A magnetic filter employs a magnetic core assembly that incorporates a plurality of exchangeable holder sleeves, each enclosing permanent magnets. Neither the sleeves nor magnetic bars are mechanically fixed to the filter housing. The magnet bars and holder sleeves are individually accessible. The number of holder sleeves in the magnetic core assembly is flexible. The magnetic filter in equipped with a screen that partially encloses the elongated holder sleeves to treat streams that contain degradation sludge, iron containing particles or flakes, and non-magnetic polymeric materials. In operation, a feed stream initially contacts the magnetic core assembly where paramagnetic contaminants become deposited onto the exterior surface of the holder sleeves under direct influence of strong magnetic field generated by the magnet bars. The mesh screen cylinder subsequently captures non-magnetic and weakly magnetic contaminants of a certain size before the cleaned stream exits the magnetic filter.