HB-5838, As Passed Senate, December 12, 2012

 

 

 

 

 

 

 

 

 

 

 

 

SENATE SUBSTITUTE FOR

 

HOUSE BILL NO. 5838

 

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 1961 PA 236, entitled

 

"Revised judicature act of 1961,"

 

by amending sections 5451 and 6023 (MCL 600.5451 and 600.6023),

 

section 5451 as added by 2004 PA 575 and section 6023 as amended by

 

1998 PA 61.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 5451. (1) A debtor in bankruptcy under the bankruptcy

 

code, 11 USC 101 to 1330, 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 judgment debtor's family or kept

 

for burial of the judgment debtor.

 

     (v) Professionally prescribed health aids.

 

     (b) Provisions and fuel for comfortable subsistence of each

 

householder and his or her 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, 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 judgment debtor or the judgment

 

debtor's family in a house or place of public worship.

 

     (e) The interest, not to exceed $2,000.00 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.

 

     (g) The interest, not to exceed $2,775.00 in value, in 1 motor

 

vehicle.

 

     (h) The interest, not to exceed $500.00 in value, in 1

 

computer and its accessories.

 

     (i) The interest, not to exceed $2,000.00 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, or 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) The interest, not exceeding $1,000.00 in par value, in

 

shares held by a member, who is a householder, of an association

 

incorporated under the savings and loan act of 1980, 1980 PA 307,

 

MCL 491.102 to 491.1202, except that this exemption does not apply

 

to a person who has a homestead exempted under the general laws of

 

this state.

 

     (k) (l) All individual retirement accounts, including Roth

 

IRAs, or individual retirement annuities as defined in section 408

 

or 408a of the internal revenue code, 26 USC 408 and 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 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, 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, 26 USC 401, or an annuity contract under

 

section 403(b) of the internal revenue code, 26 USC 403.

 

     (l) (m) 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, 26 USC 401, or an annuity

 

contract under section 403(b) of the internal revenue code, 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. 829. 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 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) (n) The interest of the debtor, the codebtor, if any, and

 

the debtor's dependents, not to exceed $30,000.00 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 in value, in a homestead.

 

     (n) (o) 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) (p) If the owner of a homestead dies, leaving a surviving

 

spouse but no children, the surviving spouse before his or her

 

remarriage, unless the surviving spouse is the owner of a homestead

 

in his or her own right, may exempt the homestead and the rents and

 

profits of the homestead.

 

     (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.

 

     (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.

 

     (4) On March 1, 2005 and at the end of each 3-year period

 

after 2005, the state treasurer shall adjust each dollar amount in

 

this section or, for each adjustment after March 1, 2005, each

 

adjusted amount, by an amount determined by the state treasurer to

 

reflect the cumulative change in the consumer price index for the

 

3-year 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 following the adjustment date.

 

     (5) As used in this section:

 

     (a) "Consumer price index" means the consumer price index for

 

all urban consumers in the area of Detroit-Ann Arbor-Flint,

 

Michigan, published by the United States department of labor or, if

 

the United States department of labor ceases publishing that index,

 

the most similar index available.

 

     (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 1382(a)(3)(A) 1382c(a)(3)(A) and (C).

 

     (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.

 

     (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 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.

 

     (e) "Residential dwelling" includes, but is not limited to, a

 

house or a manufactured or mobile home.

 

     Sec. 6023. (1) The following property of the a judgment debtor

 

and the judgment debtor's dependents shall be is exempt from levy

 

and sale under any an execution:

 

     (a) All family pictures, all arms and accouterments required

 

by law to be kept by any person, all wearing apparel of every

 

person or individual and his or her family, and provisions and fuel

 


for comfortable subsistence of each householder and his or her

 

family for 6 months.

 

     (b) All household goods, furniture, utensils, books, and

 

appliances, not exceeding in value $1,000.00.

 

     (c) A seat, pew, or slip occupied by the judgment debtor or

 

the judgment debtor's family in any a house or place of public

 

worship, and all cemeteries, tombs, and rights of burial while in

 

use as repositories of the dead of the judgment debtor's family or

 

kept for burial of the judgment debtor.

 

     (d) To each householder, 10 sheep, 2 cows, 5 swine, 100 hens,

 

5 roosters, and a sufficient quantity of hay and grain, growing or

 

otherwise, for properly keeping the animals and poultry for 6

 

months.

 

     (e) The tools, implements, materials, stock, apparatus, team,

 

vehicle, motor vehicle, horses, harness, or other things to enable

 

a person to carry on the profession, trade, occupation, or business

 

in which the person is principally engaged, not exceeding in value

 

$1,000.00.

 

     (f) Any money or other benefits paid, provided, or allowed to

 

be paid, provided, or allowed, by any stock or mutual life or

 

health or casualty insurance company, on account of the disability

 

due to injury or sickness of any the insured person, whether the

 

debt or liability of such insured person or beneficiary was

 

incurred before or after the accrual of benefits under the

 

insurance policy or contract, except that the exemption under this

 

subdivision does not apply to actions to recover for necessities

 

contracted for after the accrual of the benefits.

 


     (g) The shares held by any member, being a householder, of any

 

association incorporated under the provisions of the savings and

 

loan act of 1980, 1980 PA 307, MCL 491.102 to 491.1202, to the

 

amount of $1,000.00 in such shares, at par value, except that this

 

exemption does not apply to any person who has a homestead exempted

 

under the general laws of this state.

 

     (g) (h) A homestead of not exceeding more than 40 acres of

 

land and the dwelling house and appurtenances on that homestead ,

 

and that is not included in any a recorded plat, city, or village,

 

or, instead, and at the option of the owner, a quantity of land not

 

exceeding in amount that consists of not more than 1 lot, being

 

that is within a recorded town plat, city, or village, and the

 

dwelling house and appurtenances on that land, owned and occupied

 

by any resident of this state, not exceeding in value $3,500.00.

 

This exemption extends to any person owning and occupying applies

 

to any house that is owned, occupied, and claimed as a homestead by

 

a person but that is located on land that is not his or her own and

 

which the person claims as a homestead. owned by the person.

 

However, this exemption does not apply to any a mortgage on the

 

homestead , that is lawfully obtained. , except that the A mortgage

 

is not valid for purposes of this subdivision without the signature

 

of a married judgment debtor's spouse unless either of the

 

following occurs:

 

     (i) The mortgage is given to secure the payment of the purchase

 

money or a portion of the purchase money.

 

     (ii) The mortgage is recorded in the office of the register of

 

deeds of the county in which the property is located, for a period

 


of 25 years, and no notice of a claim of invalidity is filed in

 

that office during the 25 years following the recording of the

 

mortgage.

 

     (h) (i) An equity of redemption as described in section 6060.

 

     (i) (j) The homestead of a family, after the death of the

 

owner of the homestead, from the payment of his or her debts in all

 

cases during the minority of his or her children.

 

     (j) (k) An individual retirement account or individual

 

retirement annuity as defined in section 408 or 408a of the

 

internal revenue code of 1986, 26 USC 408 and 408a, and the

 

payments or distributions from such an that account or annuity.

 

This exemption applies to the operation of the federal bankruptcy

 

code as permitted by section 522(b)(2) of title 11 of the United

 

States Code, 11 U.S.C. the bankruptcy code, 11 USC 522. This

 

exemption does not apply to any amounts contributed to an the

 

individual retirement account or individual retirement annuity if

 

the contribution occurs within 120 days before the debtor files for

 

bankruptcy. This exemption does not apply to an individual

 

retirement account or individual retirement annuity to the extent

 

that any of the following occur:

 

     (i) The individual retirement account or individual retirement

 

annuity is subject to an order of a court pursuant to a judgment of

 

divorce or separate maintenance.

 

     (ii) The individual retirement account or individual retirement

 

annuity is subject to an order of a court concerning child support.

 

     (iii) Contributions to the individual retirement account or

 

premiums on the individual retirement annuity, including the

 


earnings or benefits from those contributions or premiums, exceed,

 

in the tax year made or paid, 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.

 

     (k) (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,

 

which 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.

 

829. This exemption applies to the operation of the federal

 

bankruptcy code, as permitted by section 522(b)(2) of title 11 of

 

the United States Code, 11 U.S.C. the bankruptcy code, 11 USC 522.

 

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 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 in the plan or annuity is subject

 

to any 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.

 

     (2) The exemptions provided in this section shall do not

 

extend to any lien thereon on the exempt property that is excluded

 

from exemption by law.

 

     (3) If the owner of a homestead dies, leaving a surviving

 

spouse but no children, the homestead shall be is exempt, and the

 

rents and profits of the homestead shall accrue to the benefit of

 

the surviving spouse before his or her remarriage, unless the

 

surviving spouse is the owner of a homestead in his or her own

 

right.

 

     Enacting section 1. This amendatory act takes effect December

 

31, 2012.

 

     Enacting section 2. This amendatory act does not take effect

 

unless House Bill No. 5835 of the 96th Legislature is enacted into

 

law.