Eliminate Debt and Keep Your Property
If you think filing for bankruptcy means you must give up all or some of your possessions, the following information will be a pleasant surprise.
In a bankruptcy, you are allowed to keep your property and possessions, as long as those things are exempt under the law. In Minnesota, almost every case is a "no asset" case in which you lose nothing you own.
The bankruptcy exemption laws focus on the fair market value — not purchase price or replacement cost — of the things you own. If you owe money on the item, then only your equity in the item is exempted. You are allowed to select either the federal bankruptcy exemptions or the Minnesota exemptions. Each spouse gets the exemptions, so in a joint case the exemptions are effectively doubled. We can advise you what exemptions it makes sense to use in your particular case.
| Federal Bankruptcy Exemptions | Minnesota Exemptions | |
| Homestead | $21,625 | $360,000 |
| Motor vehicle | $3,450 | $4,400 |
| Household goods & clothing |
$11,525 | $9,900 |
| Jewelry | $1,450 | $2,695 (wedding rings and watches only) |
| Tools of trade | $2,175 | $11,000 |
| “Wild card” exemption consisting of unused home exemption |
$11,975 | None |
| Life insurance proceeds | Exempt if needed for your support | $44,000 |
| Life insurance cash value | $11,525 | $8,800 |
| IRAs, ERISA pensions & 401(k)s |
$1,171,650 | $1,171,650 |
| Social Security benefits | Exempt | Exempt |
| Child support | Exempt | Exempt |
| Spousal maintenance | Exempt if needed for your support | Exempt as wages, 75 percent |
| Personal injury case awards |
$21,625 | Exempt with certain limits |
The table above is a good summary of the law, but the actual laws are more detailed and there are other exemptions. We will discuss what you own and advise you about what is exempt in your case. Also, the law says that your assets are exempt only if you list them in your bankruptcy papers. If you intentionally leave something out, you can't keep it even if it would have been exempt. In addition, it is a bankruptcy crime to intentionally leave something off your bankruptcy papers.
Call our office and we can advise you the best way to protect your assets if you file for bankruptcy.
