Legal Question in Bankruptcy in Minnesota

My husband and I are considering bankruptcy, we have about $15k in medical debt, $10k in credit card debt and a $20k personal loan on 2 vehicles, 1 that doesn't run and 1 is having issues. We used to be able to afford to pay everything, but do to job changes, medical issues and having kids, we are having issues just paying our basic monthly expenses on a $2000/month income. We are either borrowing money or paying late and are already on public assistance. We also need a bigger vehicle because we are now a family of 5 and no longer fit together in one. We are looking to surrender our vehicles to our finance company and file bankruptcy, catch 22... we need a vehicle. We were thinking about purchasing a vehicle with our tax refund so we wouldn't have a monthly payment and could afford liability insurance because we wouldn't have a car payment (we currently don't have any insurance because we can't afford it.) I would like to know if using the federal exemptions (because we don't own a home) if the vehicle exemption of $6450 for a married couple can be used on 1 vehicle or does it have to be 2? Can the "wild card" exemption be used for anything, even a vehicle? And also if we surrender our current vehicles and use our tax refund to purchase another vehicle, is there any way that they could take it if it is exempt? How long should we wait to file after our refund/vehicle purchase? Can they take my tax refund next year? Thank you in advance for answering my questions!


Asked on 2/08/10, 9:32 pm

1 Answer from Attorneys
David Kelly-952-544-6356 Kelly Law Office

That's a lot of questions. To start with, I must say that a face to face consultation is the best way to deal with this, because there are always lots of variables.

Yes the catch-all can be used for a car or any number of cars. As to next year's tax refund, that depends. If you use the whole catch all for other things, then your tax refund for next year is at risk - at least that portion of it that is considered earned as of the date you file your bankruptcy.

Really can't tell you how long to wait. That depends. If you are on assistance, there's a question as to whether you should file bankruptcy at all, since you have little to protect. Of course, if you are not going to file, you should be looking at the state exemption for a motor vehicle with a view toward protecting it from creditors in a non-bankruptcy context.

Good luck. This is for general information purposes only and is not legal advice. This response does not create an attorney-client relationship. You should be doing a face to face consultation with the attorney of your choice.

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Answered on 2/15/10, 7:07 am


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