtor
- Seniors (65+) or disabled filers get up to $200,000 per debtor
- These amounts apply to cases filed on or after the law’s effective date
This update brings Michigan’s exemption in line with modern home values.
Who Qualifies for the Exemption?
You qualify if:
- You’ve lived in Michigan for at least two years before filing
- The property is your primary residence in Livonia
- You file for Chapter 7 or Chapter 13 bankruptcy
- You formally claim the exemption on Schedule C when filing
Why This Matters for Livonia Homeowners
- You likely have stronger protection than under Federal exemptions
- You can keep a larger portion of your home’s equity during bankruptcy
- Greater peace of mind especially for distressed homeowners in Metro Detroit
How to Use the Homestead Exemption
- Estimate your home equity
- Subtract your remaining mortgage from current market value
- Hire a Livonia bankruptcy attorney to Compare to exemption limits and analyze your assets in full.
- Your bankruptcy lawyer will draft your petition accordingly, if available, to:
- List your home, value, and claimed exemption in the proper Schedules.
- File and protect
- Once filed, the automatic stay protects your home from foreclosure and creditors
- The Michigan bankruptcy exemption protects your home from the Chapter 7 Trustee
Joint vs Individual Filings
- Married filers each receive separate exemptions
- Joint filing can double your coverage, perfect for couples in Livonia
Exemption vs Case Type
| Bankruptcy Type | Advantage |
|---|---|
| Chapter 7 | Exempts home equity from liquidation up to the limit |
| Chapter 13 | Keeps home equity exempt while maintaining an affordable Chapter 13 payment plan |
Summary: What This Means for You
- Michigan doubled down on its homestead exemption in 2024–25
- Livonia homeowners now enjoy protection up to $125K or $200K per filer
- Use state exemptions to safeguard your home equity
- A clean, simple bankruptcy strategy can preserve your home
Need Bankruptcy Help in Livonia?
At Noble Path Legal PLLC, we guide you through each step—from assessing equity to drafting your petition documentation properly, filing it, and prosecuting your case with the attention and aggressiveness you need. We will work to protect your home and secure the fresh start to which you are entitled under law.
Our attorney has assisted hundreds of Metro Detroit Chapter 7 and Chapter 13 bankruptcy clients for nearly 20 years. We bring the experience, the expertise, and the local know-how to the table along with all of the customer service you deserve for every client.
Click the button below to schedule your free bankruptcy consultation in Livonia today.