In my last two blogs I’ve written about a common problem with chapter 13: a client’s financial situation has changed during the time the chapter 13 case is pending, and making a monthly chapter 13 payment to the trustee, which once was affordable, is no longer affordable.

In this blog, I’ll write about the options that chapter 13 debtors have when a chapter 13 case no longer “works.” I’ll write about short-term solutions first.

In many ways, federal and state laws outside bankruptcy are very pro-creditor. For example, a moneylender in Minnesota may begin the auto repossession process after just one late payment. Most creditors will try to work something out with the borrower before they resort to repossession. But, there are no guarantees. The same thing applies to late mortgage or rent payments.

In these situations, Minneapolis families basically have two options. First, they can hope that the moneylender shows some degree of patience and mercy. Second, they can take control of their finances and begin the Chapter 13 bankruptcy process in Minnesota.

Some clients at Kain & Scott run into problems making their chapter 13 plan payments because of a short-term, temporary financial problem.  For people in a temporary bind, the difficulty in making a chapter 13 payment doesn’t have to spell doom for the chapter 13 case.  Last week I wrote about fixes for short-term problems - catching up on back payments or agreeing to enter into a cure order - to catch up on chapter 13 payments and continue down the financial road to an eventual chapter 13 discharge of debt.

What are the main differences between a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy?  Sometimes, it helps to peel the onion back, layer by layer, and go back to the basics. What are the primary differences between a Chapter 7 and Chapter 13 Bankruptcy? We will leave the question of which one you should file for a different day.

Supreme Court Justice James Clark McReynolds was one of the first Justices to set out the purpose of bankruptcy laws. In 1915, he wrote that bankruptcy is designed to “relieve the honest debtor from the weight of oppressive indebtedness and permit him to start afresh free from obligations and responsibilities consequent upon business misfortunes.” So, most Minnesota bankruptcy debtors are entitled to debt relief.

The nature of this fresh start largely depends on the type of bankruptcy the debtor files. It also depends on a concept called reaffirmation, especially in certain kinds of bankruptcy.

Most Minnesota families live hand to mouth. Almost half of the households in America cannot cover a $400 emergency expense. Most secured debt payments, like rent, mortgage, or auto loans, are three or four times that amount. In other words, just one missed installment can mean a world of hurt. Most people lack the means to make catchup payments.

Most moneylenders begin adverse action, including the dreaded acceleration notice, after just two or three missed payments. An acceleration notice demands the entire loan balance immediately; the lender will no longer accept partial payments. In situations like this, a federally-guaranteed debt repayment plan is probably your best option. Almost everything you need to know about a Chapter 13 bankruptcy is described below.

As a Bankruptcy Attorney in Maple Grove, I hear it all the time- I want to file a Chapter 7 Bankruptcy, not anything else. Chapter 7 Bankruptcy, referred to as a “liquidation bankruptcy” or a “fresh start bankruptcy” is a four-month process where at the end of the process most unsecured debt is discharged, wiped out, tax free! Of course, there are many clients who do fit squarely within the parameters of a chapter 7.

Last week I wrote about why being able to file a chapter 13 bankruptcy case quickly is advantageous to debtors. Chapter 13 is often the “emergency” bankruptcy - in many cases that end up being filed as chapter 13s, a mortgage foreclosure is days away, or the repossession agent has been out looking for a client’s car to repossess.  Or in some cases, the repossession has already taken place and the owner has a short period of time in which to redeem the vehicle prior to the vehicle being sold at an auction.  So there are numerous situations in which time matters, and the time is short.  Being able to file quickly is an advantage - and at Kain & Scott we can file a case quickly and professionally.  So the question is, what is there about the Kain & Scott law firm that enables the firm to file a case quickly?

I am amazed at the number of Americans that don’t know the government actually has a government sponsored debt consolidation plan for you! It’s called a Chapter 13 Bankruptcy and it is amazing! The number of benefits of being in a government sponsored debt consolidation plan cannot be understated.

If you’re one of the thousands of Minnesota residents who is considering filing for either Chapter 7 or Chapter 13 bankruptcy, follow these simple tips to help you get the most out of your Minnesota bankruptcy.

You have had a good paying job and also using your credit cards for purchases like any other person would when the unthinkable happens: you either lose your job or for some reason your income decreases.  The dam is about to break and there is no relief in sight because you now have these credit card bills that you previously had been able to pay and had every intent to pay back.  Bankruptcy seems like the best option to get your life back, but you have heard that your creditors will cry “FRAUD!” because you have been using your credit cards recently and you fear you need to wait 90 days before you can file bankruptcy.  Your worry is that you simply cannot wait any longer.  You do not want to be accused of fraud, but you also do not think you can wait 90 days before filing for bankruptcy.  You need relief sooner rather than later.  What can you do?  What SHOULD you do?

Don’t have any idea how bankruptcy works or what it can do for you? You’re not alone – many of our clients tell us during their free initial consultation that all they know about bankruptcy is that it is a way to get rid of debt, but are unsure how bankruptcy works and how it will affect their lives.

Last week, I wrote about the nuts and bolts of bankruptcy - how bankruptcy “works.” In doing so, I concentrated on the paperwork any bankruptcy debtor has to file with the court: the bankruptcy petition, schedules and statements.  And I wrote about those documents through the lens of the two goals of bankruptcy: to treat a debtor’s creditors fairly, and to allow the debtor to live with dignity.  This week, I want to take a deeper look at how bankruptcy law attempts to satisfy those two goals.

I am a fairly private person.  I think it is natural for people to want to keep certain pieces of their lives private and this includes their financial affairs, whether they are having financial problems or not.  However, when people are having financial issues, they are probably a little more concerned with keeping it private.  It is a humbling thing to go through and people tend to not want to advertise it.  It is tough to be vulnerable and it is tough for us, as humans, to admit we are going through tough times.  I understand that.  It is interesting the stigma that is put on individuals who may be feeling some financial stress, yet look at the companies and banks that have been bailed out by the government.  I highly doubt those entities are losing sleep over being given a second chance; at being able to access a tool to help them out of their financial troubles.  You should not lose sleep over being given a second chance either.  But I know that before someone files bankruptcy, sometimes they are concerned with people finding out about their second chance.