One of the biggest concerns people have when it comes to filing for bankruptcy is whether or not they will lose their property. This is an extremely valid concern; after all, our home is more than just a house and our things are more than just material goods. These items come with memories and emotions and it can be devastating having to give up on everything you have worked for.
When you file for bankruptcy, there is a good chance that you will actually not lose your property and possessions, as long as they are exempt under the federal bankruptcy exemption law or Minnesota bankruptcy exemption law. Many people are surprised to learn that, in most bankruptcy cases in Minnesota, you will lose nothing you own.
Minnesota Bankruptcy Property Exemptions
Below are some basic rules regarding the Minnesota bankruptcy property exemptions:
- It is the equity of the item that must be exempted, if you owe money on the item.
- You can choose to either select federal bankruptcy exemptions or Minnesota bankruptcy exemptions. See below to determine which is the right for your situation
- If you are filing for a joint bankruptcy case with you and your spouse, these exemptions are doubled (for each person).
- The exemptions are based on the fair market value of the items that you own, not the purchase or the replacement costs of these items.
- You are only exempt if you list all assets in your bankruptcy. Keeping some of your assets out of the bankruptcy case is not only illegal, but it will also result in you losing it.
Of course, most of us are still confused when it comes to property exemption law in Minnesota which is why it is important to go over your personal situation with a Minnesota bankruptcy attorney. He will be able to explain what you can keep and the reasoning behind this in better detail.
Brief Overview of Bankruptcy Exemptions
- Your Home – $20,200 (federal bankruptcy exemptions)/ $330,000 (Minnesota exemptions)
- Your Vehicle – $3,225 (federal bankruptcy exemptions)/ $4,200 (Minnesota exemptions)
- Household goods including clothing – $10,775 (federal bankruptcy exemptions)/ $9,450 (Minnesota exemptions)
- Jewelry – $1,350 (federal bankruptcy exemptions)/ $2,572.50 (Minnesota exemptions, includes wedding rings and watches only)
- Tools of trade – $2,025 (federal bankruptcy exemptions)/ $10,500 (Minnesota exemptions)
- “Wild Card” exemptions that includes any unused home exemptions – $11,200 (federal bankruptcy exemptions)
- Life Insurance proceeds – exempt if need for your support (federal bankruptcy exemptions)/ $42,000 (Minnesota exemptions)
- Life insurance cash value – $10,775 (federal bankruptcy exemptions)/ $8,400 (Minnesota exemptions)
- IRA’s, ERISA pensions and 401 (k)’s – $1,095,000 (federal bankruptcy and Minnesota exemptions)
- Social security benefits – exempt (federal bankruptcy and Minnesota exemptions)
- Child support – exempt (federal bankruptcy and Minnesota exemptions)
- Spousal maintenance – exempt (federal bankruptcy exemptions)/ exempt as wages, 75% (Minnesota exemptions)
How a MN Bankruptcy Attorney Can Help
Still confused? And so you should be. The above tips can give you a brief understanding of property exemptions but will not be able to tell you exactly what will happen in your case. This is why it’s important to contact a Minneapolis bankruptcy lawyer who can assess your individual case and see what items falls under the exemptions law and what do not.