Michigan Bankruptcy Homestead Exemption: Amounts and Federal Caps

The Michigan bankruptcy homestead exemption protects up to $51,150 of equity in your primary residence, or $76,725 if you or a dependent is 65 or older or has a disability. These 2026 inflation-adjusted figures come from MCL 600.5451(1)(m), and they apply in both Chapter 7 and Chapter 13 cases.¹ Michigan also lets you choose the federal exemption list instead, which changes the math for some filers.

What Property Qualifies as a Homestead

The exemption is broader than a single-family house. You or a dependent must occupy the property as a principal residence, and the statute covers condominiums, manufactured or mobile homes, cooperative units, motor homes, and boats or watercraft used as primary residences. The property must be owned outright or purchased under a land contract.²

Size limits apply. Outside a recorded plat, city, or village, the exemption covers your dwelling and up to 40 acres. Inside a city, village, or recorded plat, the limit is one lot.²

Standard and Enhanced Amounts

The statutory base amounts are $30,000 for most filers and $45,000 for filers who are 65 or older or disabled, but the State Treasurer adjusts these figures for inflation. The current 2026 numbers:

Standard: $51,150 in home equity for most filers.
Enhanced: $76,725 if you or a dependent is 65 or older, or has a disability at the time the petition is filed.

Equity means current market value minus every mortgage, lien, or other encumbrance. A home worth $250,000 with a $210,000 mortgage carries $40,000 in equity, well inside the standard amount. The exemption shelters your ownership interest, not the total value of the home.

For the enhanced figure, the disability generally must be a physical or mental impairment that prevents gainful employment. A Social Security disability award letter or physician documentation typically suffices.

State Exemptions or Federal Exemptions

Michigan is one of the states that lets a filer pick between the state list under MCL 600.5451 and the federal list under 11 U.S.C. § 522(d).³ It’s all or nothing; you cannot mix items from both.

The federal homestead exemption is $31,575, effective April 1, 2025. That’s nearly $20,000 below Michigan’s $51,150, so the state list protects more home equity for most people. The federal system does include a wildcard exemption that can be applied to any property, and Michigan offers no wildcard at all. If you rent, or if most of your value is in non-housing property, the federal list may shelter more overall. The right choice depends on the full picture of what you own.

Married couples filing jointly must both choose the same system. If they disagree, the code defaults to the federal list.

Married Filers and Tenancy by the Entirety

The Michigan exemption protects “the interest of the debtor, the codebtor, if any, and the debtor’s dependents.” A married couple filing together shares one $51,150 exemption; the figure does not double to $102,300.²

Michigan does recognize tenancy by the entirety, a form of ownership available only to married couples. When just one spouse files, property held this way may be fully shielded from that spouse’s individual creditors under 11 U.S.C. § 522(b)(3)(B).³ This protection sits outside the dollar-amount homestead exemption and can be far more valuable. It only works against debts owed by one spouse alone. If both spouses are liable on the same debt, the protection doesn’t apply, and federal tax liens can override it.

The Two-Year Residency Rule

To use Michigan’s state exemptions, you generally must have lived in Michigan for at least 730 days before filing. This is a federal rule under 11 U.S.C. § 522(b)(3)(A) and applies in every state.³

If you moved to Michigan within the last two years, the court looks at where you lived for the majority of the 180 days before that two-year window and applies the exemption laws of that earlier state, even though you no longer live there. If that state doesn’t allow former residents to claim its exemptions, you may be pushed to the federal list. Recent movers can end up in an awkward gap between states.

Federal Caps That Can Override the Michigan Amount

Three federal rules can reduce protection even when the Michigan exemption would otherwise cover your equity.

Recently Acquired Homestead Interest

Under 11 U.S.C. § 522(p), a homestead interest acquired within 1,215 days (roughly three years and four months) before filing is capped at $214,000 regardless of what state law would allow.³ This rarely limits Michigan filers because the state exemption is far below $214,000. It matters if you rolled significant equity from another property into a new Michigan home shortly before filing.

Certain Convictions and Fraud Debts

Section 522(q) imposes the same $214,000 cap on filers convicted of a felony demonstrating abuse of the bankruptcy system, filers who owe debts arising from securities law violations, or filers who caused serious physical injury or death through intentional or reckless conduct within the preceding five years. The cap exceeds Michigan’s dollar exemption but can bite against equity otherwise protected by tenancy by the entirety.

Converting Non-Exempt Assets Into Home Equity

Section 522(o) blocks you from claiming homestead equity that you built up by converting non-exempt assets with intent to defraud creditors, looking back 10 years. Selling a boat, collectibles, or investment accounts and pushing the proceeds into your mortgage specifically to shelter that money can be challenged by the trustee or a creditor. Courts examine timing and circumstances closely.

When Equity Exceeds the Exemption

What happens next depends on the chapter.

Chapter 7

The trustee can sell your home if non-exempt equity is large enough to produce meaningful payments for creditors after the costs of sale, the trustee’s commission, and payoff of mortgages and liens. You receive the exempt amount from the proceeds. When the excess is small, the trustee often decides a sale isn’t worth pursuing, since costs eat into what creditors would recover. That is the trustee’s judgment, not a guaranteed safe harbor.

Chapter 13

Chapter 13 does not force a sale. Your repayment plan must pay unsecured creditors at least what they would have received in a hypothetical Chapter 7 liquidation. Non-exempt equity becomes the floor for what you pay them over the three-to-five-year plan. With $20,000 in equity above the exemption, the plan must deliver at least $20,000 to unsecured creditors. The actual plan payment is the higher of that amount or your projected disposable income.

Claiming the Exemption

You claim the homestead exemption by filing Official Form 106C (Schedule C) with your bankruptcy petition. The form asks for the property, its current value, the amount claimed exempt, and the specific law authorizing the exemption.⁴

Get the equity calculation right. A recent tax assessment is a starting point; a professional appraisal is more defensible when your equity sits close to the limit. You’ll need a current mortgage payoff statement showing the exact balance, along with the legal description from your deed or tax records. Overstating equity invites the trustee to argue for a sale. Understating it invites an objection that can unravel the whole exemption claim.

After you file Schedule C, the trustee reviews your values and equity math, and you answer questions under oath at the meeting of creditors (the 341 meeting). Creditors and the trustee have 30 days after the meeting concludes to object to any claimed exemption.⁵ With no objection filed in that window, the exemption is final and your equity is protected. If an objection is filed, the court sets a hearing. Common objections dispute property value, whether the property qualifies as a homestead, or whether the filer meets the residency rule.

1
Michigan Department of Treasury. Inflation Adjustments Bankruptcy Exemptions
2
Michigan Legislature. Michigan Compiled Laws 600.5451
3
Office of the Law Revision Counsel. 11 US Code 522 – Exemptions
4
United States Courts. Official Form 106C – Schedule C: The Property You Claim as Exempt
5
Office of the Law Revision Counsel. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions