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.

This has to be the most common concern expressed amongst visitors to our website and questions asked during appointments. It is not what you think. What you think will happen does not. People are always surprised to learn that your credit score and overall credit profile typically dramatically improve. Shut the front door right? How can this be true? Sometimes, the images your mind can create are pretty far-fetched. I remember thinking before I did bankruptcy work, I wonder if the “bankruptcy people” like follow you in a grocery store and inventory what you are buying. No! They certainly do not.

I totally get this feeling. I have high anxiety myself and the thought of having to file bankruptcy would be a hurdle that would not be easy for me to jump. How many of us wind up on broken roads we did not expect? If you are honest with yourself you would say every single one of us. Your intentions are wonderful but things don’t always work out the way you hoped. Consider the person who opened a business and hoped to be a millionaire. Don’t we all want this?

55% of all the people who are employed in the United States participate in some sort of retirement savings plan – whether that is a pension, a 401(k) or an Individual Retirement Account (IRA).  Congress has been clear in exempting almost all retirement accounts from administration by bankruptcy trustees.  So as a general rule, if you are thinking about the possibility of filing a bankruptcy case you do not have to worry about losing your retirement savings – 401(k)’s and pensions are not part of an individual’s bankruptcy estate and IRA’s are exempt up to more than one million dollars.  So it seems pretty clear that Congress, in passing bankruptcy laws, intended to protect people’s retirement savings from their creditors.

If you are saddled with debt, you are already stressed out beyond belief. You may also be embarrassed by your situation. At Kain & Scott, we tell you why you should never feel embarrassed about having debt and why there is definitely hope. We have helped people from all walks of life get rid of a debt problem permanently. No one likes to have debt. It sucks. But if you are suffering from a debt problem you do not have to suffer alone.