Will I Lose Any Property If I File Bankruptcy?

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WHAT PROPERTY CAN YOU KEEP IN BANKRUPTCY?

Most Chapter 7 filers lose NO property. But some people do lose some property which has become part of the bankruptcy estate.  Most of your property will become part of the bankruptcy estate.  The bankruptcy estate does not include certain property, such as ERISA qualified pensions, spendthrift trusts or certain education related accounts or interests.  You can keep this property.  A discussion of what property may be part of the estate would be too lengthy for this format.  You must rely on your lawyer to tell you if any of your property will be part of the bankruptcy estate.  Call us at 651-639-0313.

Debtors typically keep most or all of the property in their bankruptcy estate because the property is “exempt” under §522 of the Bankruptcy Code.  Generally, if the total value of all your property is less than $12,725 you will lose no property.  Further, it may be possible for you to keep property worth a great deal more.

In Minnesota a debtor is permitted to select ONE of two sets of exemptions, called “federal” or “state” exemptions.  The property you can keep depends on the type of property and its value.  For instance, the law gives greater protection to homes or cars than to cash in the bank.  A debtor can only choose one set of exemptions (state or federal) and both married joint debtors must use the same set.  For discussion of how exemptions are used in joint bankruptcies [SEE JOINT BKY]

These are the FEDERAL exemptions from §522(d) of the Bankruptcy Code:

1) interest in homestead (principal residence of debtor or debtor dependent)

$22,975

2) one motor vehicle

$3,675

3) household furnishings and goods, wearing apparel, appliances, books, animals, crops, musical instruments, primarily for household, personal or family use Up to $575 for any one item, $12,250 in aggregate
4) jewelry for personal, family or household use

$1,550

5) property of any kind or description $1,225 plus up to $11,500 from any unused homestead exmtn.
6) implements, professional books, tools of the trade of debtor

$2,300

7) unmatured life insurance contract owned (not credit life ins)

100%

8) certain interests in accrued dividend or interest or loan value in an unmatured life insurance contract when the owner & insured is debtor or dependent Up to $12,250 less certain payments from life ins. co.
9) professionally prescribed health aids for debtor or dependent

100%

10 A, B, C) Social security benefit, unemployment comp, local public assistance, veterans’ benefit, disability, illness or unemployment benefit, alimony, support, maintenance,

100%

10 D) alimony, support or maintenance Amount reasonably necessary to support debtor & dependents
10 E) payment under stock bonus, pension, profitsharing, annuity, or similar plan on account of illness, disability, age, death or length of service except under certain circumstances [ask your lawyer] 100%, but certain payments not covered – ask lawyer
11 A) crime victim’s reparations awards

100%

11 B, C) wrongful death claims for person of whom debtor was dependent, payments under life insurance on life of one who debtor was dependent of on date of death Amount reasonably necessary to support debtor & dependents
11 D) payments for bodily injury (not pain & suffering or money for actual monetary loss) of debtor or dependent

$22,975

12) retirement funds if exempt from taxation under IRS Code §§ 401, 403, 408, 408A, 414, 457 or 501(a) To extent exempt under tax law

 

These are the BASIC MINNESOTA exemptions: (There are OTHER MN exemptions, ask your lawyer about specific property) Some of the exemptions for all (100%) of a type of property may be subject to constitutional objection if they are based on a Minnesota Statute.  This list contains basic exemptions, NOT ALL exemptions are listed which may be available.

Homestead occupied as debtor’s dwelling place up to 160 acres  Minn. Stat. §510.02 $390,000; $975,000 if used for agriculture
Bible, library & musical instruments. Minn. Stat. §550.37, s. 2.

100%

Pew & burial lot.  Minn. Stat. §550.37, s. 3.

100%

Personal goods: all wearing apparel,1 watch, utensils of debtor & family.  Minn. Stat. §550.37, s. 4(a).

100%

Household furniture, household appliances, phonographs, radio, radio & tv receivers of debtor & family.  Minn. Stat. §550.37, s. 4(b).

$10,350

Wedding rings or other symbols of marriage exchanged at time of marriage & in debtor’s possession.  Minn. Stat. §550.37, s. 4(c).

$2,817.50

Farm machines used in farming by debtor principally engaged in farming & livestock, farm produce, standing crops.  Minn. Stat. §550.37, s. 5.

$13,000*

Tools of trade; tools, implements, machines instruments, office furniture, stock in trade & library reasonably necessary in debtor’s trade, business or profession.  Minn. Stat. §550.37 s. 6.

$11,500*

University apparatus, library, philosophical & chemical or other apparatus belonging to or used in instruction of youth, in any university, college, seminary or school indiscriminately open to the public.  Minn. Stat. §550.37, s. 8.

100%

Exempt property claims.  Money from claim on account of destruction or damage to exempt property.  Minn. Stat. §550.37, s. 9.

100%

Insurance proceeds.  money received or payable to surviving spouse or child from insurance payable at death of spouse or parent.  Minn. Stat. §550.37, s. 10. $46,000 + $11,500 for each dependent of surviving spouse or child
Insurance Policies.  Cash surrender value, loan value or accrued value of a policy. 1 policy up to $8,800
Beneficiary associations relief or other benefits payable or to be rendered to police dept. association, fire dept. association, beneficiary association or fraternal benefit association to any person entitled to assistance or certificate holder of beneficiary of cert. holder.  Minn. Stat. §550.37, s. 11.

100%

Manufactured home inhabited as home by debtor (requirements for size, etc.).  Minn. Stat. §550.37, s. 12.

100%

Motor vehicle (one vehicle only).  Minn. Stat. §550.37, s. 12(a). $4,600; $46,000 if modified at cost of at least $3,450 to accommodate physical disability of authorized person
Earnings (exempt if not subject to garnishment under §571.911) – earnings lose character as earnings 20 days after deposit.  Minn. Stat. §550.37, s. 13; Minn. Stat. §571.922. Greater of 75% of disposable wages or 40 times minimum wage
Public assistance money received from various public assistance programs.  Minn. Stat. §550.37, s. 14.

100%

Salary or earnings of past recipient of public assistance for six months after returning to private employment or farming.  Minn. Stat. §550.37, s. 14.

100%

Minor child’s earnings Minn. Stat. §550.37, s. 15.

100%

Claims for damages recoverable by person by reason of levy upon or sale after execution of person’s exempt property or by wrongful taking or detention of such property and any judgment.  Minn. Stat. §550.37, s. 16.

100%

Rights of action for injuries to person of debtor or of relative.  Minn. Stat. §550.37, s. 22.

100%

Life insurance aggregate interest in accrued dividend or interest under or loan value of unmatured life insurance contract owned by debtor under which insured is debtor or person of whom debtor is dependent.  Minn. Stat. §550.37, s. 23.

$9,200

Employee benefits – right to present or future payments or payments received by debtor under stock bonus, pension, profit sharing, annuity, IRA, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, death, age, or lenght of service to extent of debtor’s aggregate interest.  Minn. Stat. §550.37, s. 24.  Some of these benefits may not be included in the bankruptcy estate under 11 U.S.C. §541. $69,000 plus additional amounts reasonably necessary for support of debtor or debtor’s dependent(s)
Proceeds for improvements to property; proceeds received for labor, skill or machinery contributing to improvement of real estate under Minn. Stat. §514.01

100%

Certain public benefits: worker’s compensation (Minn Stat. §176.175); unemployment comp (Minn. Stat. §268.192); veteran’s benefits (Minn. Stat. §550.38); crime victim’s comp (Minn. Stat. §611A.60)

100%

Certain accident or disability proceeds (Minn. Stat. §550.39)

100%

Pensions (if part of bankruptcy estate) public employees (Minn. Stat. §353.15); state employees (Minn. Stat. §352.96); state troopers (Minn. Stat. §352B.071)

100%

Certain federally controlled retirement benefits – civil service (5 usc §8346); foreign service (22 usc §4060); military service (10 usc §1440); railroad workers (45 usc §241m); social security (42 usc §407); veteran’s benefits (38 usc §3101).  Some of these benefits may not be part of the bankrupcty estate.

100%

Rights under federal statutes for survivor’s benefits – military service (10 usc §1450); judges & certain court personel (28 usc §376); lighthouse workers (33 usc §775)

100%

Death and disability benefits under federal statutes – US government employees (5 usc §8130); longshoremen, harbor workers (33 usc §916); military service (42 usc §1717)

100%

miscellaneous federal non bankruptcy– military deposits to savings account while on permanent duty (10 usc §1035); Indian lands, homestead sales or lease proceeds (25 usc §410); Klamath Indian tribe benefits (25 usc §§543, 545); military group life insurance (38 usc §1970(g)); railroad workers’ unemployment (45 usc 352(e)); seaman’s clothing (46 USC. §11110); seaman’s wages on voyage pursuant to written contract (46 USC. §11109)

100%

 

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