Are you considering filing bankruptcy in Minnesota? If so, you may have questions about filing a Chapter 7 or Chapter 13 bankruptcy. You may be worried about losing property in a Minnesota bankruptcy case or whether debt settlement is better than filing bankruptcy.
In the following article, we explain everything you need to know about filing bankruptcy in Minnesota. We also provide links to bankruptcy calculators and other resources that can help you decide if a Minnesota bankruptcy is right for you.
Chapter 7 Bankruptcy in Minnesota
Many people worry that if they file under Chapter 7 that they will lose all their property. The fact is that most Chapter 7 cases filed in Minnesota are no-asset Chapter 7 cases.
Debtors (the people who file for bankruptcy relief) keep their property in a Chapter 7 case. The only property they might lose is property that they want to give up because they do not want to continue paying the secured debt payments, such as a mortgage or a car loan. A no-asset Chapter 7 bankruptcy case can be completed in about six months.
Keep in mind that if you owe income taxes, back child support, unpaid alimony, past-due mortgage payments, or past-due car payments, you might want to file under Chapter 13. Do you think filing Chapter 7 in Minnesota might be right for you? You can learn more about the Chapter 7 Bankruptcy Process, and take a Chapter 7 Means Test Calculator.
Chapter 13 Bankruptcy in Minnesota
If you earn too much money to file under Chapter 7 or if you have debts that are not dischargeable in bankruptcy, a Chapter 13 bankruptcy might be right for you.
In a Chapter 13 bankruptcy case, you can keep your home and stop foreclosure. You can also keep your car, and you might even lower your car payments. A Chapter 13 repayment plan allows you to do more to restructure your debts than you can do in a Chapter 7 case. Chapter 13 also stops wage garnishments for back taxes, unpaid alimony, and back child support payments.
A typical Chapter 13 bankruptcy plan is five years. However, some debtors can complete a Chapter 13 plan in three years. The length of your Chapter 13 plan and the amount of your Chapter 13 plan payments depend on several factors, including your income, expenses, debts, and assets. If you are interested in filing Chapter 13 in Minnesota, check out Ascend’s Chapter 13 Bankruptcy Guide and Chapter 13 bankruptcy calculator.
Chapter 7 Bankruptcy Means Testing in Minnesota
The Means Test is a bankruptcy form that is used to calculate your average monthly income. Average monthly income is used to determine your annual median income. If your median income is more than the median income of a household of your size in Minnesota, you may not be eligible for a bankruptcy discharge (debt forgiveness) under Chapter 7.
The figures used for the Means Test are based on information and data from the Internal Revenue Service (IRS) and the Census Bureau. The information is updated periodically to ensure that the information used to calculate median income is the most recent data available. The information is state-specific.
Minnesota Household Size and Median Income
The current Minnesota Means Test figures are used for bankruptcy cases filed on or after November 1, 2020.
|# of People||Annual Income|
For households that have more than four members, add $9,000 for each household member to the median income level. The Means Test has two parts, so if your median income is above the maximum amount for Minnesota, you might still qualify for Chapter 7 by completing the second portion of the Means Test.
You can read more about the Bankruptcy Means Test, including how to complete the Minnesota Means Test here.
Minnesota Credit Counseling and Debtor Education Courses
Before filing a Chapter 7 or Chapter 13 bankruptcy petition, you must complete a credit counseling course. You must complete a debtor education course before you can receive a bankruptcy discharge. If you do not complete both bankruptcy courses, you are not entitled to debt forgiveness.
The United States Trustee (UST) has approved companies in each state that provide one or both bankruptcy courses. You can access a list of approved Minnesota bankruptcy course providers on the UST’s website.
Minnesota Bankruptcy Exemptions
Bankruptcy exemptions help protect property from being sold to pay your debts. The federal bankruptcy exemptions are listed in the Bankruptcy Code. The NCLC has a list of federal bankruptcy exemptions on its website.
Minnesota also has a set of state bankruptcy exemptions. You must choose between federal and Minnesota bankruptcy exemptions when you file your bankruptcy petition. You cannot mix the exemptions.
In most cases, Minnesota bankruptcy exemptions protect more equity in property compared to federal exemptions. Equity is calculated by using the fair market value of an asset and subtracting the amount of any secured lien.
For example, the current Minnesota homestead exemption is $420,000 for up to 160 acres and a home compared to the federal homestead exemption of $23,675. However, a careful analysis of federal and Minnesota bankruptcy exemptions is required before filing to ensure you are protecting as much equity in your property as allowed by law. Bankruptcy exemptions are subject to adjustment.
Bankruptcy Courts and Trustees for Minnesota
Even though Minnesota is one district for bankruptcy filings, there are four bankruptcy courts located in Minnesota for the convenience of individuals, attorneys, and other parties to a bankruptcy case. Each bankruptcy court handles cases in specific counties. The counties are listed at the bottom of each court’s page.
- Warren E. Burger Federal Building and United States Courthouse, 316 North Robert Street, St. Paul, MN 55101
- Diana E. Murphy United States Courthouse, 300 South Fourth Street, Minneapolis, MN 55415
- Gerald W. Heaney Federal Building and United States Courthouse and Customhouse, 515 West First Street, Duluth, MN 55802
- Edward J. Devitt United States Courthouse and Federal Building, 118 South Mill Street, Fergus Falls, MN 56537 (This location is not staffed, so you cannot mail or hand-deliver filings to this location).
341 Meetings (First Meeting of Creditors) are held throughout Minnesota. A list of Minnesota 341 Meeting locations are on the court’s website.
There are seven Minnesota bankruptcy judges. There are 13 Minnesota Chapter 7 trustees and two Minnesota Chapter 13 trustees. Judges hear motions, petitions, and other matters before the court. Bankruptcy trustees are assigned to cases to administer the bankruptcy case.
Alternatives to Filing Bankruptcy in Minnesota
In some cases, bankruptcy might not be the best way to get out of debt. For some people, debt settlement or debt consolidation might be a better way to solve a debt problem. Ascend provides information about alternatives to bankruptcy. Our Debt Settlement Guide and Debt Consolidation Comparison resources give you additional information you can use to determine whether bankruptcy is right for you.
If you have questions about filing a Minnesota bankruptcy case or other debt-relief options, contact Ascend. Our goal is to help you explore debt relief options so you can get back on your feet after a financial crisis. You can also find more information about bankruptcy in our bankruptcy blog and debt relief blogs.