Bankruptcy is intended to provide an individual with a fresh start, but there are expectations for the debtor. It starts with disclosure. The premise for any bankruptcy is honesty, and disclosure so if a debtor is unwilling or unable to provide the court with the appropriate documents or testimony, then that individual is not a good candidate for filing a bankruptcy.
Once all the appropriate disclosures are made, including the listing the debtor’s assets, the debtor can make a determination on the appropriate exemption scheme to choose. Minnesota is an opt-in state, this means a debtor in Minnesota can choose either federal or state exemptions. Typically, the deciding factor between choosing federal or state exemptions is the amount of equity in the debtor’s homestead.
Traditionally, the Minnesota exemptions did not include a “wildcard” exemption. A “wildcard” exemption allows the debtor to exempt assets that are not explicitly exempted by statute. Recently, the Minnesota exemptions were amended to include a small wildcard exemption. In the next blog, I will go into more detail regarding the changes to the Minnesota exemptions.
While bankruptcy offers relief to thousands of debtors each month, not all bankruptcy filings result in a “no-asset” case. This means after the debtor has made all their necessary disclosures and applied their exemptions appropriately, there are assets or transfers that belong to the bankruptcy estate. In a chapter 7, liquidation bankruptcy, the expectation is the debtor will turnover of the asset or pay the estate the equivalent of the asset. This begs the question, how does the debtor come up with the funds to pay the estate for the asset. The answer is always the same. If the debtor cannot produced the funds to pay the estate for their non-exempt assets, the debtor will be required to turn over the asset to the bankruptcy trustee.
Some debtors, after filing, believe they can ignore the estate’s request for turnover of the non-exempt assets. This can have dire consequences for the debtor, including the revocation of the debtor’s discharge.
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Bankruptcy offers relief, but bankruptcy filers do have expectations and responsibilities to the bankruptcy estate. Contact the attorneys at LifeBackLaw and see us at www.LifeBackLaw.com and let us help you get your life back.
