Bankruptcy property exemptions

When people file for bankruptcy in Minnesota, some of their property may be protected from garnishment or repossession. Minnesota statute 550.37 lists types of property that are exempt from collection efforts by debt collectors or creditors. Some of this protected property is fully protected while other types are only protected up to a certain dollar amount.

Many different kinds of personal goods qualify for exemption under this statute. For example, items of clothing, food items and kitchen utensils may not be garnished or repossessed. A total of $10,350 worth of furniture and household appliances qualifies for the exemption as well. If a family in bankruptcy owns a personal library or a Bible, those items also qualify for an exemption.

Items that are used in a debtor's primary profession may be exempted from collection by creditors. For example, a person who makes his or her primary income as a farmer may qualify for an exemption on certain equipment that is used to perform work on the farm. In the same way, the tools of a particular trade may be exempt if they are valued at $11,500 or less.

Any funds derived from government assistance are totally exempted from garnishment. This includes assistance like Medicare, food stamps or Supplemental Security Income. Employee benefits including company stock bonuses, pensions, retirement benefits or disability compensation may be totally protected as well. In many cases, any child support payments may also be protected under the property exemption statute.

Bankruptcy can be a complex process. Talking to an attorney may be helpful in determining what kinds of property may qualify for exemptions under state law.

Source: The Office of the Revisor of Statutes, "550/37 Property Exempt", January 06, 2015

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