Bankruptcy in Minnesota (2026): Exemptions & Means Test

Minnesota is one of the states that gives bankruptcy filers a choice: you can use Minnesota's own exemptions or the federal bankruptcy exemptions, whichever protects more of your property. Bankruptcy itself is federal law, but the exemptions that decide what you keep, and the means-test income that decides which chapter you can use, are state-specific. Minnesota's homestead exemption is one of the most generous in the country and is adjusted for inflation, so the figures below reflect the amounts in effect in 2026, and you should confirm the current numbers before relying on them.

This page is general legal information, not legal advice. It is part of our Bankruptcy by State series.

Does Minnesota use state or federal bankruptcy exemptions?

Minnesota is not an opt-out state. A debtor who files bankruptcy in Minnesota may elect to use the Minnesota exemptions, found mainly in Minn. Stat. 510.02 (homestead) and Minn. Stat. 550.37 (personal property), or the federal bankruptcy exemptions in 11 U.S.C. 522(d). You choose one complete menu and cannot mix items from both lists. About a third of states, including Minnesota, allow this choice; roughly two-thirds have opted out and force filers onto state law only.

The choice usually turns on home equity. Minnesota's state homestead is far larger than the federal one, so homeowners with meaningful equity almost always choose the state set. Filers who rent or have little home equity sometimes prefer the federal set because of its larger general wildcard. Even a filer who uses the state exemptions can separately claim the federal nonbankruptcy exemptions for things like Social Security and tax-qualified retirement accounts. Married couples filing jointly elect one system together and cannot split between the two menus. The homestead is also capped per property rather than per debtor: Minn. Stat. 510.02, subd. 1 limits the exemption "per homestead, whether the exemption is claimed by one or more debtors," so joint filers cannot double the $540,000 or $1,350,000 figure.

Minnesota homestead exemption

Minnesota's homestead exemption is the headline protection for homeowners, and it is among the most generous in the United States. Under Minn. Stat. 510.02, the standard homestead exemption protects up to $540,000 of equity in a residence, and a homestead used primarily for agricultural purposes is protected up to $1,350,000. These amounts took effect July 1, 2026 under the biennial inflation adjustment.

The homestead may include any quantity of land up to 160 acres. The dollar amounts are indexed for inflation: under Minn. Stat. 550.37, subd. 4a, the Minnesota Department of Commerce recalculates the figures using the implicit price deflator for the gross domestic product, with adjustments taking effect on July 1 of even-numbered years. That means the next adjustment is scheduled for July 1, 2028, so confirm the figure that applies to your filing date.

Homestead protection covers equity, not the full value of the home. Because Minnesota's exemption is so high, the great majority of Minnesota homeowners can protect all of their home equity, but a residence worth more than the mortgage plus the exemption can still leave non-exempt equity that a Chapter 7 trustee may reach.

Vehicle, wildcard, and personal-property exemptions

Beyond the home, Minnesota protects a range of everyday property under Minn. Stat. 550.37, and those amounts are inflation-adjusted on the same even-year schedule as the homestead:

• Motor vehicle: up to $10,200 of equity in one vehicle, $27,000 for a vehicle regularly used by or for the benefit of a physically disabled person, $110,000 for a vehicle designed or modified to accommodate a disability, and $13,750 for a vehicle reasonably necessary for the debtor's trade or business (subd. 12a). Subdivision 12a lets you claim one of these categories, not several.
• Household furniture, appliances, electronics, and similar goods: an aggregate limit of $12,600 (subd. 4).
• Tools of the trade and business property: an aggregate limit of $14,000 (subd. 6). A debtor who combines this with the farm-machinery exemption in subd. 5 is capped at $13,000 for the two together under subd. 7, and subdivisions 5 and 7 are expressly excluded from the inflation adjustment in subd. 4a.
• Wages and earnings: protected under the garnishment limits in Minn. Stat. 571.922.
• A bankruptcy-only wildcard of $1,650 that can be applied to any property, including funds in a bank account (subd. 28).
• Retirement accounts: tax-qualified plans are protected through separate exemptions and under federal law regardless of which menu you choose.

Because the figures round and update every even-numbered year, always confirm the current numbers in the statute or the Department of Commerce notice before filing.

The Chapter 7 means test in Minnesota

The means test screens who can file Chapter 7. The first step compares your household's current monthly income, annualized, to the median family income for a Minnesota household of the same size. If your income is at or below the Minnesota median, you generally pass and may proceed with Chapter 7. If it is above the median, you complete the longer calculation that subtracts allowed expenses to see whether you have disposable income that should fund a Chapter 13 plan instead.

The U.S. Trustee Program publishes the median figures and updates them periodically. For cases filed on or after July 15, 2026, the Minnesota median family income is:

Add $11,100 for each additional person beyond four. The U.S. Trustee Program revises the median income data periodically, so confirm the current numbers for your filing date.

Chapter 7 vs. Chapter 13 in Minnesota

Chapter 7 is a liquidation. A trustee can sell non-exempt property to pay creditors, but because Minnesota's exemptions protect most household property and almost all home equity, many Chapter 7 cases are "no-asset" cases where nothing is sold. Most remaining unsecured debt, such as credit cards and medical bills, is discharged in a few months.

Chapter 13 is a reorganization for filers with regular income. You keep your property and repay some or all of what you owe through a three-to-five-year plan. Chapter 13 is often chosen by homeowners who are behind on a mortgage, because the plan can spread out the missed payments and stop a foreclosure while you catch up.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362. The stay immediately halts most collection activity, including foreclosure sales, wage garnishment, repossession, and collection calls, while the case proceeds.

Where you file bankruptcy in Minnesota

Minnesota bankruptcy cases are filed in the U.S. Bankruptcy Court for the District of Minnesota, the single federal bankruptcy district covering the entire state. The court holds hearings in Minneapolis, St. Paul, Duluth, and Fergus Falls. Before filing, federal law requires you to complete an approved credit-counseling course, and you must complete a debtor-education course before your debts are discharged.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts, but several categories generally survive: most student loans (absent a separate showing of undue hardship), recent income taxes, child support and alimony, and debts from fraud or willful injury. Secured debts like a car loan or mortgage continue if you want to keep the collateral and keep paying.

Because exemption amounts change, and the choice between the state and federal exemption menus and between Chapter 7 and Chapter 13 depends on your full financial picture, many people consult a licensed Minnesota bankruptcy attorney before filing.