When you file Chapter 7 or Chapter 13 bankruptcy in MN, you must list and value all of your assets at the time of filing. After listing and valuing your assets with you, your experienced Kain & Scott bankruptcy attorney will help make sure as much of, if not all of, your assets are protected from your bankruptcy trustee.
Chapter 7 Bankruptcy and Liquidation in MN
Chapter 7 bankruptcy is the liquidation chapter of bankruptcy. That means if you own anything that cannot be protected by the bankruptcy code’s exemptions, your Chapter 7 trustee’s job is to liquidate the non-exempt assets to pay your creditors. That doesn’t mean they roll up to your house in an U-Haul, but it does mean you may need to pay something to the trustee to keep your assets or will need to surrender certain assets to them that you don’t want to pay to keep. Your experienced Kain & Scott bankruptcy attorney will warn you if you have any non-exempt assets prior to filing your case and help explain to you the details on this process.
How Bank Account Balances Can Be Protected in Chapter 7
Here, I want to focus on your bank account balances and how much can be protected in a Chapter 7 bankruptcy. First, it depends on whether you are filing using federal exemptions or state exemptions. Your attorney will help you decide which one is best for your fact scenario.
If you are a using federal exemptions, your bank accounts are likely protected using 11 U.S.C. Section 522(d)(5) which protects, “any property.” Most federal exemptions cases allow people to protect $13,900 in “any property” under this exemption. Some people can protect less depending on the equity in their home (your attorney will navigate that for you). This $13,900 is what is used to protect most bank account balances, tax refunds, and any non-essential household items.
Minnesota State Exemptions
If you are using state exemptions, your bank accounts are likely protected using Minn. Stat. 550.37 subd. 13, which protects 75% of earnings. That means if your bank account consists of earnings (like wages from a job), the statute protects 75% of the balance and the remaining 25% is an asset to be paid over to your Chapter 7 trustee.
Chapter 13 Bankruptcy and Liquidation in MN
In a Chapter 13 bankruptcy, there is no liquidation. Instead, you make monthly payments to your Chapter 13 trustee for 3-5 years. We still need to do the same liquidation analysis in a Chapter 13 case as discussed in the Chapter 7 section above, but it doesn’t result in you losing any assets or turning over a portion of your bank accounts to your trustee. Instead, your experienced Kain & Scott bankruptcy attorney will make sure your Chapter 13 payments balance out the amount that is non-exempt, if any. If you have more in your bank accounts than fits within the $13,900 federal limitations, or 25% of your balances is high in the state limitations, it may cause your Chapter 13 payments to increase.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT KAIN & SCOTT
Kain & Scott’s experienced bankruptcy attorneys know how to protect your assets in both Chapter 7 and Chapter 13 bankruptcy. If you are interested in learning more about how bankruptcy can help with your debts, reach out to Minnesota’s nicest bankruptcy law firm by going now to www.kainscott.com. You will be thankful you did.