• Michigan places stipulatiions on the type of debt that can be discharged in personal bankrupcies.Justice image by MVit from Fotolia.com
  
  Federal law allows individuals to file for Chapter 7 or Chapter 13 bankruptcy protection. A Chapter 7 bankruptcy will erase most of your debts, with some exceptions. A Chapter 13 bankruptcy creates a plan to pay your debts over a predetermined period of time. Most bankruptcy laws are federal laws. However, Michigan have state-set rules regarding eligibility and the types of debts that cannot be discharged in a bankruptcy case.
  
  

Alimony and Child Support

• You will still be liable for back payments of alimony and child support payments if the person receiving the payments files a proof of claim with the bankruptcy court. The court will provide you and the Michigan Office of Child Support Enforcement with a written notice of unpaid support when you file for bankruptcy protection and after your bankruptcy case has been completed.
  
  

Taxes

• You must continue to pay taxes and repay back taxes, even if you have filed for bankruptcy. In a Chapter 13 bankruptcy case, payment of back taxes can be made over a period of three to five years depending on your income. Any interest from back taxes that continues to accrue during your bankruptcy proceedings must be paid as part of your Chapter 13 debt payment plan.
  
  

Student Loans

• Any student loan debts you have must still be paid unless you convince the court that paying the money back will create an "undue hardship" for you. The courts are strict about issuing "undue hardship" rulings for student loans. You will be required to file a separate motion and appear before a judge to prove you hardship.
  
  

Exemptions

• Exemptions are items, such as your home, that you get to keep after going through the bankruptcy process. Nonexempt items are subject to being sold by the bankruptcy trustee assigned to your case to raise money to pay your creditors. Michigan allows debtors to choose between the Michigan plan or the federal option. The main differences are the dollar amounts of equity you can protect from your creditors. Equity is the value of your property, minus what you may owe on it. Federal exemptions include a portion of certain life insurance policies, but state exemptions do not.
  
  

Michigan Means Test

• A means test is required if you wish to be eligible for Chapter 7 bankruptcy. A comparison is made between your income and the average income for your area of the state by household size. A means test will determine if you need to have most of your debts forgiven or if you can re-pay creditors under a payment plan. Local income figures are broken down by Michigan counties and zip codes. The median income of your county, as determined by the U.S. Census Bureau, is used as part of the means test.