When And Why Minnesotans File Bankruptcy

We have been practicing Bankruptcy Law at Kain & Scott since 1972. Our Lawyers have helped thousands of Minnesotans get their lives back and not a single one of these cases was identical to another. Everyone’s case is different because everyone is different. However, we have seen nearly everything under the sun and yet, the reasons why Minnesotan’s file bankruptcy can be reduced to 5 general categories.

I can assure you I have never had a single Minnesotan call me and say Wes, I really incurred all of this debt knowing I would file bankruptcy in the end. Or, you know Wes, I spent 12 months in Europe, with my friends, using my plastic on all of our expenses, knowing when I got back to Minnesota I would file bankruptcy. So, why do Minnesotans file for bankruptcy? Here we go!

1) BUSINESS FAILURE:

According to Bill Carmody with Inc., 96% of all businesses fail in the first 10 years. That is a staggering number when you think about it. Over 9 out of 10 start ups will fail. Holy guacamole right?

Who would start a business if you could not pull the rip cord and file bankruptcy if it does not work out? If you started a business, and it failed, you would be in a virtual debtor prison for life, without the help of the bankruptcy code.

Part of the policy behind the bankruptcy code is we want people trying to start businesses because that is good for the economy. Businesses employ people who earn money and then use that money to purchase goods that are manufactured by another company who employs people etc.

The flip side, is when the business is not successful, there is a way out. That way out is contained in the bankruptcy code.

2) INCOME DROP:

Have you ever heard of companies laying people off? What about a pay freeze? What about a company eliminating over time? What about a plant closing? Of course- we have all heard of these right? If you are working in a factory and you were there for 20 years and you were up to $24.00 per hour, do you expect your job will not be there again on Monday morning? If you are like me- you would expect your job to still be there Monday. But, what happens if on Monday you are told the plant is closing in 1 week?

You would feel betrayed and a complete sense of shock. After that you would wonder how it is you will pay your bills. You started this job after high school, you have no other training or degrees, and given your age, it would be hard to start over again. You based your budget- your life- on $24.00 an hour and now it’s gone. If you replace this job with a job making $12.00 an hour, do you think you can still pay your bills? Probably not.

3) DIVORCE/RELATIONSHIP BREAKUP:

I have never met a single person who dreamed of getting married so they could go through an ugly, costly divorce. The dream is to live happily ever after right?

The nightmare is when that does not happen. Besides income drop, you likely will have attorney fees, credit card debt, and other debt relating to the divorce. When you go through something as emotionally devastating as a divorce do you really care if the credit card payment is not made on time? Most of my guests don’t give a rat’s ass about the credit card bill- they are worried about other, way more important issues.

After all is said and done, the after math of the divorce/relationship break up must be dealt with. The after math is usually a mountain of debt. To move on with your life you will first need to deal with the pile of debt.

Divorce and relationship break up are a huge trigger for filing bankruptcy. When the carnage is done, and the emotional scars have been healed, the remaining debt will have to be conquered.

4) MEDICAL PROBLEMS:

How many Minnesotans wish to have a heart attack, cancer, or sustain an injury of any kind? None! And yet, we are human beings whose bodies fail us from time to time. It’s not like when it happens you are living a dream right? Not even close to that. So much of the time one problem triggers another problem- it’s like a domino effect.

If you have a medical problems, of course with most crappy plans these days, you will flip more than your share of the cost, and in addition to the medial bills that result, you will likely be off work and lose income to boot. How many of us can be off work for more than a week before going, uh oh- this is going to be a big, BIG problem? Most Minnesotans are living paycheck to paycheck. Losing one pay check is bad enough, but if you are unfortunate enough to be out longer, we are in the “devastation” category.

Having medical problems is not embarrassing, it’s human. Therefore, sustaining overwhelming medical bills is human, not embarrassing.

5) BAD FINANCIAL DECISIONS:

How many adult Minnesotans has made a bad financial decision? The answer is every single one of us and for those of you who claim to have made none you are in denial.

Have you ever seen the commercial where the person drives the car into the garage door or chops a tree branch off and it falls on the car? We are humans, we sometimes do dumb things- so what!

I once seen a young couple purchase a 70k truck and claim they needed the truck to pull their 14 ft 2k fishing boat! No kidding! Folks, I have news for you, you definitely do not need a 70k truck to pull a 14 foot boat and even if you did, so what? Get rid of the boat and you could get rid of the truck and its ridiculous truck payment.

Most of us humans, if we are honest with ourselves, buy things based on emotion, and later admit maybe that was not such a good idea. Or, maybe you thought it would be a dream to own a pizza restaurant. Turns out selling pizza’s for $7.99 a pie takes a shit load of pies to cover just your expenses.

You find out that the dream quickly turns into a nightmare. So what! You tried it, you stuck your neck out, and it didn’t work- so what! You should be giving yourself credit for taking the risk.

We have all gone astray, financially speaking, at one point or another. It just seemed like a really good idea at the time! DAMN!

CONCLUSION