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socrateaser, Attorney
Category: Bankruptcy Law
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Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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A debtor is filing Chapter 7 and using Minnesota State Law

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A debtor is filing Chapter 7 and using Minnesota State Law Exemptions. Her bank account had $333 in it on the day of her bankruptcy filing. All of those funds are from a paycheck deposit made within 4 days of the bankruptcy filing. Under state law, 75 percent of income is exempt. Will the trustee require the debtor to turn over $83.25 of that $333.00?


Under MN Stat. 550.37 Subd. 13, 75% of a debtor's net disposable earnings are exempt from attachment or levy. Therefore that 75% is exempt from seizure by the bankruptcy trustee, unless the earnings are held in a deposit account more than 20 days after paid by the debtor's employer.

Your facts allege that the payment is only four days old, therefore the 75% remains exempt at the date of filing of the bankruptcy petition, and the remaining 25% must be turned over to the Bankruptcy trustee.

Note: If the debtor chooses the federal bankruptcy exemption, debtor can exempt up to $12,725 in any property. Bankr. Code 522(d). This is more than sufficient to shield the debtor's cash earnings.

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