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.

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.

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.

For decades Chapter 13 Bankruptcy has been developing a negative stigma. The critical view is that it’s the result of ignorance and irresponsibility. But why? The stereotypes and negative stigma that it evokes are false and unfair. At Kain & Scott the Bankruptcy Attorneys in Roseville, with over 47+ years of experience know better. The reality about people who file Chapter 13 Bankruptcy is quite the contrary and always has been. Chapter 13 was designed and sponsored by our government as a way for responsible people, aware of their debt problems, to resolve their debt and get their life back. There’s no question that Choosing Chapter 13 Bankruptcy is a great option, for any debtor, for three main reasons.

When you make the decision to file bankruptcy, your next thought is likely to be how long does bankruptcy take. Your attorney understands that you have been under a great deal of stress as you have tried to handle your debt problem on your own. The frustration, fear, and anxiety of dealing with angry creditors, abusive debt collectors, and the thought of losing your home, car, and other property causes emotional and physical stress; therefore, you want to know how long bankruptcy takes and how quickly can you get on with your life.

When you file a bankruptcy under Chapter 13, a Chapter 13 trustee will be assigned to your case. Most people refer to this person simply as their “trustee” or “Chapter 13 trustee” but the exact title given to this person by the United States Trustee’s office is the “Chapter 13 Standing Trustee for the District of Minnesota.” There are two Chapter 13 trustees that serve in Minnesota. Each trustee is assigned a specific jurisdiction.

Bankruptcy is and has always been intended as a way for people who are struggling with debt to resolve their debt problems and receive the relief they need to rebuild their lives. In order to help people and businesses overcome debt problems, Congress enacted bankruptcy laws to provide a legal means of handling debt. It divided bankruptcies into six different chapters. Each bankruptcy chapter has its own set of requirements for eligibility as well as its own advantages and disadvantages for the debtors. Knowing what chapter of Minnesota bankruptcies to file is something that an experienced bankruptcy attorney can help you determine based upon your unique financial situation and your long-term financial goals.

In today’s world, it is very common to be asked to provide a co-signer when seeking a loan, apartment, or other form of credit from a bank or company. It is their way of assuring themselves that they will get paid. You may think that they require this because they don’t trust people to make their payments, but in reality, they too know that bad things can happen to good people. Things in life may happen that are not under control of the debtor such as unemployment, divorce, death of a spouse or a prolonged illness. When these events happen, the duties of a co-signer may become a reality.

Getting out of debt is a top priority for many Americans today. Debt is a huge problem in our country and is causing many people to struggle financially. Debtors depend on a number of different solutions to help them get out of debt; some rely on the bankruptcy court while others are able to make changes to their budgets, get second jobs or refinance their debts.

Some people may believe that they are eligible for bankruptcy regardless of their current financial status — they are partially correct. Others believe that the changes in bankruptcy law that came with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 made it impossible for most people to find debt relief through bankruptcy — they, on the other hand, are completely wrong. While changes in the bankruptcy laws did restrict some of the eligibility requirements, it did not remove the right of any individuals to seek relief from creditors through the protections offered in bankruptcy.

The Eligibility Confusion

The confusion can be summed up in two words: media and creditors. Creditors, with the help of media outlets, did a fantastic job of convincing most Americans that if they did not file bankruptcy before October 2005 when the new bankruptcy laws took effect, they would not be able to file bankruptcy (or that filing bankruptcy would be much more difficult).

While it is true that the new bankruptcy laws did contain some significant changes, experienced bankruptcy attorneys had already learned the new rules and laws and were ready to continue helping debtors find debt relief through bankruptcy.

If you are drowning in debt, you are not alone. Millions of Americans across the country are suffering from debt problems due to loss of jobs, medical bills or the loss of a spouse. Life is fluid and we never know what to expect around the next corner.

Yes, you can file your own bankruptcy case; however, you probably will not get the results you want as efficiently as is possible. Filing a bankruptcy case can be a very complex matter, especially if it is a Chapter 13 case. In addition to filing the bankruptcy petition, schedules and statements that are required in all bankruptcy cases, you must also create and propose a repayment plan. Repayment plans are complex and require more than simple math to calculate. The benefits of having a Chapter 13 attorney far outweigh the costs you think you might save by trying it alone.