Can you keep your home and file bankruptcy in Minnesota? Debtors filing for bankruptcy in Minnesota can exempt equity in a home and the land on which it is situated up to $360,000 in value. If the homestead is used for agricultural purposes, the Minnesota homestead exemption allows for a $900,000 exemption. Like many states, Minnesota bankruptcy laws limit application of the homestead exemption based on the size of real estate being protected. In order for the Minnesota homestead exemption to apply, the property cannot exceed 1/2 acre in a city or 160 acres elsewhere. A husband and wife filing a joint bankruptcy case in Minnesota cannot double the exemption.
How does the Minnesota homestead exemption work in a chapter 7 bankruptcy case? Let’s say that, due to overwhelming credit card debt, John from Minneapolis decides that bankruptcy will be his best option. John understands that he needs to file for bankruptcy, however, he’s concerned that he may lose his home. Based on a recent appraisal, the home is worth $250,000 and John owns it free and clear. Luckily for John, Minnesota’s generous $360,000 homestead exemption will allow him to file for bankruptcy, shed his credit card debt and retain ownership of his home.
Keep in mind that if you have a mortgage, exempting home equity will not relieve the obligation to make payments after bankruptcy. In addition, a recent move may impact which state’s bankruptcy laws apply to your case. If you are considering bankruptcy, consult an attorney.