There are a handful of things that are associated with financial troubles. Several common reasons include overwhelming debt, divorce, losing one’s job, serious illness, or home foreclosure.
In fact, the average credit card debt in Minnesota is a whopping $5,110 per person. In addition, foreclosure rates are also as staggering, one out of every 4,209 MN homes is currently in foreclosure.
If you find yourself struggling with similar situations, then you are probably struggling with other personal issues that come with dealing with debt. The fear of losing your car, home or your income can drain a person emotionally. You may have even considered Filing for Bankruptcy .
If you are thinking “Is Bankruptcy Best For Me?” you are definitely not alone. Just under a million people file bankruptcy each year in America. Bankruptcy is a device established by the US Government to help struggling Americans find relief from substantial debt. You may want to consider bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy provides people with the chance to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or by spouses jointly. When the bankruptcy is over, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy process, a trustee is appointed to oversee the particulars of the case. His or her duties differ and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Minnesota ranks #31 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 226 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Minnesota, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. What is the difference? Look below for more information
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.
A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. You will be allowed to retain your valuable assets over a 3- to 5-year period.
In order to decide which type of bankruptcy a person can file, he or she will have to determine their ability to repay using the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, they will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
Unless otherwise noted, all law references are to the Minnesota Statutes (Minn. Stat.).
- $390,000 for a home and the land it is situated ($975,000 if used primarily for agriculture up to 160 acres). Spouses may not double. Manufactured homes up to an unlimited value.
- Motor vehicle up to $4,600 ($46,000 if modified for disability); clothing, food, utensils, and watches; furniture, appliances, radio, TV, and photographs, up to $10,350 total; books; burial plot; church pew or seat; proceeds for damaged or destroyed exempt property; personal injury and wrongful death recoveries; wedding rings up to $2,817.50.
- The greater of following: 40 times the federal minimum hourly wage or minimum of 75% of weekly disposable wages.
- Public employees.
- State employees.
- Highway patrol.
- Workers’ compensation.
- Unemployment compensation.
- Public assistance.
- Veterans’ benefits.
- Crime victims’ compensation.
Tools of Trade
- Tools, library, furniture, machines, instruments, implements and stock in trade up to $11,500 total; Farm machines, implements, livestock, produce and crops of farmers. (Total cannot exceed $13,000.) Teaching materials of a university, college, public school or public institution teacher of unlimited value and not subject to $13,000 limit.
- Fraternal benefit society benefits.
- Life insurance proceeds if beneficiary is spouse or child, up to $46,000 plus additional $11,500 per dependent; unmatured life insurance contract dividends, interest, loan, cash, or surrender value if insured is the debtor or someone the debtor depends upon up to $9,200; police, fire, or beneficiary association benefits.
- Disability proceeds.
- Earnings of a minor child.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current laws do not require individuals to hire an attorney to declare bankruptcy relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.
Filing Bankruptcy without an Attorney
A simple Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Most of the time, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not the creditors.
An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in MN, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Minnesota
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In MinnesotaGerald W. Heaney Federal Building and United States Courthouse
515 West First Street
Minnesota Bankruptcy Court
United States Courthouse
300 South Fourth Street
Minnesota Bankruptcy Court
Warren E. Burger Federal Building
316 North Robert Street
St. Paul,MN 55101
Minnesota Bankruptcy Court
Additional Minnesota Resources
Foreclosure Help Program
Disability SSDI Benefits