Recently, I started watching a new television series call Ted Lasso and I was quite wonderfully surprised. This is a show about positivity, kindness, and thoughtfulness. Even faced with the ugliest of characters, Ted Lasso continues his crusade of positivity. This is a message we should all embrace.

Whether a bankruptcy can wipe out debt owed to the government is one question that many people have when considering filing for a chapter 7 or chapter 13 bankruptcy. Whether a bankruptcy discharge will eliminate this type of debt depends on the specific nature of the debt owed to the government. One common form of government debt is tax debt. Tax debt is generally not dischargeable in bankruptcy.

Bankruptcy filings like Chapter 7 and Chapter 13 are technically public record. The full case and associated documents are filed with the court. The case and associated filings are then accessible on the United States Bankruptcy Court’s website.

Unfortunately, in the bankruptcy world, there are some very unseemly practices. There are some companies who disguise themselves as law firms only to be referral agencies in reality. They take your phone call and have non-lawyers sign you up, and then refer you back to a Minnesota bankruptcy attorney. If you want crappy service, you should definitely do this.

A garnishment is when someone, usually a creditor or someone you owe money to, goes into your bank account or paycheck to obtain money that you owe.

Tax debt is a major reason that people file for bankruptcy. Despite the fact that the State and Federal taxing authorities (i.e. the IRS and MN Department of Revenue) are often willing to offer payment plans to assist people with this type of debt, owing a large amount of taxes can create both a financial and emotional burden. This is especially true when one has other expenses, debts and bills with which to contend.

Bankruptcy can often provide a great deal of assistance for those dealing with lots of tax debt.

On July 8, 2021, the United States Bankruptcy Court for the District of Minnesota issued a ruling upholding the rights for bankruptcy debtors who receive benefits under the Federal Indian Gaming Regulatory Act of 1988, 25 U.S.C. §§ 2701, et seq. (“IGRA”).

The 18 page opinion ends with a clear admonishment: “even outside of the Pokagon Band’s sovereign authority to create and define property rights, the per capita payments are not property of the estate in policy, logic, or equity.”

We cannot either. Recently, we heard of one Minnesota law firm that seems so hard up for money they actually take their clients clothing, along with furnishings and appliances, as collateral for their fees. We cannot imagine anything more distasteful than this. Bankruptcy lawyers are supposed to protect their clients assets not expose them to creditors, and especially themselves. Instead, the lawyer seizes an opportunity to take their clients property as collateral? Ridiculous. At LifeBack Law Firm we would never engage in this kind of chicanery to get paid.

A fundamental part of the bankruptcy process, is that the person(s) filing for bankruptcy relief must file schedules, statements and related documents, which are true, complete, and correct to the best of their knowledge, information and belief.

When disclosing the bankruptcy filer’s assets, it is important that all interests in property or assets (even if contingent) are disclosed. However, it is inevitable that from time to time, things may be overlooked or forgotten about.

Under the Internal Revenue Code, the general rule is that the discharge of a debt is a form of gross income. The forgiveness of a debt does sound nice, but it does come with some consequences.

For example, if a creditor forgives a debt of $20,000, you would have an additional $20,000 for taxable income. At a conservative tax rate of 15% you would owe an additional $3,000 in federal income taxes for that year.

Everyone knows the old adage, no good deed goes unpunished, and this is also true in bankruptcy. So, while it may be noble to help out a friend or family member, it can also complicate your bankruptcy. Expensive gifts, gifted while you are insolvent can be a point of contention in your bankruptcy, but what about other good deeds: lending money, co-signing on loans, or taking out loans for someone else?

If you are one of the millions of Americans that are unable to meet their monthly debt obligations, but are having trouble figuring out why, it may be because you are withholding too much from your paychecks for income tax.

On March 11, 2021, the American Rescue Plan Act was signed into law. Part of this law expended the existing child tax credit for tax year 2021.

Instead of applying up to $2,000 per qualified child, the amount was increased to $3,600 for a child under the age of 6 and $3,000 for a child aged 6 – 17. In addition, a household would receive half of either $3,600 or $3,600 in direct monthly payments between the months of July and December 2021.

Whether you file for a chapter 7 or chapter 13 bankruptcy, you will be protected from most collection efforts from most types of creditors. This protection begins on the very day you file your case until the day your case is closed, which typically occurs shortly after the court enters the Order discharging your debts. This court protection from creditors is known as the “automatic stay” and is provided by Section 362 of the Federal Bankruptcy Code.

In this discussion, I am going to focus on Minn. Stat. § 550.37, subd. 12 and 12a, referencing how bankruptcy can affect manufactured homes and vehicles in Minnesota.

I am going to skip over subdivision 11, which covers “beneficiary associations” because this law was found unconstitutional. See the court decision, In re Tveten, 402 N.W.2d 551 (Minn. 1987).

During your bankruptcy case there are going to be moving parts. There will be at least one hearing you have to attend (typically only one), your date for discharge, and more.