Should you file for bankruptcy in Minnesota?
If you are living paycheck to paycheck because of debt, then maybe you are thinking about filing for bankruptcy as an option to get out of debt.
When trying to decide if filing for bankruptcy in Minnesota is the right way to go, these are the 10 questions that you should ask yourself.
1. What is the nature of your debt problem?
Depending on your situation, your debt may be high, but you may have a high income and valuable assets that you could sell to service your debts.
- If you are making more than most people, then bankruptcy is not necessarily the right option
- Sometimes it can better to lower your expenses and pay everything off
It may surprise you to learn I have filed lots of bankruptcy cases for people in Minnesota who make more than $100,000 per year.
2. Are you a high earner?
There are many ways that filing for bankruptcy can save you money and make your finances easier to deal with, even if you are a high earner.
Perhaps you are in debt due to:
- A recent divorce
- Periods of unemployment
- A medical condition
- Working fewer hours to care for family
And have debts of just a few thousand dollars.
Your debt may be lower than many people who are considering filing for bankruptcy in Minnesota, however you might not have any money available after paying your:
- Car payment
And so you are really struggling to pay off your credit card bill and other debts.
- There is no legal minimum required to file for bankruptcy in Minnesota, but there are other eligibility requirements
- The Chapter 7 Means Test can help determine if you should file for bankruptcy in Minnesota
3. Do you owe enough to file for bankruptcy?
I find that bankruptcy is most useful to people who have at least $5,000 in debt.
Most of my clients have $10-$50,000 in dischargeable debt, but I have seen people with all sorts of debt situations.
Don’t worry, I won’t judge you.
- It is my goal to help you get out of debt and back to a normal financial life
4. What if you do nothing about your debts?
You’ll need to think about what will happen if you do nothing.
- Will your problems go away?
- Will you earn more money and be able to pay your debts off sooner?
- Will you come by some money and be able to repay your debts
If your income is about to increase, or you are about to get a large inheritance, then filing for bankruptcy in Minnesota is not as great an option.
You would be amazed, however, as Walker & Walker Law Offices has had lots of success in protecting peoples’ inheritances after bankruptcy.
5. Have you spoken to your creditors
You could also try speaking with the loan companies and the debt collectors.
Sometimes they are willing to work with you. My experience is that usually they are not.
They want money now, and will spend more time trying to get you to borrow the money from your family than on lowering interest rates and negotiating payment plans.
6. What about the Statute of Limitations?
Think that the Statute of Limitations might help you? Think again.
If you don’t know the time period to collect a debt in Minnesota, you’ll be astonished to learn it could be 26 years.
7. What about credit counselling?
There are many credit counselling services in Minnesota, which can help you manage your money better, and perhaps find solutions to your current financial problems.
Depending on your circumstances, a credit counselling service could help you get out of debt. They will certainly be able to help show you how you got into debt.
It is often the result of a misfortune like:
- Job loss
- Medical problem
My experience is that typical bankruptcy clients already know why they got into debt, and it’s not deliberately overspending or a lavish lifestyle.
8. What about debt consolidation?
We’ve spoken several times before about debt consolidation companies, and why they’re often a bad idea.
Here’s a recap:
- How do debt consolidation companies operate?
- Hiring a bankruptcy lawyer is often better than working with a debt consolidation company
- Be slow to trust a debt management company
As you can see, in our experience, debt consolidation companies often do not have your best interests at heart, and your creditors have no legal obligations to accept less than 100% of your debt.
In addition, you might owe taxes on the debts that are forgiven, and your creditors may still send your account to collections, and can even garnish your wages.
Using a debt consolidation company can mean it takes many years to pay off your debt.
9. What about bankruptcy?
If credit counselling can’t help you, and you understandably don’t want to work with a debt consolidation company, then filing for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota is usually your best option.
There are many benefits when you file for bankruptcy in Minnesota, such as:
- Your creditors don’t have to agree to a settlement
- Your creditors don’t decide whether your bankruptcy is successful
- Your creditors only get the assets that aren’t exempt (protected) – often nothing
- You are protected from judgments and garnishments for most of the bankruptcy process
- It is faster
- Your credit recovers faster. Debt settlement takes years and lots of money. You will have bad credit because of missed payments that whole time. People often have a 720 credit score only two years after Chapter 7 Bankruptcy
10. Do you want to be debt free?
Despite what you might have read, or your own pre-conceived ideas there is no stigma attached to bankruptcy.
Your employer, friends, and family won’t know about it unless you tell them.
If you can get out of debt, why wouldn’t you?
We can help you.