When a person declares bankruptcy in Minnesota, one of the first things that must happen is an evaluation of their assets. This is done to determine which assets are exempt from being liquidated and used to repay outstanding debts.
Non-exempt property
Non-exempt assets are any property or possessions that are not protected from seizure during bankruptcy proceedings. This means that if you have non-exempt assets, the bankruptcy trustee may sell them to raise money to repay your creditors according to the priority outlined in the Bankruptcy Code.
There are two main types of non-exempt assets: personal property and real property. Personal property includes things like furniture, clothing, jewelry, and electronics. On the other hand, real property can be your home, land, or car.
Valuation of non-exempt assets
The value of your non-exempt assets is determined by their fair market value. Fair market value is the price that a willing buyer would pay for an asset and that a willing seller would accept. It is important to note that this value is not necessarily the same as the appraised value or the replacement cost of an asset.
Selling non-exempt assets
The bankruptcy trustee handles the sale of non-exempt assets. The trustee will auction off the assets and use the proceeds to repay your creditors. If you have multiple non-exempt assets, the trustee may choose to bundle them together and sell them as a package.
Protecting non-exempt assets
One way to protect a non-exempt asset is reaffirming your debt on certain secured assets. This means that you agree to continue making payments on the asset and that you will not include it in your bankruptcy estate.
You could also redeem them. Redemption allows you to keep the asset by paying the creditor the total value of the collateral.
As much as non-exempt assets are liquidatable during bankruptcy, there are ways you could protect them if you want to keep them. But, this will depend on the type of bankruptcy you’ll file for in Minnesota.
