Understand Exemptions in Bankruptcy

Exemptions are those assets that are not subject to being liquidated in a bankruptcy. In the words of the Administrative Office of the U.S. Courts, exemptions consist of "Property that a debtor is allowed to retain, free from the claims of creditors who do not have liens on the property." Federal exemptions and Minnesota bankruptcy exemptions are similar but differ in detail.

What Are Exemptions in Minnesota?

The following lists of exemptions are provided here for general informational purposes only and are not necessarily up to date, precise or all-inclusive. To discuss whether you should use federal or state bankruptcy exemptions and what exemptions are relevant to your situation, contact an experienced bankruptcy attorney. Prescott Pearson & Tande, PA, welcomes your inquiry. With more than 40 years of experience handling all types of bankruptcy matters, we will gladly help you determine your exemptions for the purpose of a Minnesota bankruptcy filing.

Federal Bankruptcy Exemptions

In general, federal bankruptcy exemptions include:

  • Real estate (homestead) up to22,975; federal exemptions for homestead ($45,950 if filing jointly)
  • Life insurance cash value $12,250
  • Child support and alimony
  • Pensions and 401(k)s and IRAs
  • A motor vehicle valued up to $3,675 (for each filing person)
  • Household goods up to $12,250 in value and jewelry up to $1,550 in value
  • Wrongful death lawsuit proceeds for the death of someone on whom you depended financially and personal injury proceeds up to $22,975
  • Compensation for lost earnings and public benefits such as Social Security or welfare
  • Tools of your trade up to $2,300 in value
  • Any amount of the unused homestead exemption up to $11,500 for each debtor plus an additional $1,225 for each debtor can be used to protect any other property the individual owns.

Minnesota Exemptions

In general, Minnesota bankruptcy exemptions include:

  • Real estate ( homestead) up to $390,000 in value and up to 160 acres
  • Most personal injury accident insurance proceeds
  • Pensions, 401(k)s and IRAs
  • Personal property up to $10,390 in value (note: talk to an attorney regarding what makes up "personal property")
  • A motor vehicle valued up to $4,600 (note: this can only be used for one vehicle)
  • Public benefits
  • Tools of your trade up to $11,500 in value
  • Some wages
  • Life insurance cash value of $9,200, and up to $46,000 of life insurance proceeds paid to a surviving spouse

What Happens to Nonexempt Assets?

The bankruptcy trustee can liquidate (sell to pay to creditors) any assets that you own above and beyond the allowable exemptions according to law. In our Minneapolis law practice, most of our clients are able to keep most or all of their possessions by claiming these exemptions when filing Chapter 7 or Chapter 13 bankruptcy.

"This Is All We Do, and We Do It Well."

Contact a Business Bankruptcy Lawyer for Answers to Exemption Questions

  • Minneapolis-St. Paul Area: 651-968-8096
  • Minnesota Toll Free: 888-366-0827

To learn more about exemptions and bankruptcy, call us or contact our bankruptcy lawyers online today. We offer free initial consultations, quality services at competitive rates and effective representation statewide.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.