Filing for bankruptcy can feel overwhelming—especially when you’re worried about losing the things that matter most, like your home or your vehicle. One of the first questions many Minnesota residents ask is: “If I file bankruptcy, will I lose my house or car?” The good news is that, in many cases, you may be able to keep both, depending on your financial situation, the type of bankruptcy you file, and how Minnesota exemption laws apply to you. At Behm Law Group, we help individuals and families understand their rights and make informed decisions about debt relief. Let’s walk through how bankruptcy works in Minnesota and what it could mean for your property.

Understanding Bankruptcy Options in Minnesota

Most people who file personal bankruptcy choose either Chapter 7 or Chapter 13. Chapter 7 bankruptcy is often called “liquidation bankruptcy.” It can wipe out many unsecured debts such as credit cards and medical bills, usually within a few months. In exchange, any non-exempt assets could be sold by a trustee to pay creditors. However, Minnesota law provides generous exemptions that protect many essential assets. Chapter 13 bankruptcy is a repayment plan lasting three to five years. Instead of selling assets, you make monthly payments to catch up on overdue balances while keeping your property. This option is especially helpful if you’re behind on mortgage or car payments but have steady income. Choosing the right chapter can make a big difference in whether you keep your house or vehicle.

Minnesota Exemptions: The Key to Protecting Your Property

Bankruptcy exemptions determine what property you’re allowed to keep. Minnesota residents can generally choose between federal exemptions and Minnesota state exemptions, depending on eligibility. These exemptions are designed to help you maintain basic living standards while getting a fresh financial start. Minnesota’s homestead exemption is particularly strong, often allowing homeowners to protect significant equity in their primary residence. Vehicle exemptions also exist, helping many filers keep at least one reliable car. Here’s a brief look at commonly protected assets under Minnesota law:
  • Your primary residence (up to the homestead exemption limit)
  • One motor vehicle up to a certain value
  • Household goods and personal items
  • Retirement accounts and pensions
  • Tools of your trade
  • Certain cash and wage benefits
This is the only section with bullet points, and it highlights why so many people are surprised to learn they don’t lose everything in bankruptcy.

Can You Keep Your House After Filing Bankruptcy?

Whether you can keep your home depends on a few key factors:

1. How Much Equity You Have

Equity is the difference between what your home is worth and what you owe on it. If your equity falls within Minnesota’s homestead exemption limits, your home is usually protected in Chapter 7. If your equity exceeds the exemption, Chapter 13 may be a better option because it allows you to keep the home while repaying creditors over time.

2. Are You Current on Your Mortgage?

If you’re up to date on mortgage payments, keeping your home is often straightforward. If you’ve fallen behind, Chapter 13 can help you catch up over several years while stopping foreclosure.

3. Type of Bankruptcy Filed

Chapter 7 works well for homeowners with low equity and current payments. Chapter 13 is often ideal for those facing foreclosure or who have higher equity they want to protect. In many Minnesota cases, homeowners successfully keep their property after filing—especially with proper legal guidance.

Can You Keep Your Car in Bankruptcy?

Transportation is essential for most people, and bankruptcy law recognizes that. Many filers in Minnesota are able to keep at least one vehicle. Your ability to keep your car depends on:

Vehicle Value and Exemptions

If your car’s equity is within the allowed exemption, it’s usually protected in Chapter 7. If it exceeds the limit, Chapter 13 may allow you to keep it by paying creditors through a structured plan.

Car Loans and Payments

If you’re still making payments on your vehicle, you typically have a few options:
  • Continue making payments and keep the car
  • Reaffirm the loan (agreeing to remain responsible for it after bankruptcy)
  • Include past-due payments in a Chapter 13 plan
If you’re behind on payments, Chapter 13 can be especially helpful because it allows you to catch up over time while keeping your vehicle.

How Bankruptcy Can Actually Help You Keep Property

Many people assume bankruptcy automatically means losing everything. In reality, bankruptcy is often a tool to protect assets, not take them away. Filing bankruptcy triggers an automatic stay, which immediately stops:
  • Foreclosures
  • Repossessions
  • Wage garnishments
  • Collection lawsuits
This legal protection gives you breathing room and can prevent the loss of your home or car while you work toward a solution. Bankruptcy law is detailed, and small mistakes can lead to unnecessary stress or lost property. An experienced Minnesota bankruptcy attorney can:
  • Help you choose between Chapter 7 and Chapter 13
  • Apply the correct exemptions to protect your assets
  • Communicate with creditors on your behalf
  • Ensure all paperwork is completed accurately
  • Build a strategy tailored to your financial goals
Every situation is unique, and personalized advice makes all the difference.

Start Your Fresh Financial Chapter with Behm Law Group

If you’re struggling with debt and worried about your house or car, you don’t have to face it alone. At Behm Law Group, we focus on helping Minnesota residents find real solutions to financial hardship. Our goal is to protect what matters most while guiding you toward a stronger financial future. We take the time to understand your circumstances and explain your options clearly—so you can move forward with confidence.

Contact Us Today

If you’re considering bankruptcy or simply want answers about your rights, reach out to Behm Law Group for a confidential consultation. Phone: 507-387-7200 Email: stephen@mankatobankruptcy.com Taking the first step can feel intimidating, but getting informed is empowering. Contact us today to learn how bankruptcy may help you keep your home, your car, and your peace of mind.  

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