The basic idea behind bankruptcy is that you can financially start over. Part of this includes the idea that you will not be starting over destitute. You should be able to have at least a minimal amount of property that will allow you to get back on your feet. So, when you file for bankruptcy, there are a few items of property that you should be able to keep. These are referred to as exempt property. Of course, you will need to consult Minnesota bankruptcy laws to find out what the exemptions are.
The exemption system is a quite complicated one. While it’s true that bankruptcy laws are federal, it does allow the individual who is filing to take advantage of state laws about property that is exempt from being claimed by a creditor.
For those in certain states, the federal bankruptcy laws also allow for some exemptions, but you will need to choose between federal and state exemptions. On the other hand, even if you choose state exemptions, bankruptcy law does allow you to use what is known as nonbankruptcy exemptions.
Some of the exemptions are unlimited in value and some have a maximum value. For example, if the value of a particular asset is more than the allowed exemption amount, the asset can still be sold by the trustee in a Chapter 7 case. You will be given the amount of the exemption and your creditors will be paid the excess. Let’s say you have a car, and the maximum amount of a car exemption is $1500- but your car is worth $3000. Your car will most likely be sold- you’ll get $1500 from the sale and your creditors will get $1500. On the other hand, in most cases, the amount of an exemption will be doubled if a married couple is filing together.