Chapter 7 Bankruptcybegins once an individual seeking debt relief files a petition with the Bankruptcy Court. Here in Minnesota all of our counties are divided up and assigned to a small number of divisional offices. For example, anyone residing within Hennepin County would file their Bankruptcy Petition with the Minneapolis office. There are also several other pieces of required information which will need to be submitted and reviewed in order for your bankruptcy to be approved and your debts discharged

When you are digging into what a Chapter 7 Bankruptcy Trustee in Minnesota looks like, have you ever wondered who this person is and what on earth do they do? I am a veteran MN Bankruptcy Attorney and when I first started out many years ago, I wondered myself what the Chapter 7 Trustee does. If you file a Chapter 7 Bankruptcy in Maple Grove, Minnesota, or anywhere else in Minnesota the United States Trustee’s Office will assign a Chapter 7 Trustee to your Bankruptcy Case.

I bet most of my readers did not know that there is a government sponsored debt consolidation plan. In fact, when I meet with Minnesotans from all walks of life they are surprised to learn that there really is a government sponsored debt consolidation plan. Not only does it exist, it has been around for decades. Why then do most people not know it exists? In a nutshell, because people do not look any further if it involves the “b” word. I wish the government would not call this debt consolidation plan a chapter 13 bankruptcy. I wish they would instead call it what it is, a government sponsored debt consolidation plan. I first want to walk you through the nuts and bolts of a chapter 13 bankruptcy and how it works and then I want to walk you through a real “live” (as my 4 year old son used to say) example of a chapter 13 bankruptcy at work.

My last two blogs, Help For Small Business in Financial Trouble & Help For Small Business in Financial Trouble - Part 2, have dealt with the decision as to whether to close a business that is no longer performing financially as the owner hoped. 

Last week in my blog Help For Business In Financial Trouble - Part 1, I wrote about the decision many small business owners face: in light of the financial difficulties the business is facing, should the business close down? The decision is usually very personally painful for a person who has worked long and hard to own and operate a business. The feelings can be compounded when the reasons for business failure have to do with outside market forces more than the business decisions made by the owner. Imagine the hard-working video store owner from 1996 - today it’s very likely that the video store is no longer in business, regardless of whether the owner was a smart, capable businessman.

Last week I started talking about little “surprises” that can happen after someone files a bankruptcy case. At the end of last week’s blog, I started discussing the issues that arise after (and sometimes significantly after) a person has received a bankruptcy discharge when someone who filed a bankruptcy attempts to refinance a mortgage that was in existence at the time the bankruptcy case was filed. Often, the mortgage company will continue to report the mortgage as “in bankruptcy” long after the bankruptcy case is done and over. Some, not all, mortgage companies do this - although the companies that do report mortgages as “in bankruptcy” are often the large, nation-wide mortgage issuers.

For the past two weeks, I’ve written about the issue of timing in bankruptcy cases. Two weeks ago I looked at timing from the perspective of collection by creditors in my blog, How our Minneapolis Bankruptcy Lawyers Know When You Should File. Last week, I looked at timing as a function of the Bankruptcy Code, and talked specifically about timing the filing of a chapter 7 case. This week I want to discuss timing issues with chapter 13 cases.

Last week I discussed the timing of the filing of a Chapter 13 Bankruptcy case specifically in relation to mortgage defaults and foreclosure. Chapter 13 Bankruptcy is commonly filed by people with debt problems who are facing defaults in secured loans, such as home mortgage loans. The most common secured loan, though is a vehicle loan. Because of the retail price of both new and used cars, many if not most consumers have to finance the purchase of a vehicle.

Chapter 7 Bankruptcy is also commonly referred to as the “fresh start” bankruptcy. Chapter 7 is the most commonly filed consumer Bankruptcy in Minnesota for several good reasons. Immediately after you file a Chapter 7 you’re protected from any creditors trying to take property that secures a debt. Creditors are prohibited from obtaining a judgment for unsecured debt that can be turned into a lien against your property. You also get the option to keep any property that secures a debt or give it up to your creditor without having to pay them. Chapter 7 Bankruptcy can really give you some comforting power over your creditors. Here’s how:

How many of us lawyers meet with clients and yet miss issues the client could pursue to their benefit? I suspect the answer is a lot of us. Don’t be too hard on yourself since it’s impossible to know everything right? Most of us limit our areas of practice to a few and focus on those areas. When clients ask our MN Bankruptcy Lawyers and I about other areas of law we get jittery and tell them that we don’t practice in that area and they should see a lawyer who specializes in it. At Kain & Scott every Lawyer has a referral directory that we use to refer clients to any other area of law besides consumer bankruptcy work. Minnesota Bankruptcy work is all we do.

Let’s face it, not every client you meet with has 10k to put down toward legal fees. Some clients require the use of a payment plan to pay attorney fees incurred in a divorce. But, what happens if your client files a bankruptcy during or after the divorce, and meanwhile, the client has incurred a hefty bill for your services?

It happens all the time. We receive phone calls from anxious Minnesotans looking at their bills and wondering how in the world am I going to pay these? I am continually amazed at how long good people can hang onto a seemingly hopeless financial situation. It is not that uncommon to see people do it for years, decades even.

When it comes to debt, human nature has a common thread that runs through all of us: we want to pay it. We want to pay all of our monthly bills and yet still have enough left over to eat, keep the lights on, and make the rent/mortgage payment to keep the roof over our heads. Most of us don’t want much beyond this.

Article I, section 8, clause 4 of the United States Constitution states that . . . ”The Congress shall have the power to establish . . . uniform laws on the subject of bankruptcies throughout the United States . . . ” And so it is that the framers of the Constitution envisioned that the people of the United States would have the right to File Bankruptcy in the United States and that Congress will have the power to establish uniform bankruptcy laws throughout the United States. When you hear of individuals having a Constitutional right to file a bankruptcy, that is a bit of a misnomer. Technically, the US Constitution gives the Congress the power to give you the right it does not give you the right to file bankruptcy directly in the Constitution.

At Kain & Scott, we get the question all the time, "What happens to my credit score if i file bankruptcy?" It is a question that concerns every Minnesota debtor facing bankruptcy and wondering what the bankruptcy aftermath looks like. I am high anxiety so I would be asking the same question too. Fortunately, what makes up your credit score and how bankruptcy affects it is a lot better than you would think.

Are you struggling with debts that you cannot pay? Are creditors calling you at home and at work? Have you received threatening letters, been served with a debt collection lawsuit, or are facing a foreclosure or repossession? You may have considered filing bankruptcy to resolve your debt problem but are unsure if a bankruptcy is the best way to get rid of your debt. You may have heard that you will lose all of your property if you file bankruptcy or that you will never qualify for credit if you file bankruptcy.

Are you having trouble paying your bills? Are creditors calling your workplace or calling family members for information? Have you been served with a foreclosure complaint or a debt collection lawsuit? If so, you may need to file bankruptcy to get rid of your debt. People file bankruptcy for several reasons — unemployment, medical bills, divorce, loss of a spouse, and business failure.