Michigan Bankruptcy Exemptions
Medical bankruptcy issues when claiming Michigan bankruptcy exemptions
Medical bankruptcy cases present a pesky problem for people in Michigan. When claiming the Michigan bankruptcy exemptions, statutory liens may attach which defeat individual exemptions. Residents of Michigan do not necessarily receive notice of liens when attaching, yet nevertheless these liens are legally enforceable just as a lien on a car. For example, following an automobile accident and serious injury, emergency response personnel respond automatically. Medical treatment is provided without regard to insurance coverage. Later, if medical expenses remain unpaid, hospitals may file a statutory lien against all claims against third parties who may be liable for the accident. The result creates a lien upon personal injury cases that must be paid before disbursing any funds to the injured party. If filing bankruptcy, and claiming the Michigan bankruptcy exemption based on necessity for support, the personal injury claim may nevertheless be lost because the bankruptcy court must enforce all valid liens against exempt property.
Designate homestead property, if any doubt remains
When a debtor owns multiple tracts of real estate, and especially a second home, the enforceability of the Michigan homestead exemption becomes questionable. The safest, and the best approach, requires formal designation of the primary homestead to avoid potential objections of creditors. A formal designation should be filed within real property records before filing bankruptcy. Limitations on designation are contained within the Statutes of the State of Michigan.