As people begin to recognize bankruptcy as a financial tool, more people begin to utilize it. However, there is still some confusion about the bankruptcy process.
Particularly in regards to exemptions in bankruptcy, many people subscribe to certain misconceptions. To avoid falling into that category, understand a few key facts about bankruptcy exemptions.
Bankruptcy exemptions allow parties to protect certain assets during the bankruptcy process. Once an asset is exempt, it is no longer counted for utilization in paying down debts or paying them off. The type of bankruptcy a party chooses plays a role in determining what the party may exempt, as well as the total value of the exemptions.
Under federal law, debtors have several different exemption types they may utilize:
- Homestead exemption up to $23,675
- Home furnishings and appliances up to $12,625
- Social security or welfare income
- Child support or alimony
- Personal injury awards up to $23,675
- Car or truck up to $3,775
The homestead exemption is one that most parties are familiar with, which allows parties to maintain a certain amount of accumulated equity in their home. Some states do not allow residents to utilize the federal exemptions. However, in the state of Minnesota, residents have the option to select the set of exemption laws that works best for their personal situations.
While applicants have the choice in which type to choose, many may find state exemptions to be more generous than the federal option. Not only does Minnesota law offer larger exemptions for many of the same assets as the federal law, but it also provides additional exemption options, such as public benefits and of farm properties.
These are a few of the main facts about the exemptions available through the bankruptcy process; however, some circumstances may warrant others. For those looking to pursue a Minnesota bankruptcy, it may be beneficial to consult with a professional and review the bankruptcy law in full, to help make an educated decision fitting the situation.