Michigan Bankruptcy Exemption Bill Passes Legislature, Heads to Governor Whitmer for Signature

December 22, 2024

Lansing, Michigan —The National Association of Consumer Bankruptcy Attorneys (NACBA) is pleased to announce a significant legislative victory as Michigan’s House Bill 4901 (HB-4901) passed the State Senate in a 21-17 vote after an intense 29-hour session. This milestone marks the culmination of NACBA's legislative efforts for 2024, paving the way for substantial improvements to Michigan's bankruptcy exemption laws. The bill now awaits Governor Gretchen Whitmer’s signature.

HB-4901, alongside its companion bill HB-4900, updates Michigan's outdated exemption laws, last revised over 20 years ago. The changes address rising inflation and provide much-needed relief to Michigan residents struggling with financial insecurity.

Key Highlights of HB-4901:

1. Homestead Exemption: Increases the exemption from $30,000 to $125,000 per debtor in a joint case, or $200,000 per debtor if disabled or aged 65 or older.

2. Motor Vehicle Exemption: Raises the exemption from $2,775 to $15,000 per debtor in a joint case.

3. Tools of the Trade: Expands the exemption from $2,000 to $10,000 per debtor in a joint case.

4. Crime Victim Payments: Introduces a new exemption for payments to crime victims or their dependents.

5. Inflation Adjustment: Establishes a triennial inflation adjustment for all exemptions.

“These updates represent a monumental shift in Michigan’s bankruptcy laws, bringing long-overdue protections to vulnerable individuals and families,” said Krista D’Amelio, NACBA Director of Government Affairs & Communicaitons. “This legislation ensures that Michigan citizens retain the basic assets needed to rebuild their lives.”

NACBA extends its heartfelt gratitude to Michigan members Matt Mason, Kurt O’Keefe and Alexander Berry-Santoro, for their unwavering dedication and tireless advocacy throughout this legislative journey. Their efforts, alongside those of many other NACBA members who contributed their time and expertise, have been instrumental in driving these critical reforms forward. The passage of HB-4901 represents a monumental step toward establishing a more just and equitable system, offering Michigan residents the protections they need to navigate financial hardship with dignity and hope.

The updated exemptions address critical gaps, including protections for retirees, widows, and individuals affected by unforeseen financial crises. Current exemptions were deemed among the nation’s worst by the National Consumer Law Center, contributing to financial hardship for countless Michigan families.

The text of HB-4901 is available for review at: https://www.legislature.mi.gov/documents/2023-2024/billengrossed/House/pdf/2023-HEBS-4901.pdf

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