In Minnesota, we use the term "homestead" to mean two different things. We use the term "homestead" to mean "Gets a break on real estate taxes"; but we also use the term "homestead" to mean "land that cannot be taken by a judgment creditor".
In the context of bankruptcy, we almost always use the term in the second sense -- land that is exempt from the claims of judgment creditors. The Minnesota homestead law is comparatively generous. The law (Minn. Stat. Chapter 510) lets a person claim, as his or her homestead, up to 160 acres in size and more than $330,000 in equity. However, one of the rules is that you, or your spouse, have to actually live on the property.
However, there is a way to protect your homestead from judgments even though you no longer live there.
For example, assume you need to move from your property because you live in Grey Eagle and have lost your job there but find a job in, say, Albert Lea. Further assume that you have $100,000 of equity in your home in Grey Eagle, but you may need to file bankruptcy because, while laid off, you lost your insurance and incurred a huge medical bill.
What you do is this: You file a statement with the County Recorder stating that even though you have left the property, you still claim it as your homestead. The filing of that statement will protect the homestead for up to five years.
A couple of cautions: First, remember the statement above about the word "homestead" being used in two ways? The form you file to claim "homestead benefit for real estate tax treatment" is filed with the County Assessor, not the County Recorder. The form you file to claim "homestead as exempt from the claims of judgment creditors" is filed with the County Recorder. Since it is easy to confuse the two terms, you must be certain that the right form is filed with the County Recorder, not just assume that because one form is filed with the County Assessor for real estate tax treatment that it carries over to judgment protection. Second, the form must be filed within six months of moving from the property.
Because the Minnesota homestead exemption is so important, be certain to keep its protection in force even though you move.
