Are you suffering from an overwhelming debt problem? If so, at Kain & Scott, we are sorry you are going through this. Living with overwhelming debt is painful, embarrassing, and unstable. Every day you wonder who is going to come out of the woodwork and call you and harass you and your family. It’s a terrifying way to live. However, life is very humbling, and overwhelming debt can happen to anyone in Minnesota from any walk of life. I don’t care if you are a doctor, lawyer, bill collector, credit counselor, or a teacher. So, what are the ways to get rid of the debt? Essentially, there are four and here they are...

Wouldn’t it be nice to understand the simple differences between a Chapter 7 and Chapter 13 bankruptcy? Like, give it to me in plain English so I can actually understand my choices, right? So many lawyers talk in legalisms that are hard for most of us to understand. So here are the basic differences in simple terms...

Many individuals are worried about the potential damage that can be done to their credit score after bankruptcy. Don’t get overwhelmed; in fact, you can rest assured knowing that filing for bankruptcy is an initial step in the right direction for rebuilding your score. While you should be responsible with what you are spending post-bankruptcy, don’t be afraid to start using credit again. Responsibly using credit cards is a great way to get back on track, and begin building up your credit. Know your limits, and start small.

What happens to your credit after you file Chapter 7 bankruptcy is not what you think. Most of our guests are completely shocked to find out that Chapter 7 bankruptcy does not have the negative repercussions on your credit you think. We know, there is a stigma associated with filing bankruptcy. Have you ever wondered why or who really benefits if there is a stigma associated with filing bankruptcy?

Answering the question, “When should I file for bankruptcy” is a difficult thing to do when you are immersed in the overwhelming stress caused by debt. Worrying about how you will pay your bills and take care of your family, while dealing with aggressive debt collectors and threatening lawsuits, can quickly take its toll. This is precisely when you should meet with an experienced bankruptcy attorney. Doing so before things get out of hand and you are tempted to do something drastic will payoff in the long run.

When I meet with clients who are facing financial difficulty, I tell them that the first thing we have to decide is if they need to do something to resolve their debt issues, other than just using the same debt reduction strategies that they’ve been using up until the time we met. For the vast majority of the people I meet with, the answer to that question is yes - the reason they are in my office is that they don’t see a good financial outcome by maintaining the status quo.

Last week I wrote about the Requirements to File a Chapter 7 Bankruptcy Case. I wrote who (or what) can file chapter 7 case, the means testing requirement involved in chapter 7 cases, and the requirement that a chapter 7 debtor have a credit counseling briefing prior to filing a chapter 7 case. This week, I will look at the question that, while it does not come up often, can be quite important in the few cases where it is an issue: the venue of the bankruptcy case. Then I will write about what a chapter 7 debtor has to do to obtain a discharge.

The clients with whom I meet to discuss filing bankruptcy come in all ages, and genders. Some of my clients are very low-income wage earners; others have fairly high salaries. But my clients have one thing in common: they haven’t had very much good luck financially. For many of these people, filing a bankruptcy case, whether under chapter 7 or chapter 13, is the best option they have to resolve their financial issues. For a small percentage of these people who file bankruptcy cases, the years of bad luck that they experienced prior to filing is changed suddenly when they learn that they will inherit money or property from a deceased loved-one’s estate.

When a Minnesota resident is looking into Bankruptcy, you have a wide variety of choices amongst lawyers and bankruptcy preparer vendors. The spectrum of services provided range dramatically. Remember only Lawyers can dispense legal advice. So calling the paralegal service on a park bench is probably not the best move. They cannot give you ANY legal advice. Why? They are not lawyers. If they do give you legal advice without a law license, they are committing a crime- the unauthorized practice of law.

If you’re under water on a second mortgage, you may be in luck. Chapter 13 Bankruptcy provides two options for solving this issue. Those two options are referred to as lien strip and cramdown. Both options can be advantageous to the property owner who has real estate valued at less than the amount owed on a first mortgage. These options are provided for under the law to promote property ownership while protecting individuals from overwhelming debt. Depending on your situation, one option may be more beneficial than the other. Ultimately, the question comes down to whether or not the property is your homestead.

When you make the decision to file for bankruptcy in Minnesota, you are making the decision to erase your debts and change your life for good. But knowing which type of bankruptcy to file – Chapter 7 or Chapter 13 – can be confusing. Each type has the power to erase your debts and which is right for you is determined by your unique financial situation.

You’ve taken a major step in regaining your financial freedom by filing Chapter 7 Bankruptcy. Congratulations on being well on your way to becoming free from debt!