Bankruptcy in Minnesota

People who have never been to Minnesota tend to associate the state with Mary Tyler Moore, ice hockey, and cold weather. However, as you likely know, Minnesota is actually comprised of beautiful scenery and hard-working people.

If you're like many people from "the land of ten thousand lakes", the past few years have proved financially difficult and you may be considering bankruptcy. Even though they may not have mentioned it, it's likely that many among your friends, family, neighbors, congregation, and work place have sought bankruptcy protection. In fact, across the U.S., 1.5 million bankruptcy petitions were filed in 2011.

That's why we wrote this article. We'll show you how Minnesota bankruptcy law is unique; discuss the differences between Chapter 7 and Chapter 13 bankruptcy; and show you how to select a bankruptcy lawyer as well as how to prepare to work with your attorney.

How Minnesota Bankruptcy Law is Unique

While you should definitely check with your bankruptcy attorney about your individual situation, the Minnesota bankruptcy exemptions are very generous. You do have the choice between selection federal and state exemptions, but if you're a homeowner, the homestead exemption is large.

Exemptions are the property you get to keep and don't have to pay back to creditors.

  • In Minnesota, you can keep your home and land on which it is situated up to $360,000 of value. In addition, if your homestead is used for agricultural purposes, you can protect up to $900,000 of value.
  • Other exemptions include a car with equity up to $4,400 or up to $44,000 if the vehicle has been adapted for a disabled person.

If you don't own a home or you receive child support or alimony, the federal exemptions may protect more assets. This is part of the analysis your bankruptcy attorney will do for you.

Your Choices in Filing Bankruptcy in Minnesota: Chapter 7 or Chapter 13

Your attorney will also help you to determine whether you would best be served by filing bankruptcy under the laws in Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. This is federal law that everyone uses no matter what state they live in.

  • Most people, who meet the "means test" and qualify for Chapter 7, file under this chapter. Many unsecured debts are discharged and the process is over in about 6 months.
    • The easiest way to meet the "means test" is for your income to be under the state median income.
    • In Minnesota, an individual can make up to $46,161 and a family of four can have an income of $84,251 and meet the "means test".
    • NEVER count yourself out. If you don't meet the "means test" on the first test, there are other considerations. Get good legal advice.
  • In addition, Chapter 13 is available to filers who either don't or don't want to qualify for Chapter 7. Chapter 13 takes 3 to 5 years because you do pay back some of your debt, under more favorable terms than originally negotiated.

How to Select a Bankruptcy Attorney

The best way to find an attorney is to get a personal referral, but as we mentioned above, you may not know who has filed bankruptcy (and may not want to tell them you are). Referrals are also available from professional advisors and the local bar association.

In addition, you can do an Internet search for bankruptcy lawyers. Enter "Find a Minnesota Bankruptcy Attorney" in your favorite search engine. When you get the list, determine who has years of experience and who focuses on bankruptcy law (not a bunch of different areas of practice).

Most bankruptcy lawyers will offer a no fee, no obligation in-person consultation or phone conversation so you can determine whether that lawyer is a good fit for you.

How to Prepare to Work with a Bankruptcy Attorney

You're not going to like this part; however, it's a necessary evil. It's paperwork.

Organize all your bills, debts, contracts, expenses, payments already made, income, and find out the value of your belongings.

Then, sleep well tonight, knowing that you're not alone. You have a professional guiding and protecting you and your bankruptcy filing will only be one of about 1.5 million this year. You're not alone and you're on your way to a fresh start.

Local Bankruptcy Attorneys