Minnesota Bankruptcy Laws
Complete state of Minnesota bankruptcy exemptions laws which protect a debtor’s property when personal bankruptcy is filed.
The house owned and occupied by a debtor as the debtor’s dwelling place, together with the land upon which it is situated to the amount of area and value hereinafter limited and defined, shall constitute the homestead of such debtor and the debtor’s family, and be exempt from seizure or sale under legal process on account of any debt not lawfully charged thereon in writing, except such as are incurred for work or materials furnished in the construction, repair, or improvement of such homestead, or for services performed by laborers or servants and as is provided in section 550.175.
510.02 AREA AND VALUE; HOW LIMITED.
NOTE:The dollar amounts in subdivision 1 may not reflect the amounts as adjusted by the commissioner of commerce pursuant to section 550.37, subdivision 4a.
The homestead may include any quantity of land not exceeding 160 acres. The exemption per homestead, whether the exemption is claimed by one or more debtors, may not exceed $300,000 or, if the homestead is used primarily for agricultural purposes, $750,000, exclusive of the limitations set forth in section 510.05.
Subd. 2.Adjustment of dollar amounts.
The dollar amounts in subdivision 1 must change periodically in the manner provided for under section 550.37, subdivision 4a. The commissioner of commerce shall include the changes in the dollar amounts as part of the announcement and publication made under those provisions.
550.37 PROPERTY EXEMPT.
NOTE:The dollar amounts in this section, except the dollar amounts in subdivisions 5 and 7, do not reflect the amounts as adjusted by the commissioner of commerce pursuant to subdivision 4a. The current dollar amounts are published in the State Register, volume 32, pages 1908 and 1909 and within the department’s Web site, www.commerce.state.mn.us.
The property mentioned in this section is not liable to attachment, garnishment, or sale on any final process, issued from any court.
Subd. 2.Bible and musical instrument.
The family Bible, library, and musical instruments.
Subd. 3.Pew and burial lot.
A seat or pew in any house or place of public worship and a lot in any burial ground.
Subd. 4.Personal goods.
(a) All wearing apparel, one watch, utensils, and foodstuffs of the debtor and the debtor’s family.
(b) Household furniture, household appliances, phonographs, radio and television receivers of the debtor and the debtor’s family, not exceeding $4,500 in value.
(c) The debtor’s aggregate interest, not exceeding $1,225 in value, in wedding rings or other religious or culturally recognized symbols of marriage exchanged between the debtor and spouse at the time of the marriage and in the debtor’s possession.
The exemption provided by this subdivision may not be waived except with regard to purchase money security interests. Except for a pawnbroker’s possessory lien, a nonpurchase money security interest in the property exempt under this subdivision is void.
If a debtor has property of the type which would qualify for the exemption under clause (b), of a value in excess of $4,500 an itemized list of the exempt property, together with the value of each item listed, shall be attached to the security agreement at the time a security interest is taken, and a creditor may take a nonpurchase money security interest in the excess over $4,500 by requiring the debtor to select the exemption in writing at the time the loan is made.
Subd. 4a.Adjustment of dollar amounts.
(a) Except for subdivisions 5 and 7, the dollar amounts in this section shall change periodically as provided in this subdivision to the extent of changes in the implicit price deflator for the gross national product, 1972 = 100, compiled by the United States Department of Commerce, and hereafter referred to as the index. The index for December 1980 is the reference base index.
(b) The designated dollar amounts shall change on July 1 of each even-numbered year if the percentage of change, calculated to the nearest whole percentage point, between the index for December of the preceding year and the reference base index is ten percent or more. The portion of the percentage change in the index in excess of a multiple of ten percent shall be disregarded and the dollar amounts shall change only in multiples of ten percent of the amounts stated in this section.
(c) If the index is revised, the percentage of change pursuant to this section shall be calculated on the basis of the revised index. If a revision of the index changes the reference base index, a revised reference base index shall be determined by multiplying the reference base index then applicable by the rebasing factor furnished by the Department of Commerce. If the index is superseded, the index referred to in this section is the one represented by the Department of Commerce as reflecting most accurately changes in the purchasing power of the dollar for consumers.
(d) The commissioner of commerce shall announce and publish:
(1) on or before April 30 of each year in which dollar amounts are to change, the changes in dollar amounts required by paragraph (b); and
(2) promptly after the changes occur, changes in the index required by paragraph (c) including, if applicable, the numerical equivalent of the reference base index under a revised reference base index and the designation or title of any index superseding the index.
(e) A person does not violate this chapter with respect to a transaction otherwise complying with this chapter if the person relies on dollar amounts either determined according to paragraph (b) or appearing in the last publication of the commissioner announcing the then current dollar amounts.
Subd. 5.Farm machines.
Farm machines and implements used in farming operations by a debtor engaged principally in farming, livestock, farm produce, and standing crops, not exceeding $13,000 in value. When a debtor is a partnership of spouses or a partnership of natural persons related to each other within the third degree of kindred according to the rules of the civil law, for the purposes of the exemption in this subdivision, the partners may elect to treat the assets of the partnership as assets of the individual partners.
Subd. 6.Tools of trade.
The tools, implements, machines, instruments, office furniture, stock in trade, and library reasonably necessary in the trade, business, or profession of the debtor, not exceeding $5,000 in value.
Subd. 7.Value limitations.
The total value of property selected by a debtor pursuant to subdivisions 5 and 6 shall not exceed $13,000, if the exemptions under subdivisions 5 and 6 are combined.
Subd. 8.University apparatus.
The library and philosophical and chemical or other apparatus belonging to, and used for the instruction of youth in, any university, college, seminary of learning, or school which is indiscriminately open to the public.
Subd 9.Exempt property claims.
All money arising from any claim on account of the destruction of, or damage to, exempt property.
Subd. 10.Insurance proceeds.
All money received by, or payable to, a surviving spouse or child from insurance payable at the death of a spouse, or parent, not exceeding $20,000. The $20,000 exemption provided by this subdivision shall be increased by $5,000 for each dependent of the surviving spouse or child.
Subd. 11.Beneficiary associations.
All money, relief, or other benefits payable or to be rendered by any police department association, fire department association, beneficiary association, or fraternal benefit association to any person entitled to assistance therefrom, or to any certificate holder thereof or beneficiary under any such certificate.
Subd. 12.Manufactured home.
A manufactured home, as defined in section 168.002, subdivision 16, which is actually inhabited as a home by the debtor.
Subd. 12a.Motor vehicles.
One motor vehicle to the extent of a value not exceeding $2,000; or one motor vehicle to the extent of a value not exceeding $20,000 that has been modified, at a cost of not less than $1,500, to accommodate the physical disability making a disabled person eligible for a certificate authorized by section 169.345.
All earnings not subject to garnishment by the provisions of section 571.922. A subsequent attachment, garnishment, or levy of execution shall impound only that pay period’s nonexempt disposable earnings not subject to a prior attachment, garnishment or levy of execution, but in no instance shall more than an individual’s total nonexempt disposable earnings in that pay period be subject to attachment, garnishment, or levy of execution. Garnishments shall impound the nonexempt disposable earnings in the order of their service upon the employer. The disposable earnings exempt from garnishment are exempt as a matter of right, whether claimed or not by the person to whom due. The exemptions may not be waived. The exempt disposable earnings are payable by the employer when due. The exempt disposable earnings shall also be exempt for 20 days after deposit in any financial institution, whether in a single or joint account. This 20-day exemption also applies to any contractual setoff or security interest asserted by a financial institution in which the earnings are deposited by the individual. In tracing the funds, the first-in first-out method of accounting shall be used. The burden of establishing that funds are exempt rests upon the debtor. As used in this section, the term “financial institution” includes credit unions. Nothing in this paragraph shall void or supersede any valid assignment of earnings or transfer of funds held on account made prior to the attachment, garnishment, or levy of execution.
Subd. 14.Public assistance.
All government assistance based on need, and the earnings or salary of a person who is a recipient of government assistance based on need, shall be exempt from all claims of creditors including any contractual setoff or security interest asserted by a financial institution. For the purposes of this chapter, government assistance based on need includes but is not limited to Minnesota family investment program, general assistance medical care, Supplemental Security Income, medical assistance, MinnesotaCare, payment of Medicare part B premiums or receipt of part D extra help, MFIP diversionary work program, work participation cash benefit, Minnesota supplemental assistance, emergency Minnesota supplemental assistance, general assistance, emergency general assistance, emergency assistance or county crisis funds, energy or fuel assistance, and food support. The salary or earnings of any debtor who is or has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution shall, upon the debtor’s return to private employment or farming after having been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, be exempt from attachment, garnishment, or levy of execution for a period of six months after the debtor’s return to employment or farming and after all public assistance for which eligibility existed has been terminated. The exemption provisions contained in this subdivision also apply for 60 days after deposit in any financial institution, whether in a single or joint account. In tracing the funds, the first-in first-out method of accounting shall be used. The burden of establishing that funds are exempt rests upon the debtor. Agencies distributing government assistance and the correctional institutions shall, at the request of creditors, inform them whether or not any debtor has been an eligible recipient of government assistance based on need, or an inmate of a correctional institution, within the preceding six months.
Subd. 15.Minor child earnings.
The earnings of the minor child of any debtor and any child support paid to any debtor, or the proceeds thereof, by reason of any liability of such debtor not contracted for the special benefit of such minor child.
Subd. 16.Claims for damages.
The claim for damages recoverable by any person by reason of a levy upon or sale under execution of the person’s exempt personal property, or by reason of the wrongful taking or detention of such property by any person, and any judgment recovered for such damages.
All articles exempted by this section shall be selected by the debtor, the debtor’s agent, or legal representative.
Subd. 18.Natural persons limitation.
The exemptions provided for in subdivisions 3 to 15 extend only to debtors who are natural persons except as provided in subdivision 5 for partnerships.
The exemption of the property listed in subdivisions 2, 3, and 5 to 12a may not be waived except by a statement in substantially the following form, in boldface type of a minimum size of 12 points, signed and dated by the debtor at the time of the execution of the contract surrendering the exemption, immediately adjacent to the listing of the property: “I understand that some or all of the above property is normally protected by law from the claims of creditors, and I voluntarily give up my right to that protection for the above listed property with respect to claims arising out of this contract.”
Subd. 20.Traceable funds.
The exemption of funds from creditors’ claims, provided by subdivisions 9, 10, 11, 15, and 24, shall not be affected by the subsequent deposit of the funds in a bank or any other financial institution, whether in a single or joint account, if the funds are traceable to their exempt source. In tracing the funds, the first-in first-out method of accounting shall be used. The burden of establishing that funds are exempt rests upon the debtor. No bank or other financial institution shall be liable for damages for complying with process duly issued out of any court for the collection of a debt even if the funds affected by the process are subsequently determined to have been exempt.
For the purpose of this section, “value” means current fair market value.
Subd. 22.Rights of action.
Rights of action for injuries to the person of the debtor or of a relative whether or not resulting in death.
Subd. 23.Life insurance aggregate interest.
The debtor’s aggregate interest not to exceed in value $4,000 in any accrued dividend or interest under or loan value of any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
Subd. 24.Employee benefits.
(a) 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 $30,000 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.
(b) The exemptions in paragraph (a) do not apply when the debt is owed under a support order as defined in section 518A.26, subdivision 21.
Subd. 25.Proceeds for improvements to property.
Proceeds of payments received by a person for labor, skill, material, or machinery contributing to an improvement to real estate within the meaning of section 514.01.
(a) Unless the judgment is for child support, the maximum part of the aggregate disposable earnings of an individual for any pay period subjected to garnishment may not exceed the lesser of:
(1) 25 percent of the debtor’s disposable earnings; or
(2) the amount by which the debtor’s disposable earnings exceed the following product: 40 times the federal minimum hourly wages prescribed by section 6(a)(1) of the Fair Labor Standards Act of 1938, United States Code, title 29, section 206(a)(1), in effect at the time the earnings are payable, times the number of work weeks in the pay period. When a pay period consists of other than a whole number of work weeks, each day of that pay period in excess of the number of completed work weeks shall be counted as a fraction of a work week equal to the number of excess work days divided by the number of days in the normal work week.
(b) If the judgment is for child support, the garnishment may not exceed:
(1) 50 percent of the judgment debtor’s disposable income, if the judgment debtor is supporting a spouse or dependent child and the judgment is 12 weeks old or less (12 weeks to be calculated to the beginning of the work week in which the execution levy is received);
(2) 55 percent of the judgment debtor’s disposable income, if the judgment debtor is supporting a spouse or dependent child, and the judgment is over 12 weeks old (12 weeks to be calculated to the beginning of the work week in which the garnishment summons is received);
(3) 60 percent of the judgment debtor’s disposable income, if the judgment debtor is not supporting a spouse or dependent child and the judgment is 12 weeks old or less (12 weeks to be calculated to the beginning of the work week in which the execution levy is received); or
(4) 65 percent of the judgment debtor’s disposable income, if the judgment debtor is not supporting a spouse or dependent child, and the judgment is over 12 weeks old (12 weeks to be calculated to the beginning of the work week in which the garnishment summons is received).
Wage garnishments on judgments for child support are effective until the judgments are satisfied if the judgment creditor is a county and the employer is notified by the county when the judgment is satisfied.
(c) No court may make, execute, or enforce an order or any process in violation of this section.
The cash value, proceeds, or benefits under any matured or unmatured life insurance or annuity contract issued before, on, or after June 2, 1987, by any society authorized to do business under this chapter, is exempt from attachment, garnishment, execution, or other legal process to the extent provided by section 550.37, subdivisions 10, 23, and 24.
Subdivision 1.Preferred claim.
The right to compensation and all compensation awarded any injured employee or for death claims to dependents have the same preference against the assets of the employer as unpaid wages for labor. This compensation does not become a lien on the property of third persons by reason of this preference.
Subd. 2.Nonassignability. No claim for compensation or settlement of a claim for compensation owned by an injured employee or dependents is assignable. Except as otherwise provided in this chapter, any claim for compensation owned by an injured employee or dependents is exempt from seizure or sale for the payment of any debt or liability.
Subdivision 1.Waiver of rights void.
Any agreement by an individual to waive, release, or commute rights to unemployment benefits or any other rights under the Minnesota Unemployment Insurance Law is void. Any agreement by an employee to pay all or any portion of an employer’s taxes, is void. No employer may directly or indirectly make or require or accept any deduction from wages to pay the employer’s taxes, require or accept any waiver of any right or in any manner obstruct or impede an application or continued request for unemployment benefits. Any employer or officer or agent of any employer who violates any portion of this subdivision is, for each offense, guilty of a misdemeanor.
Subd.2.No assignment of unemployment benefits; exemptions. Any assignment, pledge, or encumbrance of unemployment benefits is void. Unemployment benefits are exempt from levy, execution, attachment, or any other remedy provided for the collection of debt. Any waiver of this subdivision is void.
(a) The Minnesota state deferred compensation plan is established. For purposes of this section, “plan” means the Minnesota state deferred compensation plan, unless the context clearly indicates otherwise. The Minnesota State Retirement System shall administer the plan.Subd. 8.Exemption from process.
No amount of deferred compensation is assignable or subject to execution, levy, attachment, garnishment, or other legal process, except as provided in section 518.58, 518.581, or 518A.53.
The provisions of section 356.401 apply to the State Patrol retirement plan.
Subdivision 1.Exemption.The provisions of section 356.401 apply to the general employees retirement plan, to the public employees police and fire retirement plan, and to the local government correctional service retirement plan. Subd. 2.[Repealed, 1Sp2005 c 8 art 10 s 81]
Subd. 3.Payment to public bodies.
If, in the judgment of the executive director, conditions so warrant, payment of an annuity, a retirement benefit, or a refund may be made to a public body in behalf of an annuitant, disabilitant, or survivor upon such terms as the executive director may prescribe.
Subdivision 1.Exemption; exceptions.
None of the money, annuities, or other benefits provided for in the governing law of a covered retirement plan is assignable either in law or in equity or subject to state estate tax, or to execution, levy, attachment, garnishment, or other legal process, except as provided in subdivision 2 or section 518.58, 518.581, or518A.53.
Subd. 2.Automatic deposits.(a) The chief administrative officer of a covered retirement plan may remit, through an automatic deposit system, annuity, benefit, or refund payments only to a financial institution associated with the National Automated Clearinghouse Association or a comparable successor organization that is trustee for a person who is eligible to receive the annuity, benefit, or refund.
(b) Upon the request of a retiree, disabilitant, survivor, or former member, the chief administrative officer of a covered retirement plan may remit the annuity, benefit, or refund payment to the applicable financial institution for deposit in the person’s individual account or the person’s joint account. If an overpayment of benefits is paid after the death of the annuitant or benefit recipient, the chief administrative officer of the pension plan is authorized to issue an administrative subpoena consistent with the requirements of section 13A.02, requiring the applicable financial institution to disclose the names of all joint and co-owners of the account and a description of all deposits to, and withdrawals from, the account which take place on or after the death of the annuitant or benefit recipient. An overpayment to a joint account after the death of the annuitant or benefit recipient must be repaid to the fund of the applicable covered retirement plan by the joint tenant if the overpayment is not repaid to that fund by the financial institution associated with the National Automated Clearinghouse Association or its successor. The governing board of the covered retirement plan may prescribe the conditions under which these payments may be made.
Subd. 3.Covered retirement plans.The provisions of this section apply to the following retirement plans:
(1) the legislators retirement plan, established by chapter 3A;
(2) the general state employees retirement plan of the Minnesota State Retirement System, established by chapter 352;
(3) the correctional state employees retirement plan of the Minnesota State Retirement System, established by chapter 352;
(4) the State Patrol retirement plan, established by chapter 352B;
(5) the elective state officers retirement plan, established by chapter 352C;
(6) the unclassified state employees retirement program, established by chapter 352D;
(7) the general employees retirement plan of the Public Employees Retirement Association, established by chapter 353;
(8) the public employees police and fire plan of the Public Employees Retirement Association, established by chapter 353;
(9) the public employees defined contribution plan, established by chapter 353D;
(10) the local government correctional service retirement plan of the Public Employees Retirement Association, established by chapter 353E;
(11) the voluntary statewide lump-sum volunteer firefighter retirement plan, established by chapter 353G;
(12) the Teachers Retirement Association, established by chapter 354;
(13) the Duluth Teachers Retirement Fund Association, established by chapter 354A;
(14) the St. Paul Teachers Retirement Fund Association, established by chapter 354A;
(15) the individual retirement account plan, established by chapter 354B;
(16) the higher education supplemental retirement plan, established by chapter 354C;
(17) the Minneapolis Employees Retirement Fund, established by chapter 422A;
(18) the Minneapolis Police Relief Association, established by chapter 423B;
(19) the Minneapolis Firefighters Relief Association, established by chapter 423C; and
(20) the judges retirement fund, established by chapter 490.
All moneys paid to any person as a veteran’s pension, bonus, adjusted compensation, allotment, or other benefit by the state of Minnesota or by the United States are exempt from, and shall not be liable to, attachment, garnishment, seizure, or sale on any final process issued out of any court for the period of one year after receipt thereof.
The net amount payable to any insured or to any beneficiary under any policy of accident or disability insurance or under accident or disability clauses attached to any policy of life insurance shall be exempt and free and clear from the claims of all creditors of such insured or such beneficiary and from all legal and judicial processes of execution, attachment, garnishment, or otherwise.
Reparations may be awarded in a lump sum or in installments in the discretion of the board. The amount of any emergency award shall be deducted from the final award, if a lump sum, or prorated over a period of time if the final award is made in installments. Reparations are exempt from execution or attachment except by persons who have supplied services, products or accommodations to the victim as a result of the injury or death which is the basis of the claim. The board, in its discretion may order that all or part of the reparations awarded be paid directly to these suppliers.
Note: While this reference information is current as of August 2010, it may not reflect the most up-to-date exemption figures on official state of Minnesota bankruptcy court statutes.