The Restructuring Report

PROPERTY

BANKRUPTCY CODE

NONBANKRUPTCY LAW

1. Homestead

The debtor’s aggregate interest not to exceed $27,900, or $55,800 for spouses who co-own property in value in real or personal property that the debtor or a dependent of the debtor uses as a residence. 11 U.S.C. § 522(d)(1).

Up to $510,000 of value of real property owned and occupied by the debtor, whether the exemption is claimed individually or jointly. Exemption is $1,275,000 for land used primarily for agricultural purposes. Minn. Stat. § 510.02. Both limited to 160 acres.

A manufactured home that is actually inhabited as a home by the debtor is also exempt. Minn. Stat. § 550.37, subd. 12.

In addition, the proceeds of a homestead are exempt for up to one year. Minn. Stat. § 510.07.

Under some circumstances the Bankruptcy Code limits this exemption.

2. Sacred Possessions, Library, Musical Instruments, and Pets

No comparable exemption.

A bible, Torah, Qur’an, prayer rug, and other religious items up to an aggregate amount of $2,000; a personal library up to an aggregate amount of $750; musical instruments up to an aggregate amount of $2,000; and family pets up to an aggregate amount of $1,000. Minn. Stat. § 550.37, subd. 2. 

3. Burial Plot

Included within part of the homestead exemption. 11 U.S.C. § 522(d)(1).

One lot in any burial plot. Minn. Stat. § 550.37, subd. 3.

4. Motor Vehicle

$4,450 in one motor vehicle. 11 U.S.C. § 522(d)(2).

$10,000 in one motor vehicle, or $25,000 in a vehicle used for a physically disabled person, or $100,000, for a vehicle that has been modified to accommodate a disability, or $12,500 for a vehicle used in a trade or business Minn. Stat. § 550.37, subd. 12a (measured by the debtor’s equity, not the total value).

5. Household Furnishings, Household Goods, Wearing Apparel, Household Appliances, Household Tools and Equipment

$700 per item, limit of $14,875 total value. 11 U.S.C. § 522(d)(3).

Clothing, utensils, and foodstuffs are not subject to a dollar limitation. Minn. Stat. § 550.37, subd. 4(a).

$11,250 total value of household furniture, household appliances, radios, television, and electronics. Minn. Stat. § 550.37, subd. 4(b).

$3,000 total value of household tools and equipment. Minn. Stat. § 550.37, subd. 27.

6. Jewelry

$1,875 total value. 11 U.S.C. § 522(d)(4).

One watch. Minn. Stat. § 550.37, subd. 4(a).

$3,062.50 in jewelry (formerly wedding rings). Minn. Stat. § 550.37, subd. 4(c).

7. Any Property (“Wildcard”)

The Bankruptcy Code provides an exemption of $1475 plus the unused portion of the homestead exemption, not to exceed $13,950. This exemption can be designated by the debtor to apply to any property. 11 U.S.C. § 522(d)(5).

$1,500 (includes funds in a bank). Minn. Stat. § 550.37, subd. 28.

8. Implements, Professional Books, Office Furniture, Tools, and Library

$2,800. 11 U.S.C. § 522(d)(6).

$13,500 (specifically excludes farm equipment). Minn. Stat. § 550.37, subd. 6.

9. Farm Machine and Implements

Included in tools of the trade. 11 U.S.C. § 522(d)(6).

Farm machine and implements, $13,000 of farm machines and implements including livestock, farm produce, and standing crops used by a debtor engaged principally in farming. Minn. Stat. § 550.37, subd. 5. The total value of property selected pursuant to subdivision 5 and subdivision 6 cannot exceed $13,000. Minn. Stat. § 550.37, subd. 7.

10. Funds Received by or Payable to a Surviving Spouse or Child at the Death of a Spouse or Parent

Amount reasonably necessary for support of debtor and dependents of debtor. 11 U.S.C. § 522(d)(11)(B).

$54,000 plus $13,500 for each dependent. Minn. Stat. § 550.37, subd. 10.

11. Loan Valued or Accrued Dividend under an Unmatured Life Insurance Contract

$14,875 less any amount used by insurance company to pay automatic premium or non-forfeiture payment. 11 U.S.C. § 522(d)(8).

Exempt up to $10,800. Minn. Stat. § 550.37, subd. 23.

12. Health Aids

Totally exempt. 11 U.S.C. § 522(d)(9).

No comparable exemption.

13. Earnings

Under 11 U.S.C. § 541, post-petition earnings are not property of the estate, except under chapter 11, 12, or 13.

The greater of 75% of disposable earnings or 40 times the greater of a specified state minimum wage (currently $9.50) or federal minimum wage (currently $7.25) per week of pay included in the pay period. Minn. Stat. § 550.37, subd. 13; Minn. Stat. § 571.922.

Note, beginning April 1, 2025 (and applying to causes of action commenced on or after that date) a graduated schedule applies:

·   100% of disposable earnings if debtor’s weekly income is equal to or less than $380 (40 times $9.50, which is the current amount of the greater of two reference wages)

·   90% of disposable earnings if debtor’s weekly income is more than $380 but less than or equal to $570 (60 times $9.50)

·   85% of disposable earnings if debtor’s weekly income is more than $570 but less than or equal to $760 (80 times $9.50)

·   75% of disposable earnings if debtor’s weekly income is more than $760

The earnings or salary of a person who is a recipient of government assistance based on need is exempt. Minn. Stat. § 550.37, subd. 14. Earnings are also exempt for six months after the termination of the government assistance program. Id.

14. Social Security Benefits, Unemployment Compensation, or Local Public Assistant Benefits

Totally exempt. 11 U.S.C. § 522(d)(11)(A).

Social Security benefits are exempt under 42 U.S.C. § 407. Unemployment compensation is exempt under Minnesota Statutes section 261.192. Relief based on need is exempt under Minnesota Statutes section 550.37, subdivision 14.

15. Veterans Benefits

Totally exempt. 11 U.S.C. § 522(d)(10)(B).

Exempt for a period of one year. Minn. Stat. § 550.38.

16. Disability, Illness, or Unemployment Benefits

Totally exempt. 11 U.S.C. § 522(d)(10)(C).

Payments from accident or disability insurance are exempt up to $1,000,000 per claim. Minn. Stat. § 550.39. Unemployment benefits are exempt. Minn. Stat. § 268.192.

17. Alimony, Support, or Maintenance

Exempt to the extent reasonably necessary for the support of the debtor and the debtor’s dependents. 11 U.S.C. § 522(d)(10)(D).

Child support is exempt. Minn. Stat. § 550.37, subd. 15.

18. Stock Bonus, Pension, Profit-Sharing, or Similar Benefits

Exempt to the extent reasonably necessary for the support of the debtor and the debtor’s dependents. 11 U.S.C. § 522(d)(10)(E). ERISA-qualified plans are exempt from seizure of creditors under applicable “nonbankruptcy law” are not property of the bankruptcy estate and, therefore, not subject to the claims of debtor’s creditors or the trustee in bankruptcy. Patterson v. Shumate, 505 U.S. 1239 (1992).

Any retirement funds to the extent that those funds are in an amount that is exempt from taxation under sections 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code (these are provisions regarding rollovers, etc.). 11 U.S.C. § 522(d)(12).

Certain IRAs, however, are subject to a $1,512,350 cap. 11 U.S.C. § 522(n).

Stock Bonus, Pension, Profit-Sharing or Similar Benefits. Minn. Stat. § 550.37, subd. 24. The debtor’s right to receive present or future payments, or payments received by the debtor, under a stock bonus, pension, profit-
sharing, annuity, individual retirement account, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent of the debtor’s aggregate interest under all plans and contracts up to a present value of $81,000 and additional amounts under all the plans and contracts to the extent reasonably necessary for the support of the debtor and any spouse or dependent of the debtor.

In the event of a bankruptcy filing, ERISA-qualified plans are exempt from seizure of creditors and are not property of the bankruptcy estate; therefore, not subject to the claims of debtor’s creditors or the trustee in bankruptcy. 11 U.S.C. § 541(b)(7); Patterson v. Shumate, 505 U.S. 1239 (1992).

Any retirement funds to the extent that those funds are in an amount that is exempt from taxation under I.R.C. §§ 401, 403, 408, 408A, 414, 457, or 501(a)
(these are provisions regarding rollovers, etc.). 11 U.S.C.
§ 522(b)(3)(C). Certain IRAs are capped at $1,362,800.
11 U.S.C. § 522(n).

19. Award under a Crime Victim’s Reparation Law

Totally exempt. 11 U.S.C. § 522(d)(11)(A).

No comparable exemption.

20. Payment on Account of Wrongful Death

Exempt to the extent reasonably necessary for the support of the debtor and debtor’s dependents.
11 U.S.C. § 522(d)(11)(B).

Totally exempt under Minnesota Statutes section 550.37, subdivision 22. (This exemption was held unconstitutional by local bankruptcy courts.)

21. Payment on Account of Personal Bodily Injury

A $27,900 exemption is provided but it does not include an award for pain and suffering or for compensation for actual pecuniary loss. The exemption covers payments for personal bodily injury to the debtor or a dependent. 11 U.S.C.
§ 522(d)(11)(D).

Applies to rights of action or money received; qualifying injuries include physical, mental, and emotional; Minn. Stat. § 550.37, subd. 22. General damages and future special damages are exempt, whereas accrued special damages are not; In re Cook, 138 B.R. 943 (Bankr. D. Minn. 1992).;

22. Proceeds of Payments Received by Mechanic Lien Holder

No comparable exemption.

Totally exempt under Minnesota Statutes section 550.37, subdivision 25.

23. Government Assistance Based on Need

No comparable exemption.

All government assistance based on need, and the earnings or salary of a person who is a recipient of government assistance based on need, is exempt. Minn. Stat. § 550.37, subd. 14. Earnings are exempt for six months after the termination of the government assistance program. Id.

24. Health Savings Accounts; Medical Savings Accounts

No comparable exemption.

Exempt up to $25,000. Minn. Stat. § 550.37, subd. 26.