Bankruptcy Considerations in Michigan

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Bankruptcy can mean a new beginning if you have severe financial issues by providing relief in two ways. For those debtors with considerable unsecured debt, a Chapter 7 bankruptcy can discharge most if not all of that debt while protecting your assets from the claims of creditors. A Chapter 13 bankruptcy is an approved repayment plan that pays back your creditors and which can protect assets or equity that might otherwise not be protected in a Chapter 7.

While bankruptcy is a federal right that is regulated under federal law, there are particular facts that Minnesota residents should be aware of when filing in their state.

Where Do You File in Minnesota?

You can file a bankruptcy petition in the United States Bankruptcy Court, District of Minnesota, in Duluth, Fergus Falls, Minneapolis, or St. Paul, depending on where you live. Check the court's online website for more information.

Eligibility Requirements to File Chapter 7

Whether you can file for a Chapter 7 bankruptcy depends on your average monthly income. If it is less than Minnesota's median income, then you are eligible to file Chapter 7.

In the event your average monthly income is equal to or greater than Minnesota's median income, you cannot file Chapter 7 unless you can pass a means test.

Does a Chapter 13 Plan Last Long?

The length of your Chapter 13 repayment plan depends on your average monthly income. If it is less than Minnesota's median income, then your Chapter 13 Plan cannot exceed 36 months unless the court agrees there is good cause for extending it up to 60 months.

If your average monthly income is equal to or exceeds Minnesota's median income, then your Chapter 13 Plan is usually 60 months long.

Can I Keep All My Assets?

Minnesota allows you certain exemptions or those items of personal and real property that you can keep in bankruptcy. Minnesota has its own exemption laws, but you can choose between the state exemptions and those listed under federal law. You cannot mix and match exemptions, however.

Federal and state exemptions include the following items of property:

  • Homestead equity
  • Household furniture, clothing and jewelry
  • Engagement and wedding rings
  • One vehicle
  • Burial plot
  • Tools of your trade
  • Tax exempt retirement accounts
  • Unemployment, workers compensation and welfare benefits
  • Life insurance proceeds
  • Certain amount of wages
  • IRAs
  • Wildcard for any property.

There are differences in the value of certain exemptions, some of which are substantial. For example, the federal homestead exemption is $21,635 for an individual, or double for joint filers, while Minnesota's is $360,000, or $900,000 for a farm. Its motor vehicle exemption is $4,400 as compared to the federal exemption of $3,450.

Retain A Minnesota Personal Bankruptcy Attorney

Trying to determine how the bankruptcy laws work for you is complicated. To get more detailed, specific information about your own circumstances, please contact a Minnesota bankruptcy lawyer.

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