Eligibility & Technical Details

Understanding Bankruptcy Eligibility

From time to time the circumstances of life – such as illness, loss of work, or divorce – can throw your financial situation into turmoil. When times are tough, people need help. Should you decide to pursue bankruptcy, we can help you understand your options: Chapter 7 or Chapter 13.

Bankruptcy Code: Chapter 7

Under this form of bankruptcy, your non-exempt assets (i.e. non-protected assets) will be liquidated and your debts forgiven. In many cases, it is possible to keep your home, automobiles and almost all of your belongings.

Not everyone qualifies to file for Chapter 7. If the income for your household is lower than those shown in the table below, you can file under Chapter 7 in most circumstances. These figures went into effect on May 1, 2020, based on data from the U.S. Census Bureau.

Earner + # of Dependents
Total Annual Household Income

* Add $9,000 per additional person

If you have a household income above the median, you may be able to pass what is referred to as the “means test” and qualify for Chapter 7. The means test involves complicated calculations, based in part on the actual facts of the case and based in part on IRS and Census Bureau statistics. Please contact us to discuss this option.

Bankruptcy Code: Chapter 13

Under this form of bankruptcy, you undergo consumer debt consolidation in an attempt to start over. Chapter 13 can also help you to stop foreclosure proceedings on your home. You will have to make payments on your debts for a period of time, usually 3-5 years.

What Assets Can Be Protected?

Some assets that can be protected from creditors in a bankruptcy include:

      • The family bible, library, and musical instruments.
      • A seat or pew in any house or place of public worship and a lot in any burial ground.
      • All wearing apparel, one watch, utensils and foodstuffs of the debtor and debtor’s family.
      • Household furniture, household appliances, phonographs, radio and television receivers of the debtor and the debtor’s family not exceeding $8,550.
      • The debtor’s homestead including 160 acres of land. Whether claimed jointly or individually, the value of the claimed homestead exemption may not exceed $300,000. The homestead exemption does not apply to mortgages or mechanic’s liens. You may claim the full $300,000 exemption provided for under Minnesota law only if you have lived in your home longer than 1,215 days.
      • Life insurance proceeds of a surviving spouse or child not exceeding $38,000. Add another $9,500 for each dependent of the surviving spouse or children.
      • A manufactured home inhabited as a home by the debtor.
      • One motor vehicle to the extent of a value not exceeding $3,800. This number may be higher if the vehicle has been modified to accommodate someone with a physical disability.
      • Cash value of an unmatured life insurance policy up to $7,600.
      • Employment benefits under a stock bonus, pension, profit sharing, annuity, individual retirement account or similar plan on account of illness, disability, death, age or length of service up to $57,000 and “additional amounts … to the extent reasonably necessary for the support or the debtor and any spouse or dependent of the debtor.”

What To Do?

People try to avoid filing for bankruptcy out of a sense of pride. Deciding whether or not to file for bankruptcy is a very difficult decision, and you don’t need to do it alone – let us help you determine whether bankruptcy is an appropriate option for you.

To learn more about bankruptcy options, please submit your contact information to our office, along with a good time to contact you. Evenings and weekends are okay. Contact us today to take the next step in moving forward.

Disclaimer: The information on this website is for informational purposes only and is subject to change at any time. It should not be construed as legal advice and should not be used as the sole factors in making your decisions. We encourage you to contact us for more information. If the information here differs from current laws and statutes, official laws and statutes prevail.

The content of this website is for informational purposes only, and should not be construed as legal advice, advertisement, or solicitation. Information exchanged via this website or electronic mail does not constitute an attorney-client relationship; such relationship is only established with an engagement letter signed by a licensed attorney of this firm. The Butwinick Law Office is a debt relief agency.

Pursuant to 11 U.S.C. Section 528: We are a debt relief agency.
We help people file for bankruptcy relief under the Bankruptcy Code.