Bankruptcy Attorneys in Minneapolis & St. Paul
Deciding if you need to file bankruptcy is complicated. Consulting with an attorney at Walker & Walker Law can help you determine if bankruptcy is right for you as well as which type of bankruptcy would be best.
What Bankruptcy Can Do For You
Bankruptcy is a federal court process designed for people caught in severe financial crisis. The process helps you repay or dismiss your debts under the protection of the bankruptcy court. It allows you to start rebuilding your life and your credit without the harassment of debt collectors.
Numerous circumstances may make it necessary to file for bankruptcy:
- Attempts to control your spending are unsuccessful, even after counseling.
- Attempts to work with creditors on debt repayment plans have not worked.
- Your current income is insufficient to meet debt obligations.
- Debt-to-income ratio is 40-50% or more
- Excessive debt from too much credit
- Loss of employment
- Loss of income due to injury
Once your bankruptcy petition is filed, an immediate, temporary “automatic stay” is initiated, protecting you from any debt collection actions, eviction, disconnection of utilities, foreclosure, car repo, or wage garnishments. It will likewise stop the harassment. A creditor can no longer act without special permission from the bankruptcy court.
There are several steps involved in filing for bankruptcy—you can easily get lost in the quagmire of paperwork and timelines, causing the dismissal of your case. The Bankruptcy Law Specialists at the Walker & Walker Law Firm will ensure that this does not happen to you.
Types of Bankruptcy
Chapter 7 is liquidation- all non-exempt assets are converted to cash (liquidated), and secured creditors may have the item they financed returned (such as a house or car) unless the debtor reaffirms the debt with the court’s approval before obtaining a discharge.
Chapter 13 is a “reorganization” option for people with regular income and debts that are less than the allowed limits. You keep your assets, pay your creditors, and potentially discharge some debts.
In either of these scenarios, hiring an attorney who knows how to navigate the bankruptcy laws is highly recommended. The Bankruptcy Specialists at the Walker & Walker Law Firm have many years of combined experience handling these types of cases.
Discharge Debt Limitations: Chapter 7
Chapter 7 bankruptcy eliminates most debts but also requires immediate liquidation of some assets.
- You can keep the following assets :
- Your homestead/Land
- An inexpensive car- Minnesota bankruptcy laws increase the car exemption to $46,000 if a vehicle has been modified to accommodate a disability
- Your retirement accounts
- 1 Whole life insurance policy
- Your personal effects, furniture, and so on.
Chapter 7 Non-Exempt property subject to liquidation:
- Equity in a house over $420,000
- Luxury items, i.e., jewelry other than wedding rings, luxury vehicles, boats, jet skis, etc.
- A vacation house such as a cabin or time-share
Your attorney will help you determine which exemptions are best for your situation. These exemptions place some property outside the reach of your creditors.
These would include such things as:
- Essential personal property, such as furniture, appliances, and clothing
- Cash value of your insurance policies
- Home equity—this may be capped at a specific dollar limit.
- Most of your earned but unpaid wages are protected. (Must pass a “Means Test”)
- Motor vehicles
- Payments from Social Security, Welfare, and Unemployment insurance are fully protected.
- Retirement plans and pensions that qualify under the Employee Retirement Income Security Act are fully protected.
- Tools of your trade (up to a specific dollar limit)
- Your homestead (Note: If you are behind on your mortgage, a Chapter 7 bankruptcy will not help you keep your home)
Discharge Debt Limitations: Chapter 13
Rather than liquidate your assets, Chapter 13 reorganizes your debt. When you file under Chapter 13, a repayment schedule is set up for you to pay off your debt, usually within 3-5 years. Additionally, you agree to pay about 25% of your income to the court. A bankruptcy trustee will supervise the plan, manage your money, and distribute it to the debtors in the plan.
Benefits of Chapter 13
There are several advantages choosing Chapter 13 over Chapter 7, reasons that include:
- It allows you to make up missed payments, reinstate the original agreement, and keep your home or car
- It looks better on your credit
- You are not currently eligible for a Chapter 7 discharge
- You do not lose your assets
- You have a co-signer on a loan
- You would like to reserve the option of filing Chapter 7 later
- You need the bankruptcy court’s protection to pay off your debt without harassment
To submit your bankruptcy petition properly, you will need to provide information such as:
- Details of monthly living expenses
- List all creditors and the amounts you owe
- List of property
- Sources of your income
The following obligations cannot be discharged through bankruptcy
- Back child support
- Creditors you may have defrauded (purchasing luxury items, vacations, etc. with intend to file bankruptcy)
- Debts ordered under a divorce decree or settlement
- Fines imposed for violating the law
- Income taxes
- Recent income tax debt
- Student loans (unless repayment will cause a hardship)
Contact Walker & Walked To See If You Qualify
To find out whether you are eligible to file bankruptcy, and which option is best for your situation, contact the Bankruptcy Attorneys at the Law Firm of Walker & Walker today for a free initial consultation.