Filing a chapter 13 bankruptcy is a great way for many Minnesotans to deal with their creditors and get rid of debt.  In a chapter 13 bankruptcy, the debtor (the legal term for a person who files a bankruptcy case) makes monthly payments to their creditors in a three to five year repayment plan, after which they receive a discharge of their remaining debt. 

When a person files a chapter 7 bankruptcy case in Minnesota, they can choose what to do with their secured debts such as home mortgages and car loans.

Boating could very well be considered the quintessential Minnesota pastime! With 10,000 lakes (well, 11,842 lakes to be exact) it’s no wonder Minnesotans love to go boating. For many Minnesotans, their boat is one of their most valuable pieces of property that they own. So, it is no surprise that many Minnesotans who are considering filing for bankruptcy wonder if they will be able to keep their boat after their case is filed.

 At LifeBack Law we strive to make the process of filing a bankruptcy as stress free as possible. This is done in a few steps. 

A Chapter 13 bankruptcy allows a debtor to cure mortgage arrears, keep all nonexempt property without paying the trustee additional cash, and pay priority tax debt in their Chapter 13 plan. Priority tax debt is tax debt that was incurred by a debtor in the previous 3 years prior to the filing of their Chapter 13 bankruptcy. Priority tax debt would otherwise be nondischargeable in a Chapter 7 bankruptcy. A Chapter 13 bankruptcy allows debtors in a challenging financial situation to repay a portion of all of their debts in a structured and organized way, by making affordable monthly payments to the Chapter 13 trustee’s office.

After a Chapter 13 bankruptcy is filed, it must be confirmed at the Chapter 13 confirmation hearing. A Chapter 13 confirmation hearing is a hearing in which the bankruptcy judge formally approves the debtor’s Chapter 13 plan, and determines whether the plan meets the Chapter 13 requirements. Debtors do not need to attend this hearing. The confirmation of a Chapter 13 plan is important, as after the Chapter 13 plan is confirmed, debtors may start to rebuild their credit and it will be easier for debtors to obtain new financing, such as for a new vehicle. In order for a debtor’s Chapter 13 plan to be formally confirmed by the court, it is crucial that debtors in a Chapter 13 bankruptcy, file all required tax returns for tax periods ending within 4 years of their Chapter 13 filing. This is a requirement dictated by the Bankruptcy Code. Additionally, the Bankruptcy Code also requires that debtors must continue to pay all current taxes as they become due and continue to file all required tax returns timely throughout their Chapter 13 bankruptcy. A debtor’s failure to file tax returns or pay current taxes during a Chapter 13 bankruptcy may result in their case being dismissed, or may result in their Chapter 13 plan not being formally confirmed by the court. The Chapter 13 trustee will review the debtor’s Chapter 13 plan, and will look for changes in income. The trustee will also review the debtor’s tax returns each year, to determine if there is a change in income that is significant enough to require a modification in the debtor’s monthly Chapter 13 payment plan. The trustee will also review the debtor’s tax returns to determine if the debtor will receive any tax refunds that must be turned over to the trustee. In Minnesota, the Chapter 13 trustee’s office allows joint tax filers to keep $2,000 of their tax refund and allows single tax filers to keep $1,200 of their tax refunds each year in the Chapter 13 bankruptcy. The Chapter 13 trustee also allows the debtor to keep any portion of their state and federal refund that derives from the federal earned income credit and Minnesota working family credit, in addition to these amounts. Any portion of the debtor’s tax refunds that the trustee does not allow the debtor to keep, will generally have to be turned over to the trustee. These funds would be used to pay the debtor’s creditors.

     Over the years, I have seen some brave Minnesotans think it is a good idea to file bankruptcy themselves. Here is what they quickly discovered. For those I spoke with, they regretted filing bankruptcy themselves. Usually that regret surfaced after meeting with a Chapter 7 trustee and after listening to the trustee’s commentary and realized, they were in some trouble.

When you take the leap to speak with a bankruptcy attorney, a big weight should be lifted off your shoulders, as you will be given your options for taking control of your finances again.  

     What is a reaffirmation agreement in bankruptcy? First, it is important to note that a reaffirmation agreement is a subject discussed in Chapter 7 Bankruptcy, not Chapter 13 Bankruptcy. There is no such thing as a reaffirmation agreement in Chapter 13 Bankruptcy. In Chapter 13 Bankruptcy, collateral on a loan is either surrendered, paid on the plan, or paid outside the plan, with language on the plan that binds both debtor and creditor. 

Bankruptcy provides a relief to debtors who are facing unsurmountable debt and is an avenue towards better financial management. While the remedy bankruptcy affords is a wipe out of old debt that was incurred prior to filing for bankruptcy, it is important that debtors are aware and cautious about how they are spending their money in the 90 days prior to filing for bankruptcy

     The prospect of filing Chapter 7 Bankruptcy can be daunting. For those of us with high anxiety, it can push you to the far edge of your comfort zone, and beyond. Even for those with lower anxiety, the thought of filing Chapter 7 Bankruptcy can be overwhelming. Unfortunately, there are ways to make a bad situation worse. These are two things you should watch out for when filing Chapter 7 Bankruptcy in Minneapolis, MN. 

     You live in Minneapolis, MN and you are contemplating hiring LifeBack Law Firm to file Chapter 7 Bankruptcy on your behalf. You know you are going to hire LifeBack Law Firm as your bankruptcy law firm because LifeBack Law Firm is Minnesota’s most kind and helpful bankruptcy law firm. But before you file, you want to know, what do Chapter 7 Bankruptcy trustee’s look for in a Chapter 7 Bankruptcy case. The first thing you need to understand is Chapter 7 trustee’s get paid a small fee to administer most Chapter 7 Bankruptcy cases. Most would not be a trustee if they were paid this small fee only. 

A debtor may choose to file a Chapter 7 bankruptcy in order to wipe out their unsecured debt in three to four months. This provides the debtor with a fresh, new start. In a debtor’s Chapter 7 bankruptcy, the debtor’s assigned bankruptcy trustee may “avoid” or “undo” particular transfers of money or property the debtor made prior to the filing of their case. The bankruptcy trustee can avoid a transfer by demanding the return of the transferred property or money from the person or entity to whom the transfer was made.

Filing for chapter 7 bankruptcy is a great way for individuals struggling with debt to find financial relief. When filing bankruptcy, anyone who earns less than the median Minnesota State income, based on their household size, can file a chapter 7 bankruptcy case. When they do so, the court discharges their personal liability on all of their debts, with a few exceptions (i.e. past due child support, most taxes, criminal fines, etc.)