Michigan Bankruptcy Blog

Michigan Constitution Does Not Create Independent Personal Property Exemption

In re Caperton, Bankr. W.D. Mich., Dec. 21, 2009 (Case No. 09-09540, Hon. Scott W. Dales).

The Bankruptcy Court for the Western District of Michigan recently rejected a debtor's attempt to exempt property based on a provision of the state constitution. The chapter 7 debtor elected to rely on state exemptions and, in addition to those statutory exemptions, claimed an exemption in $750 in personal property under Article X, § 3 of the Michigan Constitution ("Section 3"). Section 3 provides in part that "personal property of every resident of this state in the amount of not less than $750, as defined by law, shall be exempt from forced sale on execution or other process of any court."

The trustee objected to the claimed exemption, arguing that Section 3 is not an independent exemption and that it contemplates further action by the Legislature. The debtor argued that Section 3 creates a "wildcard" exemption, separate from statutory state exemptions.

The court, after finding no case law on point, held that Section 3 establishes the minimum exemption amount but that the "as defined by law" language authorizes the Legislature to increase the exemption amount. The court noted that "personal property" includes a variety of tangible and intangible property and that it is "reasonable to conclude that the types or specific items of exempt personal property would be defined by the legislature." Thus, the court concluded that Section 3 is not a "self-executing" or independent exemption, and it sustained the trustee's objection. 

Categories: Chapter 7, Western District of Michigan