Chapter 7 · the “fresh start” chapter
Chapter 7 bankruptcy in Minnesota
The faster chapter: most unsecured debt — credit cards, medical bills, personal loans — is wiped out in about four to six months, and most Minnesota filers keep everything they own. Here's how it works, who qualifies, and what it costs.
What Chapter 7 actually does
Chapter 7 is often called “liquidation” bankruptcy, but don't let the word scare you. A court-appointed trustee reviews your property; anything not protected by an exemption can be sold to pay creditors — and in most consumer cases, exemptions protect everything, so nothing is sold.
At the end, most unsecured debts are discharged: you are no longer legally required to pay them. Collection calls, lawsuits, and most wage garnishments must stop the day you file, thanks to the automatic stay.
Usually wiped out
Credit cards, medical bills, personal loans, old utility bills, most judgments
Usually survives
Most student loans, recent taxes, child support, spousal maintenance
Who qualifies: the means test, in English
Step one is a simple comparison: your household's average income over the last six months (annualized) against the median income for a Minnesota household of your size. At or below the median, you generally pass. Above it, a second calculation looks at your actual expenses — and an attorney often finds allowable deductions filers miss on their own. According to Census Bureau figures published by the U.S. Trustee Program for cases filed on or after April 1, 2026:
1-person household
$77,696
2-person household
$98,328
3-person household
$126,487
4-person household
$149,882
Larger households add $11,100 per additional person. These figures adjust periodically — an attorney checks the current numbers before filing. Earning more than the median does not automatically rule out Chapter 7; if it doesn't fit, Chapter 13 may.
Your house and your car
Minnesota lets filers choose between Minnesota's state exemptions and the federal bankruptcy exemptions — one complete set, no mixing — and the choice matters a lot:
Home equity
- Minnesota homestead exemption: up to $540,000 of equity protected (as adjusted effective July 1, 2026; up to $1,350,000 for agricultural property) — one of the most generous in the country.
- Federal homestead exemption: $31,575 (doubled for a married couple filing together), but the federal set includes a flexible “wildcard” that can protect cash and other property.
Vehicle equity
- Minnesota: up to $10,000 of equity in one vehicle (higher for a vehicle modified for a disability).
- Federal: $5,025, and the wildcard can often stack on top. Remember: exemptions protect equity — the car's value minus what you still owe on it.
Homeowners with significant equity usually lean toward the Minnesota list; renters often do better with the federal list. Picking the right set is one of the highest-value things a local attorney does.
Cost and timeline
$338
Court filing fee (U.S. Courts fee schedule). Low-income filers can ask to pay in installments or have it waived entirely.
$1,000–$3,000
Typical Minnesota attorney flat-fee range reported by consumer legal resources — a range that varies with your case, not a quote. Ask exactly what a fee includes.
4–6 months
Typical filing-to-discharge timeline for straightforward cases, with one short trustee meeting — most filers never see a judge. See the full step-by-step timeline →
Is Chapter 7 right for you? Ask a local attorney — free.
Two minutes, confidential, no obligation. An independent Minnesota attorney who takes your inquiry contacts you directly, usually within one business day.
Chapter 7 FAQs
Will I lose everything in a Chapter 7?
In most Minnesota consumer cases, filers keep everything they own because of legal protections called exemptions. Minnesota filers choose between Minnesota's exemption list (which protects up to $540,000 of home equity as of mid-2026) and the federal list. Only property above your exemptions is at risk, and an attorney evaluates that before you file.
Do I earn too much for Chapter 7 in Minnesota?
Not necessarily. If your household income is at or below Minnesota's median for your household size (for example, $77,696 for one person and $149,882 for a family of four under the figures published for cases filed on or after April 1, 2026), you generally pass the means test. Above the median, a longer calculation of your actual expenses applies — earning more than the median does not automatically disqualify you.
How fast does Chapter 7 work?
Most straightforward consumer cases go from filing to discharge in roughly four to six months, with one short trustee meeting along the way. The automatic stay — which stops most garnishments and collection — takes effect the day the case is filed.
How do I find a Chapter 7 attorney near me?
Tell us about your situation using the form on this page — it's free and confidential. Independent Minnesota bankruptcy attorneys review the general details (never your contact info), and an attorney who takes your inquiry contacts you directly. We're a matching service, not a law firm, and nothing on this page is legal advice.
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