I live in Michigan and now that the snow is gone most of my grass looks like straw. When I tried raking it, it comes out to the dirt. This has never happened before. Should I continue to rank it out and start fresh?

I would, if it's coming out that easy.

I would suggest you rake your lawn and whatever clumps come out just shake some of the dirt off put it back down and press it back down with your foot then seed over it instead of leaving bald spots the grass will re-root itself and in about 4-6 weeks you should start seeing nice results. 2nd) while your lifting and shaking the grass clumps watch for grubs which looks like a huge maggot with a yellowish orange head, If you have some here is a 2 for 1 deal go to the grocery store and get non-alcoholic beer mix it with dish soap(2 cans to 1/4 cup soap) spray it on your lawn. This kills grubs and makes your grass real happy and healthy.