The moment you file a bankruptcy, there are a bunch of things that happen. The biggest thing is the formation of a bankruptcy estate. Now you’ve probably heard estate used in phrases like ‘real estate,’ ‘family estate,’ or ‘estate planning.’ Specific to bankruptcy, your estate is everything you have at the exact moment you file. The easiest way to think of the estate is that it’s a ‘bucket of stuff.’
Why There’s a Bankruptcy Estate
Again, the moment you file you have a ‘bucket of stuff’ that’s put together. The things in that bucket are used to pay off your creditors. After the bucket’s empty, all other debts are discharged, which is great if you have way more creditors than funds in your estate. However, there’s a lot of things that can go into that bucket: money in your bank accounts, jewelry, the equity in your home, tons of different stuff.
Luckily not everything has to go into the bankruptcy estate. There’s a set of rules called exemptions and they keep you from ever having to start from scratch.
What Exemptions are for
The middle class is this idea of having the basics, like a home and transportation. Exemptions are designed to help keep you in the middle class. Exemptions allow us to pull those middle class things out of a bankruptcy estate and keep them with you. We use a homestead exemption and a vehicle exemption to do that, plus tons of other types too. The exemptions we use fit into two sets: Federal Exemptions and Minnesota Exemptions. A lot of work goes into finding the best way to apply those sets to your situation. Here’s a brief example of just some of the differences:
- Federal Exemptions are really good at protecting money and things easily sold for money. It’s usually best for people who rent, or those who have special belongings they want to protect.
- Minnesota Exemptions are better at protecting homes and equity. It works best for homeowners and those who have most of their money invested in property.
How We Help You
Now there’s so much more that goes in to applying these exemptions to each case. Everyone’s situation is different, everyone has different things they want to protect when they file. That’s why we have experts to help you sort through the important stuff and protect the things closest to you. If you want to know more, give us a call at 612-824-4357.