In bankruptcy there are certain exemptions you can choose from. These exemptions are what protect your assets from liquidation and asset seizure.
What Exemptions Can I Use?
There are two sets of exemptions you can use in Minnesota, either State or Federal.
Each set of exemptions provide protection for your assets, for instance, household goods, vehicles, clothing, and more. But what happens if either you go above the exemption amount or there is not an exemption for the asset you have?
In either scenario non-exempt assets are created, because the exemption will not cover all of the property or none of it.
For example, let’s say you own a vehicle worth $8,000 with a loan against it for $2,000, you have $6,000 in equity. If you are in either State or Federal exemptions you will have at least some of the vehicle non-exempt. In State the vehicle exemption is $5,000, so $1,000 of the equity would be non-exempt. For Federal $4,000 is exempt, meaning $2,000 would not be.
Choosing Your Set of Exemptions
In Minnesota you are allowed to choose which set of exemptions to use, based on the best benefit to you. Generally, but not always, federal exemptions are more beneficial, because of what is called the wildcard exemption. This allows up to $13,900, based on the equity in your home, to be used as a wildcard on otherwise non-exempt property.
How will non-exempt assets impact me?
In a chapter 7 bankruptcy, non-exempt assets are liquidated. Generally, you receive the choice to have your non-exempt personal property either liquidated or you can pay in the value to keep it. In a chapter 13 bankruptcy you do not lose any non-exempt property, instead, your unsecured creditors have to receive as much in the chapter 13 as they would have in a chapter 7.
CALL NOW FOR A FREE STRATEGY SESSION FROM A MN BANKRUPTCY LAWYER AT LifeBack Law Firm
Figuring out exemptions is a tricky part of bankruptcy filings. Your attorney will be able to help you sort through them and whether you will have any non-exempt assets. Visit www.lifebacklaw.com to speak with an attorney today. You will be glad you did!
