Everybody asks our Bankruptcy Attorneys in Eden Prairie MN what they get to keep and what they have to lose after they file bankruptcy. However 98% of all bankruptcies that are filed are called no-asset cases, meaning that you will get to keep everything that you own. This is because most everything these days is exempt by an attachment from a creditor- contrary to back in the mid to early 1800’s before bankruptcy started. Prior to the formation of bankruptcy in the 1870’s if you owed someone a lot of money they would take you to court, get a writ of attachment, come to your home in Eden Prairie and literally take everything you own. The problem with this is that those people who lost everything would become a burden on the state; the government would have to support them. Well the government didn’t want to do that anymore so they created a list of things that are exempt from attachment. Meaning the creditors can’t get them or have them liquidated to pay your debt. We still have this list today.
What is Exempt From Attachment in Minnesota?
1. Your Homestead
One of the biggest reason our Bankruptcy Attorneys in Eden Prairie MN help people file bankruptcy is to keep the main essentials they need in life. One of the biggest is your home. If you have a home that has less than $390,000 of equity it is exempt from attachment as long as you reside in the home and continue to make your payments. This is the fair market value of the home minus the amount that you owe on it. For example if you own a home that is worth $200,000 and owe $150,000 on it you would have $50,000 of equity in it. The homestead exemption can be claimed no matter if the deed is in your name or your spouses. This exemption also allows you to keep any money from an insurance claim due to damage or that you make when you sell it, for up to one year.
2. Your Retirement
Even more now than ever before, your retirement accounts are safe. The Bankruptcy Code was amended in 2005 to provide you with even more protection on these accounts. The government wants to encourage not discourage people to save money in their retirement accounts. Because of this they protected them for youo from all creditors. Pensions, 401K’s, IRA’s and profit sharing plans are all forms of retirement accounts that are protected.
If you’re thinking about taking money out of your retirement accounts to pay your bills that is a really good indicator that you might want to pursue a Chapter 7 or 13 Bankruptcy. If this is the case by all means contact our the Bankruptcy Attorneys in Eden Prairie MN to discuss if bankruptcy might be right for you.
3. Your Vehicle
Another one of the biggest concerns our clients have when they meet with the Kain & Scott Bankruptcy Attorneys in Eden Prairie is that they are going to lose their vehicle. However, that is generally not the case. Most people have car loans or the vehicle is old and not worth that much. In a similar way that the homestead exemption in Minnesota works so does the Minnesota Motor Vehicle Exemption. If you have a car that has less than $4,900 of equity it is also exempt from attachment. A Chapter 13 Bankruptcy will help you keep the car as long as you continue to make your payments through the re-payment plan. Even if you’ve had your vehicle repossessed and weact very quickly, after your bankruptcy case has been filed, we can get the vehicle back for you as long as the vehicle has not been auctioned off yet.
4. Your Personal Property
When you file bankruptcy you generally have two different types of property. Your real property which includes your real estate and your homestead and your personal property which basically includes everything else. When you file a bankruptcy the trustee will be looking for things that they can get ahold of to liquidate and apply the proceeds of the sale to pay down some of your debt. However, the Bankruptcy Code allows you to exempt some or all of your personal property, meaning the trustee can’t get those items. In Minnesota you can choose to exempt certain things like clothes, household goods, jewelry and tools of your trade. How much you can exempt depends on what it is and typically the trustee is not going to go after anything that they can’t sell for over $1000.
5. Your Insurance & Assistance
If you are a receiving some type of insurance payment or assistance it might be considered an asset in a bankruptcy estate but in most cases these benefits are protected either by a Minnesota or Federal exemption. In Minnesota 100% of any public assistance benefits including income, child and education tax credit are exempt. So are insurance proceeds from the death of a relative or from the loss or damage to an exempt property. Unemployment, workers compensation and veteran’s benefits are also protected. The reason being is that we can often prove these benefits are reasonable and necessary when the Bankruptcy Attorneys in Eden Prairie MN file your case.
6. Your Wages
Another common exemption is a wage garnishment. Typically most creditors are limited to only be able to garnish up to 25% of your wages to pay your debts. This is because the Minnesota Wage Garnishment Law protects up to 75% of your wage or 40 times the federal minimum wage, whichever is greater. Keep in mind this is before your bankruptcy petition is filed. However, after your bankruptcy petition has been filed any garnishments other than court ordered child support and criminal fines will stop dead in it’s tracks.
For more information about Filing Bankruptcy in Eden Prairie, MN and the MN Bankruptcy Exemptions download our Debt Solutions 101 eBook.
