The Minnesota Motor Vehicle Exemption in Bankruptcy
Learn about the Minnesota motor vehicle exemption and how it protects your car from creditors in bankruptcy.
The Minnesota motor vehicle exemption helps determine whether you can keep your car, truck, van, or other vehicle if you file for Chapter 7 bankruptcy. Here you’ll find information about the Minnesota car exemption: how much it is, what types of vehicles it covers, how it works for married couples, how to find the applicable statute, and more.
(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)
The Motor Vehicle Exemption and Your Car
Minnesota’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than Minnesota’s car exemption, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?
Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?
The Amount of Minnesota’s Motor Vehicle Exemption
In Minnesota, you can exempt up to $4,600 in equity in your car or other vehicle, but the exemption amount increases to $46,000 for a vehicle modified to accommodate a physical disability and to make the disabled person eligible for a certificate to park in disabled parking spaces. The increase to $46,000 only applies if the modification to the vehicle cost at least $3,450.
The Federal Motor Vehicle Exemption
Minnesota allows you to choose between the state exemptions or the federal bankruptcy exemptions. The federal motor vehicle exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions.
Can Married Couples Double Minnesota’s Motor Vehicle Exemption?
Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Minnesota does allow married couples to each have their own set of exemptions, which means that if the household has two cars, each spouse can use the full exemption amount for his or her own car. Therefore if you own a car worth $3,000 and your spouse owns a car worth $5,000, you can exempt the full value of your car and your spouse can exempt his or her car up to $4,600.
Learn more about joint bankruptcy options in Nolo's section on Bankruptcy Considerations for Married Couples.
What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?
The Minnesota motor vehicle exemption covers the equity in one motor vehicle.
Checking Minnesota’s Exemption Laws
You can find Minnesota’s motor vehicle exemption at Minn. Stat. Ann. 550.37.
To learn how to find state statutes, see Nolo’s Laws and Legal Research area.
When the Minnesota Exemption Amounts Are Updated
The exemption laws in Minnesota change July 1 of every even-numbered year when the government updates the exemption amounts based on changes to the implicit price deflator for the gross national product. The commissioner of commerce will publish the new amounts by April 30 of the year they change. You can find updated amounts on the State of Minnesota website on the adjustments of dollar amounts page, here: www.state.mn.us/portal/mn/jsp/common/content/include/contentitem.jsp?contentid=536884755.