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Working to Change Michigan Bankruptcy Rules

Good news of progress on getting Michigan residents bankruptcy relief. I have been part of the NACBA working group to update Michigan bankruptcy laws (particular exemptions to liquidation) to better help struggling families shed oppressive debt all the awhile keeping their homes, vehicles and other assets.

Here is the news release:

NACBA State Advocacy: Michigan Senator Mary Cavanagh Introduces Bill to Enhance Bankruptcy Exemptions

NACBA's MI working group has collaborated closely with Senator Cavanagh to ensure that Michigan families are granted a fresh start and are protected from losing their homes, cars, and public benefits to creditors.

Lansing, MI – June 28, 2023: The National Association of Consumer Bankruptcy Attorneys (NACBA) commends State Senator Mary Cavanagh (D-Redford Twp) for her introduction of Senate Bill 409. This bill aims to assist struggling Michigan families in better safeguarding their housing, transportation, and other essential needs while coping with debt.

Michigan's current bankruptcy exemptions are outdated, as they were last updated in 2005, and fail to meet even the most basic standards. SB 409 seeks to increase the value of exemptions, ensuring that Michiganders can resolve their debts while safeguarding their homes, transportation, and enough funds to cover necessary expenses until they receive their next paycheck.

“When Michigan families experience difficult financial times, bankruptcy might be the best opportunity to start fresh,” said Senator Cavanagh. “If their home, vehicle, and other necessities are lost in the process, regaining financial stability can become an impossible cycle of barriers for many Michiganders.”

Currently, Michigan's homestead exemption stands at $46,125, while the car exemption is set at $4,250. It is widely acknowledged that home appreciation in Michigan far exceeds the existing exemption amount. Additionally, the average price of a used car is $27,000. Recognizing these realities, NACBA members in Michigan have actively advocated for changes to the state's bankruptcy exemptions.

"NACBA's MI working group fully supports Senator Cavanagh's initiative in introducing SB 409, and we eagerly anticipate continuing our collaboration with her to ensure the implementation of these crucial changes," said Matt Mason, a member of NACBA's Legislative Committee and NACBA's MI Working Group. "Many within the consumer bankruptcy community understand the vital role that state exemption laws play in safeguarding consumers and their families from falling into poverty. These laws also preserve their ability to contribute as productive members of society and achieve financial recovery. SB 409 would further protect homeowners by raising the amount of equity safeguarded to $250,000 ($350,000 for individuals aged 65 or disabled) and safeguard working families' vehicles by increasing the exemption to $15,000. By modernizing our exemption laws, Michigan can prevent creditors and debt buyers from plunging families into poverty."

Senator Cavanagh serves as the chair of the Senate Committee on Finance, Insurance, and Consumer Protection. In conjunction with Senate Bill 408, sponsored by Sen. Jeff Irwin (D-Ann Arbor), which addresses exemption categories and amounts in consumer debt garnishment and seizure cases, she introduced SB 409.

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