BANKRUPTCY BULLETIN
Contributing Author: Nauni Manty, Manty & Associates, P.A.
In In re Sand, 2023 WL 7449957 (Bankr. D. Minn. November 9, 2023), the bankruptcy court analyzed the personal goods exemption under Minn. Stat. § 550.37, subd. 4(b) which states, in part: “[h]ousehold furniture, household appliances, phonographs, radio and television receivers of the debtor and debtor’s family, not exceeding $11,250 in value.”
The trustee objected to the debtor’s exemption of various household goods and appliances, including a computer, DVD player, printer, DSLR camera, a GoPro camera, snowblower and tools under Minn. Stat. § 550.37, subd. 4(b). At the initial hearing on the exemption, the issues were narrowed as to the exemption of the computer and the snowblower after the debtor conceded that the other items were not exempt. The trustee supported her objection citing In re Irwin, 232 B.R. 151 (Bankr. D. Minn. 1999) (holding a computer is not a household appliance). Both the debtor’s attorney and the trustee agreed that it would be helpful to have an updated decision on whether the Minnesota personal goods exemption applies to a computer and a snowblower.
The bankruptcy court noted that it was “not clear that the constitution’s framers contemplated that only the Legislature would have the power to determine by law the nature and the amount of property exemptions.” According to the bankruptcy court, the Minnesota Supreme Court has “left room for judicial discretion in determining whether a debtor may exempt certain property that is not explicitly described in the Personal Goods Exemption.” Medill v. State, 477 N.W.2d 703, 706-07 (Minn. 1991). Where the scope is ambiguous, the court “accedes to the instruction of the Minnesota Supreme Court.”
The Minnesota Supreme Court noted that the purpose of the exemption is to protect “a debtor’s fundamental needs by limiting the assets available for distribution to creditors.” Medill, 477 N.W.2d at 708. In order to determine if a computer and a snowblower were included as “household appliances” under the personal goods exemption, the bankruptcy court considered whether the items were “for domestic use” and necessary “to protect a debtor and [her] family against absolute want” by allowing them a “reasonable means of support” to maintain “the decencies and proprieties of life.”
The bankruptcy court observed that the Irwin decision was well-reasoned at the time given the novelty of personal computers, but a lot had changed in 20 years. “[T]he passage of time has eroded the rational” contained in Irwin because the use of personal computers has significantly changed. A personal computer is clearly “a machine for domestic use” being “utilized in a wide variety of daily tasks that are essential to maintaining an average household, such as banking, managing utilities, paying bills, renewing prescriptions, telehealth appointments, student-teacher conferences, and tax preparation” to name a few. The bankruptcy court concluded that computers are a “common object in American homes, and they are a part of everyday life for average Americans.” Computers are no longer a luxury good. Computers are necessary and integral in everyday life. As such, the bankruptcy court overruled the trustee’s objection and permitted the debtor to exempt the personal computer.
Applying those same principles, the court found that a snowblower is unnecessary to the debtor’s fundamental needs. There is a reasonable alternative to a snowblower, and it is called a shovel. In re Zieg, 409 B.R. 917, 921 (Bankr. W.D. Mo. 2009). A snowblower is not necessary for “the maintenance of the decencies and proprieties of life.” Poznanovic v. Maki, 296 N.W. 415, 417 (Minn. 1941).
To read the bankruptcy court’s memorandum decision and order, click here.
Editors-in-Chief:
C.J. Harayda, Stinson LLP
David M. Tanabe, Winthrop & Weinstine, P.A.