When I meet with people in Minnesota who are considering filing for bankruptcy, they often ask me about what exactly they will lose if they file for bankruptcy. In other words, what assets were possessions must they turn over in bankruptcy?
Most importantly, people want to know whether they will be able to keep their home if they file for bankruptcy. They are also concerned about their automobiles, heirlooms with sentimental value, and clothing.
The items that you are allowed to keep in a Minnesota bankruptcy are considered exemptions or exclusions. That is, some assets are exempt from bankruptcy and some assets are excluded from bankruptcy. You don’t have to worry about exemptions and exclusions (since your bankruptcy attorney will take care of this for you) other than to know that you can keep your assets in those categories, at least up to the value protected by law.
In Minnesota, you have the option of taking the Minnesota exemptions or the federal exemptions. Whichever you choose, you will be able to keep
- your current home (up to a certain value) if you have not faulted on the mortgage,
- your car or truck (up to a certain value),
- heirlooms with sentimental value (up to a certain value), and
- clothing (up to a certain value).
Obviously there is a limit to all of these. You cannot keep a $100,000 Mercedes-Benz as your vehicle. However, if the value of your vehicle exceeds the bankruptcy limit, you may be able to keep your vehicle by paying the amount that exceeds the limit. For example, if your vehicle is $5000 over the limit, you can pay $5000 to keep that vehicle. Essentially you are buying back the vehicle from bankruptcy. To get money for a buyback, you may borrow or obtain a gift from friends or family.
Buying back items in bankruptcy is not limited to vehicles. You may buyback personal property or real estate as well.
There are other assets you will be able to keep when filing for bankruptcy. You can keep certain retirement accounts, personal property (up to a certain value), and a list of other items.
During the initial free consultation with people considering bankruptcy, I analyze what they own and explain to them what items they can keep after filing for bankruptcy, explain how property can be bought back, and if they choose to move forward with bankruptcy, put together a plan to prepare for the bankruptcy filing.