BANKRUPTCY; EXPAND PROPERTY EXEMPTIONS S.B. 409 (S-2):
SUMMARY OF BILL
REPORTED FROM COMMITTEE
Senate Bill 409 (Substitute S-2 as reported)
Sponsor: Senator Mary Cavanagh
Committee: Finance, Insurance, and Consumer Protection
CONTENT
The bill would amend Chapter 54A (Bankruptcy) of the Revised Judicature Act to modify the
value of types of property and expand the types of property exempt from inclusion in a
debtor's estate. It also would require the State Treasurer to adjust the amounts of exemption
for each type of exemption after the first adjustment date by an amount determined by the
State Treasurer to reflect the cumulative change in the Consumer Price Index for the
adjustment period and rounded to the nearest $25.
MCL 600.5451
BRIEF RATIONALE
Generally, an individual who can no longer pay the individual's debts may file for either
Chapter 13 or Chapter 7 bankruptcy, if eligible. 1 The U.S. Bankruptcy Code allows an
individual debtor to exempt certain property from the debtor's estate, including certain
retirement funds, professionally prescribed health aids, social security benefits, or local public
assistance benefits, among others.2 The Code also allows states to establish their own
bankruptcy property exemptions. In Michigan, a debtor may elect to abide by Federal or State
exemptions. Testimony indicated that there is a need to update the State’s bankruptcy law to
align with modern living costs. Some have argued that current law leaves residents facing
bankruptcy without a home, transportation, or means to sustain their lives and achieve
economic success. It has been recommended that homestead and vehicle exemption amounts
be increased to allow these individuals to participate in society after the considerable
challenges of bankruptcy.
Legislative Analyst: Nathan Leaman
FISCAL IMPACT
The bill would have no fiscal impact on State or local courts.
Date Completed: 10-29-24 Fiscal Analyst: Michael Siracuse
1
Referring to Chapter 7 and Chapter 13 of the U.S. Bankruptcy Code. For more information on individual
eligibility for Chapter 7 bankruptcy, see www.uscourts.gov.
2
For more information on Federally exempt property, see uscode.house.gov.
floor\sb409 Bill Analysis @ www.senate.michigan.gov/sfa
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not
constitute an official statement of legislative intent.


Statutes affected:
Substitute (S-2): 600.5451
Senate Introduced Bill: 600.5451