We get this phone call often. The person on the other end of the call is a former client of LifeBack Law Firm. The client has a vehicle loan for 10k and the vehicle is now a pile of junk. Yes, it is unusual for a bank not to want their collateral back, unless the collateral is junk.

Filing for chapter 7 bankruptcy is a great way for individuals struggling with debt to find financial relief. When filing bankruptcy, anyone who earns less than the median Minnesota State income, based on their household size, can file a chapter 7 bankruptcy case. When they do so, the court discharges their personal liability on all of their debts, with a few exceptions (i.e. past due child support, most taxes, criminal fines, etc.)

At LifeBack Law we file both chapter 7 and chapter 13 bankruptcy cases. A chapter 7 is referred to as a liquidation bankruptcy, where as a chapter 13 bankruptcy is a restructuring of your debt.

The timing of your bankruptcy discharge will depend on which chapter you file. With a chapter 7 bankruptcy you will receive your discharge roughly 90 days after filing. For a chapter 13 your discharge date will be three to five years after your case was filed. 

Welcome back to our series of blog posts on the history and philosophy of the economy, bankruptcy, and debt – today we continue to discuss public benefits, specifically social security and other 20^th century public benefits. 

If you are looking at filing bankruptcy in Minneapolis, Minnesota, you may be wondering what steps you have to take and what you need to file. Every case is different, therefore the below is a general guideline and idea. 

Not all debts in a bankruptcy are dischargeable. 11 U.S.C. § 523 of the Bankruptcy Code provides exceptions to the dischargeability of some debts. This blog will address the nondischargeability of debts encompassed by Section 523(a)(6). 

Over my last posts, we discussed the bankruptcy regimes in the United States up to the Chandler Act of 1938. It is worth taking a moment to plot the policy concerns over those periods.

Filing for Chapter 7 bankruptcy offers a financial fresh start for individuals burdened by overwhelming unsecured debt. It’s a legal process designed to eliminate most debts, providing much-needed relief. However, the road to bankruptcy can be fraught with potential pitfalls, particularly when it comes to managing your finances in the lead-up to filing. A crucial aspect to consider is the repayment of debts owed to friends and family members. While the intent may be noble, such actions could have unintended negative consequences for both you and your loved ones, including delaying or even preventing your bankruptcy discharge. Before you file bankruptcy, it's important to understand the implications of paying back family members, as it could affect the fairness to all creditors and the overall bankruptcy process.

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Not everyone is eligible to file a chapter 7 bankruptcy. There are income requirements to filing a chapter 7 and those individuals that do not meet the income requirements, will not be able to file a chapter 7 bankruptcy. But, even those that do meet the eligibility requirements to file a chapter 7, may find the outcome of filing a chapter 7 disagreeable. While chapter 7 filings are effective vehicles for discharging unsecured debt and they are short in duration, there are times when even those eligible for a chapter 7 bankruptcy may choose to file a chapter 13 instead.

When a person files a chapter 7 bankruptcy case, they often have secured debts. These types of debts are secured to certain property, known as “collateral,” which can be taken to satisfy the debt if the debt is not repaid by the borrower.  Home mortgages and car loans are examples of secured debts as the lender retains a “lien” on the home or car (the collateral) and can foreclose on the home, or repossess the car, if the borrower defaults on their monthly payments on the debt. 

A Chapter 7 bankruptcy works as a quick reset button – all of your unsecured debt will be wiped out in approximately 3-4 months, from the date your case is filed. Unsecured debt includes credit card debt, medical bill debt, and personal loans. This sounds exciting, as it certainly provides you with a fresh new start. Instead of paying your credit card bills, you can simply wipe out the remaining debt you have. You can obtain a new credit card after you receive your bankruptcy discharge, and rebuild your credit score by using the credit card and paying it off every month. 

 We file two different kinds of bankruptcy cases at LifeBack Law, both Chapter 7 and Chapter 13. How long each will take and a timeline of what happens in each differs. Below we will go through both.

The trustee is another attorney who is assigned to your case by the US Trustee to represent the bankruptcy estate. The trustee is the person who administers your estate and distributes any funds that come in during your case. They also make sure what you said in your bankruptcy case is truthful and correct and verify the information you provided. You will meet with the bankruptcy trustee at the 341 hearing, usually about 4 to 6 weeks after your case is filed.

   If you find yourself knee deep in debt, you are not alone. Each, year, thousands and thousands of Minnesotans just like you and I end up with overwhelming debt and the need to file Chapter 7 Bankruptcy. Hitting the reset button on your financial life is not as hard as you think. Once you wrap your mind around the “b” word, the actual process of filing Chapter 7 Bankruptcy is no so difficult to tolerate.

Here is what CAN occur in a Chapter 7 Bankruptcy:

 Job loss is a common reason that people file for bankruptcy. In many cases, when an individual loses their job, they are entitled to certain benefits to help them while they seek new employment. While these types of unemployment benefits are generally “exempt,” meaning legally protected from creditors, there are some exceptions and nuances in the law. Debtors filing for bankruptcy in Minnesota may choose between Federal exemptions and State exemptions to exempt, and protect, their property.