I know- you read this headline and go what? What do you mean don’t worry about my credit after filing bankruptcy? This is what prevents me from filing to begin with. I completely understand the concern our guests have with how will bankruptcy impact my credit life after bankruptcy. There are a lot of myths out there. This notion that you can’t get credit after bankruptcy is just that- a complete myth.

Let me tell you the story of a former client of mine. She lived in Eden Prairie, Minnesota. I will call her Eve Padonk. Eve was an office worker at a local high school. She is a very nice person with a story to tell.

Last week, I wrote about how bankruptcy cases interact with home mortgage and car loans in chapter 7 cases. The general rule is simple: as long as individuals in bankruptcy cases make their house and car payments on time, those individuals should be able to “keep” their homes and cars. The reason for this is that the equity in residential real estate and motor vehicles is almost always exempt under either the Bankruptcy Code or the Minnesota state law that deals with debtors and creditors. But while that general rule is true, individuals who are thinking about filing a bankruptcy case need to know that there are issues that these individuals should be aware of as they make a decision - first, whether to file a bankruptcy case and second, if they intend to keep their homes and/or their cars after their bankruptcy case.

At first a lot of people want to try and figure out how to file a bankruptcy themselves. However, after getting started they find that it is a lot more complicated and difficult than they had anticipated. Just like anything: if you don’t know what you’re doing it’s not going to go as smooth as it would with the use of a professional. The bankruptcy petition is extremely long, you need to attend a 341 meeting, possibly negotiate payments with a trustee and take credit counseling courses. Besides, making a mistake could potentially jeopardize your assets and financial future. That is why even though it might sound like a good idea at first, most people decide to hire an experienced Bankruptcy Attorney to help them through the process and ensure the best possible outcome. In the end they realize it’s worth the money and a much better deal than losing assets or paying the debt that an experienced lawyer will know how to get you discharged.

A common question your Eden Prairie MN Bankruptcy Law Firm is asked all the time is do I have to have a minimum amount of debt in order to qualify to file a bankruptcy in Minnesota? The phrase it’s all relative is quite appropriate in answering this question. To a millionaire, 10k is pocket change. To a person making $8.00 per hour, 10k might as well be a million dollars. If I had to guess what the average size of a person’s debt is who comes in to see us a bout possibly filing a bankruptcy case, I would guess it averages roughly $20,000.00. That doesn’t seem like a lot of money if you are making 100k per year but again consider what 20k worth of debt looks like if you pay check every two weeks is only $512.00!?

Everybody asks our Bankruptcy Attorneys in Eden Prairie MN what they get to keep and what they have to lose after they file bankruptcy. However 98% of all bankruptcies that are filed are called no-asset cases, meaning that you will get to keep everything that you own. This is because most everything these days is exempt by an attachment from a creditor- contrary to back in the mid to early 1800’s before bankruptcy started. Prior to the formation of bankruptcy in the 1870’s if you owed someone a lot of money they would take you to court, get a writ of attachment, come to your home in Eden Prairie and literally take everything you own. The problem with this is that those people who lost everything would become a burden on the state; the government would have to support them. Well the government didn’t want to do that anymore so they created a list of things that are exempt from attachment. Meaning the creditors can’t get them or have them liquidated to pay your debt. We still have this list today.