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Serving clients across Minnesota
with 9 convenient office locations.

Choosing state or federal bankruptcy exemptions in Minnesota

When filing for bankruptcy in Minnesota, you are allowed to protect some essential properties from creditors, such as your personal belongings, your homestead or your car. In doing so, you can either use Minnesota exemption rules or the federal exemptions when protecting some of your property in a bankruptcy case. Read on to learn about these exemptions in bankruptcy and how to choose between them.

Minnesota’s exemptions

Certain properties are exempt from liquidation in a bankruptcy case, up to a certain amount. However, section 550. 37(4)(a) requires that exemption limits be adjusted for inflation after a certain number of years. If you are using the state’s exemptions, you can protect the following property:

  • Your homestead of value $450,000 or less is exempt if you have lived there for 1,215 days or more; if not, you can only exempt $170,350.
  • A homestead used for agricultural purposes with a value not exceeding $1,125,000 is exempt.
  • A mobile home or a manufactured home is exempt to an unlimited value only if you actually live there.
  • A vehicle of value $5,000 is exempt, but it can go higher if it was modified to accommodate a disability.
  • You can exempt personal belongings with a value of $11,250 or less and any savings of up to $25,000.

Federal law exemptions

The federal law will protect your Social Security, Supplemental Security Income, veteran’s benefits, retirement benefits and pensions. Many people opt for federal bankruptcy exemptions if they want to protect their retirement benefits. However, if you take the federal exemption and want to protect something like your homestead, the maximum amount you can protect is $25,150, which is much less than what the Minnesota exemption can do for you.

Work closely with your attorney to determine which options to choose based on your specific goals. There are some occasions where the federal exemption may be preferable, and there are other cases where Minnesota’s exemptions are better.

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