Filing for bankruptcy can be a daunting situation, but the more you know, the less scary it typically becomes. One of the biggest sources of stress is the common misconception that bankruptcy will force you to liquidate your assets. On the contrary, there are several options that allow bankruptcy candidates to file and retain most — if not all — of their most valuable assets.
Bankruptcy exemptions deem certain property and assets immune to liquidation when one files, and the details of exemption laws vary from state to state. For individuals considering Chapter 7 or Chapter 13 in Minnesota, the following three exemptions may be available when you file.
A homestead exemption protects your home or other real estate holdings when you file for bankruptcy. There are certain caps that may affect your ability to claim this exemption, though. According to the Office of the Revisor of Statutes, the quantity of land cannot exceed 160 acres, and the value of the exemption has a cap at $390,000.
You might worry about the possibility of having your car repossessed. Unless you elect to liquidate this asset in order to repay debts, you can typically retain vehicles in bankruptcy. In Minnesota, cars are usually considered personal property and exempt up to a value of $4,600. This cap is even higher — up to $46,000 — if the vehicle has modifications to accommodate a disability. Other personal property, such as clothing, electronics, books and furniture, may also be exempt.
Depending on whether you file for Chapter 7 or Chapter 13, your wages may be subject to garnishment as part of a debt payment plan. In some cases, however, wages are considered exempt in bankruptcy. Either 75 percent of your disposable wages or 40 times the federal rate for hourly minimum wage may be exempted. Whichever is greater can typically avoid immediate liquidation.