Minnesota offers more options in their Chapter 7 bankruptcy than some other states. This makes possible to fit the needs more individuals. However, the decision to file for bankruptcy should be thoroughly vetted with the assistance of an attorney prior to making any decisions. Chapter 13 may offer a much better solution to financial crisis for some debtors. The right choice of bankruptcy is completely depended on the debtors’ circumstances.
Minnesota Bankruptcy Topics
- Personal Bankruptcy Options
- Keep Your Home: Bankruptcy and Foreclosure
- Minnesota Exemptions to Bankruptcy Liquidation
- Options for Filing Bankruptcy
- Minnesota Bankruptcy Courts and Trustees
For some Chapter 13 bankruptcy is the clear choice. However, the most widely chosen option is Chapter 7 bankruptcy all across America. Both are available in Minnesota and both options offer positives and negatives for every individual.
Chapter 7 Bankruptcy
Before qualifying for bankruptcy, the debtor must pass a federally mandated 'means test.' To pass this test the debtor must be under his or her given median income. In Minnesota, the median income figure used is $47,592 for an individual, $62,073 for couples, $75,603 for three person households, $87,630 for four person households, and an additional $6,900 for each addition family member. Once successfully filed, Chapter 7 bankruptcy requires all assets to be placed in control of a bankruptcy trustee to be liquidated with the profits distributed to creditors, hence the name 'liquidation' bankruptcy. At that cost, nearly all debts will be removed from the debtor, hence the name 'fresh start' bankruptcy, leaving the debtor on his or her way to financial freedom.
Chapter 13 Bankruptcy
For private individuals with no more than $1,010,650 in secured debts or $336,900 in unsecured debts, Chapter 13 bankruptcy is an option, although debtors must also pass the 'means test' to qualify. It is often called 'wage earners' bankruptcy because it is designed for those who still earn a regular income, but have accumulated many debts and want to repay them effectively. A plan is created with the bankruptcy court to help the debtor arrange his or her debts to be repaid in 3 to 5 years. This 5-year limit is required by law, but may be adjusted in some cases through the bankruptcy court. The debtor is able to maintain all of their possession with this type of bankruptcy. (See more on Filing Chapter 13 in Minnesota).
For those who have a home that is being foreclosed on, bankruptcy can help in many cases. After successfully filing for bankruptcy, a government required 'automatic stay' is enacted. This forces a debtor's creditors to halt any actions made to regain their debts from the debtor. This includes foreclosure on homes. However, this is not guaranteed to stop foreclosure. If the foreclosure had already been filed before the bankruptcy or if the creditor demonstrates to the bankruptcy court they the home will loss notable value during the process, the foreclosure may sometimes continue.
In the state of Minnesota, debtors may claim exemptions through two schemes. One, under the state exemptions laws as well as the Federal supplemental exemptions and two, they may chose to use only the Federal exemption set:
Type of Asset(s)
Details on Applicable Exemption(s)
Property to $200,000 ($500,000 if used for agriculture)
Accident or disability, Fraternal benefit society, Life, Police, Fire or beneficiary association, Unmatured life contract dividends to $6,400
Earnings of minor, Business property
ERISA to $48,000, IRA to $48,000, Retirement (private), Public, State, and State troopers
Household items to $7,200, Books, Musical Instruments, Burial Plot, Church pew, Clothing (including watches), Food, Vehicle to $3,200 (to $32,000 if for disability)
AFDC, SSI/ISSA, Crime victims, Unemployment, Veterans', and Workers' benefits
Tools of trade
Up to $13,000
Earn but Unpaid (minimum 75%), Garnishment free earnings
Use a Bankruptcy Lawyer
Bankruptcies are very complex processes with a great number of laws and variations involved. The average individual will need assistance to navigate the procedures. A bankruptcy lawyer can be of invaluable help through financial advice and through moral support, knowing that you are making the right choices.
Use a Filing Service
This service has the sole purpose alleviating paperwork duties from the debtor and nothing more. A filing service provides no financial advice at all. They are not often recommended, but can be used by those without the financial means to hire a bankruptcy lawyer.
File “Pro Se”
To file pro se can be very risky to most individuals. Bankruptcies are difficult and stressful procedures. However, without the financial means, many are forces to go about their bankruptcy in this manner.
Minnesota Bankruptcy Court - Main Office
301 United States Courthouse
300 South Fourth Street
Minneapolis, MN 55415
Minnesota Bankruptcy Court - Duluth Divisional Office
Gerald W. Heaney Federal Bldg and
United States Courthouse, Suite 416
515 West First Street
Duluth, MN 55802