Minnesota Bankruptcy Laws
Most of those who file for bankruptcy protection in Minnesota choose Chapter 7 (87%). Those clients can claim a number of property exemptions to avoid liquidation. They may choose either state or federal exemptions, although they may not mix the two. State exemptions include:
Homestead |
Up to $300,000 ($750,000 for agricultural property) |
Personal Property |
Motor vehicles up to $4,200 ($42,000 if disability-enabled); clothing, food, furniture, household goods up to $9,300 total; burial plot |
Wages |
Either 40 times the federal hourly minimum wage or minimum of 75% of weekly disposable wages, whichever is greater |
Pensions |
Tax exempt retirement accounts; Traditional and Roth IRAs up to $1,095,000/person; ERISA-qualified benefits up to $63,000 present value; public employees; state employees; state troopers |
Public Benefits |
Worker’s comp; unemployment; public assistance; veterans’ benefits; crime victims’ compensation |
Tools of the Trade |
Up to $15,000 total of tools, furniture, machines, instruments and stock; farm machines, livestock, produce up to $13,000; teaching materials of unlimited value |
Insurance |
Fraternal benefits; some types of life insurance proceeds, benefits, dividends, interest, loan, cash, surrender value; police, fire, or beneficiary association benefits |
The filing process begins once the client and their lawyer have chosen their options, prepared their assets, and completed credit counseling. After that:
- The court puts a stay on all credit collections
- The bankruptcy trustee examines the case and processes the petition
- The trustee, all creditors, the client and their attorney attend a 341 meeting to be informed of the plan and answer any questions
If the petition is granted, the Chapter 7 client has many of their debts discharged and the Chapter 13 client has a repayment plan that will allow them to be debt-free in three to five years.
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