Protecting Assets under the Minnesota Bankruptcy Exemptions
When filing either chapter 7 or chapter 13 bankruptcy, each individual debtor is allowed to exempt a limited amount of equity in real property, cash, personal assets and other property while still obtaining a discharge of most debts. Only when a debtor exceeds the available exemptions will they have “non-exempt” assets that will either be liquidated in chapter 7—i.e. expect to surrender nonexempt assets or, more commonly pay the value of the nonexempt assets to a chapter 7 trustee—or, alternatively, the debtor will pay the value of the nonexempt assets over the duration of a chapter 13 plan.
The Minnesota exemption statutes allow for the exclusion of certain assets from the bankruptcy estate and, thereby, exempts these assets from the bankruptcy trustee. When filing bankruptcy in Minnesota, a debtor elects to utilize either the federal exemptions or the Minnesota state exemptions. If you have over $27,900 (or $55,800 for joint filings) in equity in a homestead, you may consider opting to file with the Minnesota exemptions below. There are other factors that may dictate filing with the Minnesota exemptions, such as the debtor has a personal injury claim pending at the time of filing that he or she wishes to exempt.
Note the below list is not comprehensive of all property that may be exempt under Minnesota exemption laws and only contains some of the more common assets people tend to hand. As of the date of this post, the Minnesota exemptions are the following amounts per debtor:
Available Minnesota Exemption*
Equity in homestead property
$480,000 (this is not doubled for joint filers)
Household goods, furniture and wearing apparel
Cash value of unmatured life insurance policy, certain other requirements having been met
$10,400 (one policy only)
$5,200 (only one per debtor)
Personal injury claims that are not yet settled and only including certain types of damages
Generally exempt in an unlimited amount for “injuries to person” but not necessarily other types of damages or settled claims; claim must not yet be settled at time of bankruptcy filing for exemption to apply.
ERISA-qualified retirement accounts such as 401(k), 403(b) and 408 plans
Individual Retirement Accounts (IRAs)
usually unlimited subject to certain limits on recent contributions
Other retirement benefit plans including Public Employee Retirement Association (PERA), Minnesota State Retirement System (MSRS), and Teachers Retirement Association of Minnesota (TRA)
Generally unlimited so long as the employee does not have a right to withdrawal of funds
Tools of trade (must be used in employment)
Other property not otherwise exempt under another other provision such as excess equity in a vehicle, cash, bank account balances, tax refunds, second vehicles, recreational equipment, stocks and bonds, ownership interest in a business, inheritance proceeds, claims against a business or individual, tax refunds, homestead equity in excess of $480,000, etc.
* These amounts change periodically and were last updated by Minnesota Congress in 2022. You should consult a bankruptcy attorney to analyze the available exemptions under your particular circumstances.