Those who are married at the time of the bankruptcy filing can choose to file together or to file alone. When filing a bankruptcy together, the debtors may jointly elect to utilize either the applicable exemption provisions pursuant to Minnesota law or pursuant to subsection (d) of section 522 of the Bankruptcy Act, United States Code, title 11, section 522(d) (federal exemptions), but not both.
When a petition for bankruptcy is filed individually, and not jointly, the non-filing spouse in a subsequent case cannot claim exemptions under the federal exemption scheme if the case filed by the other spouse, in the previous filing, claimed exemptions under Minnesota law within 3 years of the other spouse’s filing. To prevent married individuals from splitting the exemption schemes, the statue ensures that married individuals will file with the same exemptions within 3 years of the initial spouse’s case filing. Federal exemptions allow for a substantial “wildcard” exemption. This exemption can be used to protect assets that are typically non-exempt, motorcycles, boats, campers, tax refunds. However, for bankruptcy filers with equity in their homes, the Federal exemptions may not fully protect the home. The State exemptions do not have a substantial wildcard exemption, so the filers may have non-exempt assets in their case. The appeal for married couples to claim both exemptions, to get the most benefit out of the two exemption schemes, on two separate filings may be tempting, but it is not allowed.
Persons are considered to be married if they are married to each other at the time of the filing of the first individual filer.
Bankruptcy filers in the state of Minnesota have the option to choose their exemption scheme, but the filing of one spouse can affect the later exemption scheme of the other spouse. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.