Bankruptcy exemptions granted to MN residents

Minnesota residents who file for bankruptcy protection are able to keep certain assets because they are exempt. Those assets are protected by law from being sold to pay creditors. The exemptions fall into categories, such as motor vehicles and clothing, with a maximum dollar amount allowed for each category. Filers are free to use the Minnesota exemptions or they can elect to use federal exemptions.

Exemptions are applied to the amount of equity a person has within each property class. Equity is the difference in the property's market value and the amount owed on the property. For example, a person that owes $3,000 on a car worth $4,000 has $1,000 in equity. If a person has an allowable amount of equity in property that has a loan against it, the person is usually allowed to keep the property as long as they continue to make payments in a timely fashion.

For married couples filing jointly, each spouse is able to claim the full exemption amount, with certain exceptions. If a person desires to keep property that is not exempt, they generally must pay the trustee the market value of the property. Similarly, if a filer wants to keep property in which their equity exceeds the allowable amount, they will have to pay the amount of the excess equity in order to keep the property.

In order to more fully understand Minnesota and federal bankruptcy exemptions as well as bankruptcy laws in general, a Minnesota resident may want to discuss their situation with an attorney who has experience in that area. If a resident elects to file for bankruptcy protection, the attorney might be helpful in preparing the filing and representing the filer throughout the bankruptcy process.

Source: Minnesota Bankruptcy Law, "Minnesota Bankruptcy Exemptions", August 17, 2014

Source: Minnesota Bankruptcy Law, "Minnesota Bankruptcy Exemptions", August 17, 2014

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