SB 1138

SENATE BILL NO. 1138
A bill to amend 1961 PA 236, entitled
"Revised judicature act of 1961,"
by amending section 5451 (MCL 600.5451), as amended by
2012 PA 451.
the people of the state of michigan enact:
Sec. 5451. (1) A debtor in bankruptcy
under the bankruptcy code, 11 USC 101 to 1532, may exempt from property of the
estate property that is exempt under federal law or, under 11 USC 522(b)(2),
the following property:
(a) All of the
following:
(i) Family pictures.
(ii) Arms and accoutrements required by law
to be kept by a person.
(iii) Wearing apparel, excluding furs.
(iv) Cemeteries, tombs, and rights of burial
in use as repositories for the dead of the debtor's family or kept for burial
of the debtor.
(v) Professionally prescribed health aids.
(b) Provisions and
fuel for comfortable subsistence of each householder and his or her the
householder's family for 6 months.
(c) The interest,
not to exceed a value of $450.00 in each item and an aggregate value of $3,000.00, $5,000.00, in
household goods, furniture, utensils, books, appliances, and jewelry.
(d) The interest , not to exceed $500.00
in value, in a seat, pew, or slip occupied by the debtor or the debtor's
family in a house or place of public worship.
(e) The interest,
not to exceed $2,000.00 $10,000.00 in value, in crops, farm animals, and feed
for the farm animals.
(f) The interest , not to exceed $500.00
in value, in household pets, companion animals,
and service animals.
(g) The interest,
not to exceed $2,775.00 $15,000.00 in value, in 1 motor vehicle.
(h) The interest,
not to exceed $500.00 $5,000.00 in value, in 1
computer computers and its computer accessories, including, but not limited to, mobile computing devices,
and mobile telephones.
(i) The interest,
not to exceed $2,000.00 $10,000.00 in value, in the tools, implements,
materials, stock, apparatus, or other things to enable a person to carry on the
profession, trade, occupation, or business in which the person is principally
engaged.
(j) Money or other
benefits paid, provided, allowed to be paid or provided, or allowed, by a stock
or mutual life, health, or casualty insurance company because of the disability
due to injury or sickness of an insured person, whether the debt or liability
of the insured person or beneficiary was incurred before or after the accrual
of benefits under the insurance policy or contract, except that this exemption
does not apply to actions to recover for necessities contracted for after the
accrual of the benefits.
(k) All individual
retirement accounts, including Roth IRAs, or individual retirement annuities as
defined in section 408 or 408a 408A of the internal revenue code of 1986, 26 USC 408 and 408a,
408A, and the payments or distributions
from those accounts or annuities. This exemption applies to the operation of
the federal bankruptcy code as permitted by section 522(b)(2) of the bankruptcy
code, 11 USC 522. This exemption does not apply to the amount contributed to an
individual retirement account or individual retirement annuity within not more than 120
days before the debtor files for bankruptcy. This exemption does not apply to
any of the following:
(i) The portion of an individual retirement
account or individual retirement annuity that is subject to an order of a court
pursuant to a judgment of divorce or separate maintenance.
(ii) The portion of an individual retirement
account or individual retirement annuity that is subject to an order of a court
concerning child support.
(iii) The portion of an individual retirement
account or individual retirement annuity that is attributable to contributions
to the individual retirement account or premiums on the individual retirement
annuity, including the earnings or benefits from those contributions or
premiums, that, in the tax year made or paid, exceeded the deductible amount
allowed under section 408 of the internal revenue code
of 1986, 26 USC 408. This limitation on contributions does not apply to
a rollover of a pension, profit-sharing, stock bonus plan, or other plan that
is qualified under section 401 of the internal revenue code of 1986, 26 USC 401, or an annuity contract under
section 403(b) of the internal revenue code of 1986,
26 USC 403.
(l) The right or interest of a person in a
pension, profit-sharing, stock bonus, or other plan that is qualified under
section 401 of the internal revenue code of 1986,
26 USC 401, or an annuity contract under section 403(b) of the internal revenue
code of 1986, 26 USC 403, if the plan or
annuity is subject to the employee retirement income security act of 1974,
Public Law 93-406, 88 Stat. Stat 829, and the payments
or distributions from the plan or annuity. This exemption does not apply
to any amount contributed to a pension, profit-sharing, stock bonus, or other
qualified plan or a 403(b) annuity if the contribution occurs within not more than 120
days before the debtor files for bankruptcy. This exemption does not apply to
the right or interest of a person in a pension, profit-sharing, stock bonus, or
other qualified plan or a 403(b) annuity to the extent that the right or
interest is subject to either of the following:
(i) An order of a court pursuant to a
judgment of divorce or separate maintenance.
(ii) An order of a court concerning child
support.
(m) The interest of
the debtor, the codebtor, if any, and the debtor's dependents, not to exceed $30,000.00 $125,000.00 in
value or, if the debtor or a dependent of the debtor at the time of the filing
of the bankruptcy petition is 65 years of age or older or disabled, not to
exceed $45,000.00 $200,000.00
in value, in a homestead.
(n) Property
described in section 1 of 1927 PA 212, MCL 557.151, or real property, held
jointly by a husband and wife as a tenancy by the entirety, except that this
exemption does not apply with regard to a claim based on a joint debt of the
husband and wife.
(o) If the owner of
a homestead dies, leaving a surviving spouse but no children, the surviving
spouse before his or her the surviving spouse's remarriage, unless the
surviving spouse is the owner of a homestead in his
or her the surviving spouse's own right,
may exempt the homestead and the rents and profits of the homestead.
(p) Any money paid or to be paid because the debtor or a dependent of
the debtor was a crime victim.
(q) The debtor's interest in or money held in a bank account that the
debtor received within the previous 18 months as payment of any means-tested
public assistance benefits, unemployment compensation benefits, federal earned
income tax credit under section 32 of the internal revenue code of 1986, 26 USC
32, state tax credit under section 272 of the income tax act of 1967, 1967 PA
281, MCL 206.272, or a similar credit under a program of this state or a local
unit of government providing an earned income tax credit, disability benefits,
or worker's compensation benefits. The source of money held in a bank account
under this subdivision must be determined by applying a first-in, first-out
assumption.
(r) In addition to the exemptions provided in
subdivisions (a) to (q), the debtor's aggregate interest in any property, not
to exceed $1,475.00 in value plus up to $13,950.00 of any unused amount of the
exemption provided under subdivision (m).
(2) In a joint bankruptcy case, the exemptions in subsection (1) apply
fully for each debtor.
(3) The exemptions in subsection (1) apply to all property held in a
revocable trust of which the debtor is the settlor to the same extent the
property would be exempt if it were not held in trust.
(4) The value of property to which an exemption is applied under
subsection (1) and the adjusted value of the exemption must be determined on
the date the bankruptcy petition is filed.
(5) If the interest of the debtor in a homestead does not exceed the
applicable exemption amount under subsection (1)(m) on the date the bankruptcy
petition is filed, any increase in the value of the debtor's interest in the
homestead during the pendency of the case is exempt.
(6) (2) An
exemption under this section does not apply to a mortgage, lien, or security
interest in the exempt property that is consensually given or lawfully obtained
unless the lien is obtained by judgment, attachment, levy, or similar legal
process in connection with a court action or proceeding against the debtor.
(7) (3) If
property that is exempt under this section is sold, damaged, destroyed, or
acquired for public use, the right to receive proceeds or, if the owner
receives proceeds and holds them in a manner that makes them identifiable as
proceeds, the proceeds received are exempt from the property of a federal
bankruptcy estate in the same manner and amount as the exempt property. An
exemption under this subsection may be claimed up to 1 year after the receipt
of the proceeds by the owner.
(8) (4) On March 1, 2005 and at the end of each 3-year period
after 2005, Except
as provided in subsection (9), on an adjustment date, the state treasurer shall adjust each dollar amount in this section or,
for each adjustment after March 1, 2005, each the first adjustment date, the most recent adjusted
amount, by an amount determined by the state treasurer to reflect the
cumulative change in the consumer price index Consumer Price Index for the 3-year adjustment period
ending on the December 31 preceding the adjustment
date and rounded to the nearest $25.00. The state treasurer shall
publish the adjusted amounts. The adjusted amounts apply to cases filed on or after April 1 March 31 following the adjustment date.
(9) On an adjustment date, or as soon as practicable based on the
availability of the home price index, the state treasurer shall adjust the
dollar amounts in subsection (1)(m) or, for each adjustment after the first
adjustment date, the most recent adjusted amounts, by amounts determined by the
state treasurer to reflect the cumulative change in the home price index for
the adjustment period and rounded to the nearest $25.00. The state treasurer
shall publish the adjusted amounts. The adjusted amounts apply to cases filed
after March 31 following the adjustment date.
(10) (5) As
used in this section:
(a) "Adjustment date" means March 1 of every third year after
the year in which the amendatory act that added this definition takes effect.
(b) "Adjustment period" means the 3-year period ending on
December 31 preceding the adjustment date.
(c) (a) "Consumer
price index" Price
Index" means the consumer price index Consumer Price Index for all urban consumers in the
area of Detroit-Ann Arbor-Flint, Detroit-Warren-Dearborn, Michigan, published by the
United States department of labor Department of Labor or, if the United States department of labor Department
of Labor ceases publishing that index, the most similar index available.
(d) (b) "Disabled"
means unable to engage in substantial gainful activity, as defined by 42 USC
1382c(a)(3)(E), as a result of a physical or mental impairment and receiving
supplemental security income under 42 USC 1382c(a)(3)(A) and (C).
(e) "Home price index" means the FHFA Expanded-Data House
Price Index for the United States, calculated and published by the Federal
Housing Finance Agency, or, if that index is no longer calculated and published,
the most similar index available.
(f) (c) "Proceeds"
means money payable or paid as a result of 1 or more of the following:
(i) Sale of the property.
(ii) Insurance or other indemnification for
damage or destruction of the property.
(iii) Compensation for the acquisition for
public use of the property.
(g) (d) "Homestead"
means 1 of the following owned or being purchased under an executory contract
by the debtor that the debtor or a dependent of the debtor occupies as his or her the debtor's
or the dependent's principal residence:
(i) If the land is located outside of a
recorded plat, city, or village, a residential dwelling and appurtenances and
the land on which they are situated, not exceeding 40 acres.
(ii) If the land is located within a recorded
plat, city, or village, a residential dwelling and appurtenances and the land
on which they are situated, not exceeding 1 lot or parcel.
(iii) A residential dwelling situated on land
not owned by the debtor.
(iv) A condominium unit.
(v) A unit in a cooperative.
(vi) A motor home.
(vii) A boat or other watercraft.
(h) (e) "Residential
dwelling" includes, but is not limited to, a house or a manufactured or
mobile home.
(11) This section, as amended by the amendatory act that added this
subsection, applies only to bankruptcy cases filed on or after the effective
date of that amendatory act.