LANSING, Mich. (Dec. 12, 2024) — Today, the Michigan Senate passed Senate Bills 408 and 409, which would provide reasonable exemptions to protect Michigan residents from being pushed into poverty or homelessness by debt collectors. The legislation, sponsored by Sens. Jeff Irwin (D-Ann Arbor) and Mary Cavanagh (D-Redford Twp.), would also protect publicly funded Earned Income Tax Credit (EITC) benefits from going directly into the pockets of debt collectors and enable families to protect a modest home in bankruptcy.
“It simply doesn’t make sense to allow debt collectors to seize benefits intended for vulnerable families, drain bank accounts to nothing, or take the family home or car,” Sen. Irwin said. “I am so glad to see this legislation to protect Michigan families pass the Senate, and I am grateful to the consumer advocates, financial institutions, creditors, and other stakeholders who have worked with me for over two years to shape this legislation.”
“The main reason people seek bankruptcy protection is because they have been hit by unexpected financial hardship and are in danger of losing their home,” Sen. Cavanagh said. “But current home value exemption amounts aren’t realistic and haven’t been updated in over a decade, so current bankruptcy law doesn’t even offer stability for families whose homes are valued well below the median home in Michigan. SB 409 will ensure that people do not lose their homes and left destitute when they fall on hard times by updating the homestead exemption amount to $125,000 and pegging it to the Housing Price Index so it stays current.”
The consumer debt protection legislation has support from a number of organizations including the Pew Trusts, Michigan Poverty Law Project, the Michigan Coalition Against Homelessness, the United Ways of Northwest and Southeastern Michigan, the Christian Coalition, and the Center for Civil Justice. Senate Bills 408 and 409 will go next to the Michigan House of Representatives. They must pass both chambers in identical form to make it to the governor’s desk.