If you’re struggling with overwhelming debt, Chapter 7 bankruptcy in Minnesota may be the lifeline you need. It can stop wage garnishments and bank levies in Minnesota, end collection harassment, and erase credit card and medical debt, giving you a genuine chance at a fresh start. In this guide, we’ll cover everything you need to know about Chapter 7 bankruptcy in Minnesota, from who qualifies, to what property you can keep, to life after discharge.
What Is Chapter 7 Bankruptcy in Minnesota?
Chapter 7, sometimes called the “fresh start” bankruptcy, eliminates unsecured debts like credit cards, medical bills, payday loans, and certain judgments. The moment your case is filed, an automatic stay takes effect, halting lawsuits, garnishments, and collection activity.
Who Qualifies for Chapter 7 Bankruptcy?
Means Test: Your household income is compared to Minnesota’s median income. If you’re below, you qualify; if above, detailed calculations apply.
Prior Bankruptcies: You must wait 8 years between Chapter 7 discharges.
Full Disclosure: You must be honest and list all assets, debts, and income.
If you don’t qualify for Chapter 7, other tools like Chapter 13 or defending against collection lawsuits in Minnesota may still provide relief.
What Property Can You Keep? (Minnesota Bankruptcy Exemptions)
Minnesota law protects most property through exemptions. Common protections include:
Home equity (up to $510,000 as of 2025)
Vehicle equity (up to $10,000 as of 2025)
Retirement accounts (401k, IRA, pensions)
Household goods and clothing
Wages you’ve already earned
Most Minnesotans who file Chapter 7 keep their home, car, and everyday belongings.
The Chapter 7 Process in Minnesota: Step by Step
Preparation: Gather pay stubs, bank statements, tax returns, ID, and complete a short online credit counseling course.
Filing: Your lawyer files your case in Minnesota’s federal bankruptcy court. The automatic stay takes effect immediately.
Trustee Review: A trustee is assigned to review your paperwork.
341 Meeting of Creditors:About 30 days later, you attend a short meeting with the trustee and your bankruptcy lawyer. Creditors rarely attend.
Financial Management Course: A second short online course must be completed.
Discharge: Typically 60–90 days later, the court issues an order wiping out your eligible debts.
What Debts Are Erased—and What Aren’t
Discharged: Credit cards, medical bills, payday loans, personal loans, certain judgments.
Not Discharged: Child support, alimony, student loans (except rare cases), most recent taxes, government fines, or fraud-related debts.
The Benefits of Chapter 7 Bankruptcy
Stops garnishments, repossessions, lawsuits, and collections
Eliminates tens of thousands in unsecured debt
Quick process (usually 3–4 months)
Sets the stage for rebuilding credit
Provides peace of mind and a true fresh start
Life After Chapter 7: Rebuilding in Minnesota
Bankruptcy wipes the slate clean, but how quickly you bounce back depends on your next steps:
Stick to a budget
Use credit wisely (secured cards, small installment loans)
Monitor your credit report regularly and address fixing credit report errors after bankruptcy
Many Minnesotans see credit scores improve within 12–24 months after filing.
Myths About Chapter 7 Bankruptcy
“I’ll lose my house and car.” False. Exemptions protect most property.
“Everyone will know I filed.” False. Unless you’re a public figure, it’s unlikely.
“I’ll never get credit again.” False. Many receive credit offers within months.
Local Process: Chapter 7 in Minnesota Courts
Bankruptcy cases are filed in Minnesota’s federal bankruptcy courts, located in Minneapolis, St. Paul, Duluth, and Fergus Falls. Trustees and local practices vary, so working with a Minnesota bankruptcy lawyer familiar with them is key.
Beyond Bankruptcy: Protecting Your Rights After Filing
Filing Chapter 7 is just the beginning. Creditors sometimes break the law even after your case:
FDCPA: If a collector contacts you about a discharged debt, it may be debt collector harassment.
FCRA: If your credit report shows discharged debt as still owed, that’s a violation.
EFTA: If a creditor keeps auto-debiting after filing, that may be illegal.
Your fresh start deserves protection, and Minnesota law gives you tools to enforce it.
FAQs About Chapter 7 Bankruptcy in Minnesota
How long does Chapter 7 take? About 3–4 months.
Will I lose my house or car? Most people keep both, if equity is protected.
Does Chapter 7 stop garnishment? Yes, immediately.
What debts are erased? Credit cards, medical bills, payday loans, personal loans, certain judgments.
Will everyone know I filed? Unless you tell them, almost nobody will.
Conclusion: A Fresh Start Is Possible
If you’re ready to stop garnishments, end collections, and finally move forward, Chapter 7 bankruptcy in Minnesota may be the solution. Bankruptcy isn’t about failure — it’s about taking control and protecting your future.
In Minnesota and ready to talk to a lawyer about bankruptcy?
Schedule a free consult with bankruptcy lawyer Todd Murray.
Since 2009, Todd has helped hundreds of Minnesotans get out of debt. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.