Bankruptcy in Minnesota
Are you contemplating bankruptcy or hiring a bankruptcy attorney in Minnesota? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.
Types of Bankruptcy in Minnesota
Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Minnesota, to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.
Minnesota has 3 U.S. Bankruptcy Courts. If you are facing bankruptcy you must file in 1 of these 3 courts.
Chapter 7 Bankruptcy
Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Minnesota who can help you to decide if a liquidation plan is right for you.
Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.
The Attorney General of Minnesota states that while bankruptcies have fallen over the last decade, personal circumstances may require you to repay your debts under the protection of the courts. Filing for chapter 7 will halt collection proceedings such as foreclosures, and will turn power over to a trustee to liquidate your assets in order to satisfy the collectors.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is more complex than other types of bankruptcy. It is often used by businesses and certain types of people. It allows petitioners to restructure their debts with a reorganization plan, so they are easier to manage over a determined length of time, usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan that enables them to stay current on their debts moving forward.
The U.S. Courts provide an in-depth overview of Chapter 11 bankruptcy. You should note, however, that chapter 11 is generally used by businesses seeking to restructure their debts and avoid liquidation. In Minnesota, when filling for chapter 11, you reorganize debt to allow for more time in order to pay off the debt. Under this timeline of reorganizational bankruptcy, the debtor enacts the same processes as the trustee, but remains in control of all the assets as they pay down the debt. Generally, a period of between 3 and 5 years is given for the debtor to pay off the debt.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Minnesota after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.
Chapter 13 bankruptcy is more commonly referred to as debt adjustment, and allows a debtor to file a plan as to how they will pay off the debt from their current income within a given 3 to 5-year time frame. Minnesota Bankruptcy Law states that Chapter 13 can be incredibly beneficial as it places you firmly in control, and allows you the time you need to get out from under the debt without being crushed by it. However, an experienced attorney in Minnesota can be beneficial to helping restructure your debt.
The Bankruptcy Process in Minnesota
There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.
In Minnesota to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.
Filing for bankruptcy in Minnesota requires you to complete certain steps as well as filing the appropriate forms and their accompanying filing fees. You’ll have to decide if bankruptcy can actually alleviate your debt, and which particular type of bankruptcy you will pursue. Then you’ll need to stop paying qualifying debts and begin to file for your exemptions. The U.S. Courts lays out a timeline for your bankruptcy requirements.
Minnesota allows exemptions both for your home, and up to $975,000 worth of farm property. There are also exemptions for $4,600 in automobiles, and $10,390 in personal property such as jewelry, furniture, and clothing. You can file by yourself, but an experienced attorney in Minnesota could prove very beneficial in this process.
At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.
Work With an Experienced Minnesota Lawyer
Hiring a local bankruptcy lawyer in Minnesota during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced Minnesota attorney can also offer you guidance to improve the outcome of your case.
Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Minnesota can guide you through the entire bankruptcy process. We can even help you connect with an attorney across Minnesota state lines.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!