Should I File Chapter 7 or Chapter 13 Bankruptcy in Minnesota?

Posted by Charles Nguyen on August 5, 2021 at 7:04 AM

A scale made out of rocks, creating a balanced and serene scene with the ocean in the background, raising the question, Should I file Chapter 7 or Chapter 13 in Minnesota?Individuals looking for a fresh start seek a bankruptcy to get rid of their overwhelming debt. They may be able to file under a chapter 7 or chapter 13, or they may be eligible for just a chapter 13.

When to File Chapter 7 in Minnesota

A chapter 7 bankruptcy allows an individual to get rid of unsecured debt, which typically includes credit cards, medical bills and unsecured loans. A trustee is appointed to your case and their job is seek and sell any asset that is not exempt. The funds from these assets are then given back to your creditors.

To qualify for a chapter 7 you must not exceed the median income set by the courts. The larger the household, the higher the median income number. For example, if you live in Minnesota and you’re a household of one, you can’t make more than $60,000 a year. In other words, if you make less than $60,000, then you qualify for a chapter 7 bankruptcy. If you’re a single parent with a child, and you’re a household of two, then that median number goes up to roughly $81,000. If your income is higher than the median number and you have too much disposable income, then you’ll have to file a chapter 13.

When to File Chapter 13 in Minnesota

A chapter 13 is a reorganization bankruptcy where you establish a repayment plan that usually lasts 5 years. Typically, the repayment plan is based on a budget that is created by looking at your net income and then your expenses.

For the most part, there isn’t a median income limit like a chapter 7; however, if your household is above the income limit, then you would have to file a 5 year plan. Further, an individual is eligible to file a chapter 13 as long as their unsecured debts are less than $394,725 and secured debts are less than $1,184,200.


But, just because you’re below the median income level, doesn’t mean you should automatically decide to file a chapter 7. There may be other factors in your case where a chapter 13 makes the most sense. So, if you’re thinking of filing for bankruptcy, and or if you have questions or are ready to get your life back, reach out to Minnesota’s nicest bankruptcy law firm by going to You won’t regret it!

Topics: bankruptcy in minnesota

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