Ingham County Circuit Judge Rosemarie Aquilina on Monday said she will hear arguments in her Lansing courtroom in a week.
The state asked Monday to move the case to federal court.
Aquilina says she doesn't want to "pre-judge" the motion, but sees the case as a state issue because the Michigan Constitution protects pension benefits and Michigan's emergency manager law is in play. The judge last week ordered Gov. Rick Snyder to withdraw the bankruptcy petition.
During the hearing on Monday, Judge Aquilina said the Michigan Constitution should not be made to be Swiss cheese.
"Once we erode (the Constitution) with one hole, there will be others," Aquilina said. "(Detroit Emergency Manager Kevyn Orr) violated his obligations, and that's a state issue."
Detroit bankruptcy court hearing is Wednesday
Meanwhile, Orr asked the federal bankruptcy court to expedite the Chapter 9 hearings. He wants to move quickly because 15 months from now the Detroit City Council will have the power to end his state appointment.
A bankruptcy court hearing date has been set for 10 a.m. Wednesday in Detroit. A second hearing is scheduled for 10 a.m. Aug. 2. Judge Steven Rhodes said Monday that he will take up the city's request to freeze any lawsuits challenging last week's decision to file for bankruptcy protection.
On Monday morning, lawyers for the city's two pension funds, citing the Ingham County case, filed their own motion saying the bankruptcy case should be put on hold.