Many people who file bankruptcy rely upon the support of regular child support or alimony payments to meet their basic needs, and many are owed large amounts of past due child support or alimony from the other parent. Bankruptcy law generally protects a debtor’s right to receive these domestic support benefits but this right is not absolute. When a debtor in Minnesota files bankruptcy, they may choose to use either “Federal exemptions” (those provided in the Federal Bankruptcy Code) or “State exemptions” (those provided for under the Minnesota Statutes and other applicable Federal law) to “exempt,” or legally protect their property from being taken to pay creditors. This is important because debtors in a chapter 7 bankruptcy case may have to surrender money or property that is not exempt to the trustee to pay their creditors. It is also important in a chapter 13 case, as the more property that is not exempt, the higher their monthly payment, because they are required to pay to their unsecured creditors, at minimum, the value of the nonexempt property.
