Minnesota Bankruptcy Law (MN)

Changes in the Minnesota homestead exemption act after reform

The State of Minnesota is one of but fourteen states that allows state residents to chose either the federal exemption allowances or the state of Minnesota exemption allowances. This attribute is know as an "opt in state", and creates a choice between the most beneficial alternative. Be ware, debtors can not select to most beneficial terms of each statute, but must limit their choice to either the complete set of state or federal exemptions.

The homestead allowance is the focus of most people who file bankruptcy in Minnesota under Chapter 7 or Chapter 13 of the Code. Due to recent preemption through extensive federal reform acts, the Minnesota homestead exemption amount is reduced (capped) to a lower federal level. In practice, despite the mandate of the state legislature, residents are now restricted to a more homogenized, single national standard. This provision has grown more controversial since enactment, and critics claim that credit card companies are responsible for restricting state rights, state citizen's rights, and receiving a largely disproportionate advantage under the new reform act.