If you are are planning on filing for bankruptcy soon, and are also expecting to receive a future tax refund, you may wonder whether you can keep your tax refund after filing a bankruptcy case, or whether you would have to turnover that refund to your bankruptcy trustee. Whether you are able to keep your tax refund or not, depends in large part on what type of law is applied to your case in order to protect all of your assets. There are two types of law that can be applied to any given bankruptcy case – federal or state law. Your bankruptcy attorney will determine which type of exemptions to use in order to best protect your property during your bankruptcy. 

   Welcome to St. Cloud, Minnesota nestled along the tranquil backwaters of the upper Mississippi River. The population of St. Cloud (according to the 2020 census) was 68,881 making it Minnesota’s 12 largest city. St. Cloud is famous for its granite quarries which have been worked since 1868. In fact, St. Cloud has been nicknamed the “granite city”. 

Lately it has been in vogue to buy into the cryptocurrency world. And when a debtor files bankruptcy any value that the cryptocurrency would have would be considered an asset. But before you jump into the cryptocurrency market you should consider all the risk. 

Many Minnesotans file bankruptcy due to the financial strain of being unemployed for a long period of time. During their period of unemployment, many people often receive unemployment compensation in order to afford to pay their bills. Unemployment benefits are completely “exempt” in bankruptcy. This means unemployment benefits cannot be taken, or used, for the purpose of satisfying a person’s debts when they file a personal chapter 7 or chapter 13 bankruptcy case. When a person files for bankruptcy in Minnesota, they are allowed to choose whether they use Federal or State law to exempt their property. Regardless of which law they choose, any money they receive for unemployment compensation will be exempt, and protected. 

A bankruptcy filing will discharge your personal liability on most debt. This includes secured assets, for example, vehicles or mortgages. Although your personal liability on the loan is dischargeable, if you want to keep the secured property you have to keep making payments. Some creditors will also request you sign a reaffirmation agreement after your chapter 7 bankruptcy is filed. A reaffirmation agreement typically says that you will keep your terms of your debt the same as if you had not filed bankruptcy, including your personal liability on the loan. 

If you currently live outside of Minnesota, you may wonder if you can still file for bankruptcy in Minnesota. Do I need to be a resident of Minnesota to file for bankruptcy in Minnesota? Well, the residency requirements to file in Minnesota are quite easy to be met. You simply have to have lived in Minnesota for at least 91 days in order to file for bankruptcy in Minnesota. 

A preference is essentially a payment that benefits one creditor over others. This commonly occurs with payments to unsecured creditors of $600 or more in the 90 days prior to filing or to a relative of $600 or more in the 1 year prior to filing. The trustee in your chapter 7 bankruptcy will want the funds received from this preference, to distribute to all of your creditors. 

Filing for Chapter 7 bankruptcy offers a financial fresh start for individuals burdened by overwhelming unsecured debt. It’s a legal process designed to eliminate most debts, providing much-needed relief. However, the road to bankruptcy can be fraught with potential pitfalls, particularly when it comes to managing your finances in the lead-up to filing. A crucial aspect to consider is the repayment of debts owed to friends and family members. While the intent may be noble, such actions could have unintended negative consequences for both you and your loved ones, including delaying or even preventing your bankruptcy discharge. Before you file bankruptcy, it's important to understand the implications of paying back family members, as it could affect the fairness to all creditors and the overall bankruptcy process.

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In Minnesota, the creation of a statutory exemption from claims of creditors for real estate used as a homestead is authorized by Article I, Sec. 12 of the State Constitution.  Minn. Stat. Chap. 510 sets forth the homestead exemption. It begins with a definition that reads, in pertinent part: 

If you are thinking about filing for bankruptcy, it is helpful to understand the different types of creditors and what kind of creditors you have. The type of debt and creditors that you have can be determinative of the type of bankruptcy that you file. A creditor is somebody you owe money to. When you file for bankruptcy, all of your creditors will be listed in your petition and schedules – those are the legal documents that are filed with the court in order to start your bankruptcy case.

A fraudulent transfer is a transfer before a bankruptcy filing with some type of fraud that the bankruptcy trustee can claw back. Common examples are when something is sold or transferred with the intent to hinder, delay, or defraud your creditors or you transfer something under fair market value before filing. But there are other types of fraudulent transfers as well. Your attorney will go through your case with you and should let you know if there is any risk with filing and fraudulent transfers. Your attorney should be able to discuss if there are any possible defenses, as well. Under federal law the look back period for fraudulent transfers is two years. 

Carrying on from our discussion putting past bankruptcy policies in context, we arrive at the 20^th century and the development of our modern bankruptcy regime. The Bankruptcy Act of 1898 was never repealed, lasting until the enactment of the Bankruptcy Act of 1938.  The Chandler Act, as it became known, was not revolutionary. It simply increased access to debtors and made voluntary bankruptcy more attractive for debtors. Technically, the Chandler Act merely amended the previous policy, so an incremental change to bankruptcy policy is not surprising. It is worth noting that modern case law occasionally looks back to these 20^th century policies for precedential decisions. 

A chapter 7 bankruptcy is referred to as a liquidation bankruptcy. This is because any assets above what the bankruptcy exemptions cover will have to be liquidated or you will have to pay their value to keep them. Non-exempt assets can happen in both Minnesota and Federal exemption cases. That being said, they are more common in Minnesota exemption cases. Let’s look at a few examples:

  There are some law firms who game the system. They use software to generate and “gate” bad reviews so the reviews that display are typically stronger reviews. This is unethical and dishonest. At LifeBack Law Firm, we have never used software to generate any Google reviews. All of our reviews are left from people who came in contact with the firm in one form or another and were moved to leave a review. LifeBack Law Firm’s Google reviews are the most heartfelt reviews in the bankruptcy business. 

If you are thinking about filing for bankruptcy, you may be deciding between whether a Chapter 7 or a Chapter 13 would be better for you. While a Chapter 7 bankruptcy is known to give you a quick refresh button by wiping out all of your unsecured debt in 3-4 months, there are advantages to a Chapter 13 bankruptcy too. A Chapter 13 bankruptcy also provides benefits that a Chapter 7 cannot. 

Section 362 provides that a bankruptcy petition "operates as a stay, applicable to all entities" and "generally prohibits attempts to collect prepetition debts against the debtor or the debtor's property or attempts to enforce liens and other interests against property of the bankruptcy estate”