Secured debt can sound like a foreign term for a lot of people, but it is in fact quite a simple concept. A secured debt simply means your loan or line of credit is attached to some form of property or asset. Secured debts are commonly used for your home (ie mortgage or home equity line of credit), car and equipment loans, or there are even secured credit cards, where the line of credit is attached to funds already deposited.

What exactly does filing a bankruptcy involve? Well that largely depends on if you choose to have an experienced bankruptcy lawyer do the work for you or not. What the law requires is stated in 11 U.S.C. § 521. (See https://kainscott.com/us-bankruptcy-code/chapter-v/ss-ii/code-521). These are strict requirements which can result in you being denied a discharge in your bankruptcy, and your debt not being eliminated if you do not comply with the requirements.

When a bankruptcy case is filed you are saying to the Court, I have listed everything I own or have an interest in.

I  like to create lists when I am thinking about the positives and negatives of doing something. It could be buying a vehicle or hiring a professional etc. If you are contemplating filing bankruptcy, I would want to know what are the pros and cons of filing bankruptcy.

At Kain & Scott, we know how much courage it takes to reach out to us for help. We know because all of our former clients felt the same way you do now. And yet, what our clients found is that life on the other side of debt is beautiful. Just yesterday, I had a former client of mine call me and thank me. It was touching to hear his story. He told me I was his attorney 4 years ago in a Chapter 7 Bankruptcy. He said he was driving by our office and wanted to call me and thank me again for helping him and his wife get their lives back. He said he and his wife bought a house, bought new vehicles, and their credit scores are great! He said filing bankruptcy was the best thing he ever did and he was so thankful for help in the process.

In my last post, I wrote about issues involving IRAs in bankruptcy cases.  IRAs are a common retirement savings product and Congress and the Bankruptcy Courts have been consistent in giving retirement accounts protection from creditors in bankruptcy cases.

 Chapter 7 Bankruptcy: What is a Chapter 7 Bankruptcy? A Chapter 7 Bankruptcy is frequently referred to as a “fresh start” bankruptcy. The focus in a Chapter 7 Bankruptcy is on your assets. The vast majority of Minnesotans do not lose any assets in Chapter 7 Bankruptcy. Most assets are what we call “exempt” and are not lost to a Chapter 7 trustee. Some assets can be “non-exempt” and those assets get turned over to the estate and liquidated and the proceeds used to pay down your debt. Whatever debt that doesn’t get paid off gets wiped out, tax free, forever. These debts are typically in the nature of credit card debt, unsecured loans, personal guarantees, trade payables etc.

I recently read one of our Google reviews. It was a review that was describing how thankful our client was that we do all the work. He was also thankful for us doing things behind the scenes he was not aware needed to be done--- because we do them without saying anything to the client.

Perhaps the most common and important question I get from people: “is my home protected in a bankruptcy or do I have to give it up?” The short answer to the question is a qualified YES.

Which is better, a Chapter 13 Bankruptcy or a Chapter 7 Bankruptcy? Honestly, the answer is it depends! Sometimes, you don’t have much of a choice in the matter. As a general rule, if you have the ability to pay back some of your debt you are expected to do so. That means a Chapter 13 Bankruptcy. If you don’t have the ability to pay back your creditors, than maybe we think about a Chapter 7 Bankruptcy. I wish the world was always that simple. Unfortunately, it is not.

Financial trouble brings with it a boatload of negative emotions.  People dealing with money problems experience stress, depression, anxiety and desperation.  Being in a tough spot financially can lead to a feeling of isolation – it’s embarrassing to talk with someone about these troubles, whether that someone be a friend or relative or a stranger.

In my last post I wrote about the rules regarding inheritances as property of the bankruptcy estate – and my focus was on the rules that apply to people in chapter 7 cases. But there’s another chapter that the attorneys at Kain & Scott practice – chapter 13. And inheritances in chapter 13 cases are handled a little differently.

As a society we are perpetually telling children to try new things, experience life, fail, grow, and learn. But it seems as we age, we are more reluctant to do any of those things. We like the status quo.  We never want to venture outside of our comfort zone.  But why? Are those not the things that make life worth living-that make you become a more interesting person?  Lately, I have really been trying to push myself to learning new skills.

While the clear majority of bankruptcy cases filed in Minnesota are Chapter 7 (liquidation) bankruptcies. You would be surprised how often people making $50K, $80K, $100K, or even $200K+ need to file for bankruptcy relief. While it is easy to say, “if I made that much money, I could definitely afford my bills and live a normal life.” The problem is, that unexpected events occur (which should now be more obvious than ever), which can cause people earning a high income to no longer afford their bills.

I’ve posted two recent blogs regarding the concept of property in bankruptcy cases, focusing on property that an individual may not have at the time a bankruptcy case is filed, but which the Bankruptcy Code identifies as property of the bankruptcy estate. I wrote about some common examples of this type of property – earned but unpaid wages, tax refunds, insurance residual payments and real estate commissions. The key point in these examples is that all of these not-yet-received payments were owed to the bankruptcy debtor at the time the bankruptcy case was filed – any wages, refunds, residuals or commissions earned after the filing date belong to the debtor, not the bankruptcy estate.

As attorneys that specialize only in bankruptcy law, Kain & Scott stays on top of all changes to bankruptcy law as they happen through-out the year. Whether this is related to new acts of Congress, such as under the CARES Act which provides specific relief to bankrupt debtors, or Minnesota state law, it is important your bankruptcy attorney stays on top on all changes to the law.