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<strong>Is</strong> <strong>Bankruptcy</strong><br />
<strong>Right</strong> <strong>for</strong> <strong>Me</strong>?<br />
Heller & Thyen, P.A.<br />
Call Us Today (320) 654-8000
<strong>Is</strong> <strong>Bankruptcy</strong><br />
<strong>Right</strong> <strong>for</strong> <strong>Me</strong>?<br />
KW bankruptcy lawyer<br />
Most of us never receive any <strong>for</strong>mal instruction in finance, and so it’s no<br />
surprise that so many adults at some point find themselves in financial<br />
straits. If you’re lucky, you learn your lesson early on and you’re able to<br />
repair any damage you’ve caused in short order. Maybe you overextend with<br />
a low-limit credit card, but over the course of several months you pay it off<br />
and you solemnly resolve to be more careful with credit in the future.<br />
On the other hand, you could be going along fine, paying off student<br />
loans, whittling down your mortgage, and even setting some money<br />
aside in savings and a 401K, when all of a sudden you suffer an<br />
unexpected injury, illness, layoff, divorce, or another scenario that<br />
launches you into a financial crisis. Not everyone ends up facing<br />
overwhelming financial burden because of poor decisions – some<br />
people are just unlucky or unprepared.<br />
Although the thought of filing <strong>for</strong> Chapter 7 or another <strong>for</strong>m of bankruptcy is a<br />
frightening proposition, it really is a pretty simple and easy process.<br />
<strong>Bankruptcy</strong> could be your best option to get out from under overwhelming<br />
financial burden. Or perhaps there are other options you hadn’t<br />
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considered. Your best bet is to speak with a qualified advisor from<br />
an experienced local law firm in Saint Cloud, Minnesota.<br />
chapter 7 13 attorney<br />
A professional attorney that specializes in bankruptcy can guide you<br />
through every option and help you determine whether it’s in your best<br />
interest to file <strong>for</strong> bankruptcy, or if another option is better suited to<br />
your situation. In the meantime, here are a few things you’ll have to<br />
consider when deciding if bankruptcy is right <strong>for</strong> you.<br />
What is Chapter 7?<br />
There are two main <strong>for</strong>ms of bankruptcy filing: Chapter 7 and Chapter 13.<br />
The most common by far is Chapter 7, which is sometimes referred to as<br />
“straight bankruptcy” because of the relative simplicity of the process. In<br />
Chapter 7, there is no payment plan, and it only takes about 3 months from<br />
filing to the end, when the bankruptcy court issues you a “discharge”, which is<br />
the <strong>for</strong>giveness of your debts that are covered in bankruptcy.<br />
In Minnesota, we have laws that are very generous to ensure that<br />
people can keep the assets they own to guarantee a “fresh start”. That<br />
means that most people will be able to keep everything and eliminate all<br />
of their debts. Because bankruptcy is a balancing act, sometimes<br />
people have significant assets and not all of them can be protected. In<br />
that case, your bankruptcy professional will review with you what assets<br />
are not protected and how the bankruptcy trustee will work with you to<br />
either surrender the unprotected assets or negotiate a settlement where<br />
you can “buy back” the non-exempt property that you wish to keep.<br />
Call Us Today: (320) 654-8000
How Do I Know It’s Time To Talk to<br />
a <strong>Bankruptcy</strong> Attorney?<br />
What is Chapter 13?<br />
st cloud<br />
Chapter 13 bankruptcy is where you use your future income to pay<br />
back some or all of your current debts. Chapter 13 is sometimes called<br />
a “wage earner” plan or a “reorganization bankruptcy”. When you file<br />
<strong>for</strong> Chapter 13 in Waite Park, MN, or anywhere in Minnesota, <strong>for</strong> that<br />
matter, you and your attorney propose a plan to contribute a certain<br />
payment <strong>for</strong> a period of time between 36 and 60 months.<br />
There are a number of reasons why you might choose Chapter 13<br />
over Chapter 7. They include:<br />
1. You simply want to pay back your debts but everyone wants all of<br />
their money right now, but you can't please everyone. Chapter 13<br />
<strong>for</strong>ces the creditors to wait to allow you to make one payment and<br />
the creditors get an orderly and predictable payment so long as<br />
you can af<strong>for</strong>d to do so. In other words, you can pay them back<br />
on your schedule, in an amount that you can af<strong>for</strong>d, rather than<br />
the amount and timeframe they want.<br />
2. You are behind on a secured payment, such as a mortgage or car loan.<br />
You are at risk <strong>for</strong> either repossession or <strong>for</strong>eclosure. Chapter 13 can<br />
prevent the banks from taking your home or car. You can use the<br />
Chapter 13 plan to get caught up on the back payments while you<br />
continue to make your regular scheduled payments to the bank. By<br />
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the time your plan is completed, you will have caught up on your<br />
loan payments.<br />
minnesota<br />
3. You want to save an asset that you would otherwise have to<br />
surrender if you filed Chapter 7. Let’s say your dad left you a<br />
classic car that he had as a teenager. It is a family heirloom and it<br />
is your duty to protect it. Or let’s say your parents put a cabin in<br />
the your name, along with your other siblings. That asset may<br />
prevent you from filing a Chapter 7 because you would risk having<br />
to sell the cabin in order cover your interest in the cabin. A<br />
Chapter 13 will allow you to keep the car or cabin so long as you<br />
pay enough to cover the value of the asset. Your bankruptcy<br />
professional will help figure out how much your payment would<br />
need to be to successfully keep your special, but valuable assets<br />
and still get relief from your creditors.<br />
4. You have filed a Chapter 7 within the last 8 years. You would not<br />
be eligible <strong>for</strong> a Chapter 7 discharge until after the 8 years has<br />
passed. However, you could file a Chapter 7 after only 4 years.<br />
5. You have issues from a divorce where you are obligated to pay a<br />
property settlement to your <strong>for</strong>mer spouse or have agreed to “hold<br />
harmless” your <strong>for</strong>mer spouse <strong>for</strong> a debt that you both owed jointly.<br />
Filing Chapter 7 in that situation could result in your ex-spouse<br />
taking you back to family court to en<strong>for</strong>ce that provision in your<br />
divorce decree. A chapter 13 will allow you to discharge you<br />
property settlement with your ex-wife. Keep in mind that debts<br />
relating to child support and spousal maintenance are never<br />
discharged in bankruptcy. You need to speak with a very<br />
experienced attorney about divorce decree related debts because<br />
there are other issues that may be raised when divorce related<br />
debts are at issue in bankruptcy.<br />
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6. You just make too much money to qualify <strong>for</strong> Chapter 7. Chapter 7<br />
is means tested. That means the court looks at the amount of<br />
money that you have earned over the past 6 months and also<br />
looks at the size of your household. The more people in the house,<br />
the more money you can earn and still qualify <strong>for</strong> Chapter 7. Your<br />
attorney will help you figure out if you qualify <strong>for</strong> Chapter 7 based<br />
on income. You you do not qualify, Chapter 13 will be your best bet<br />
<strong>for</strong> getting debt relief.<br />
What Are the Benefits of Filing <strong>Bankruptcy</strong>?<br />
Once the court accepts the bankruptcy filing, creditors can no longer<br />
contact you <strong>for</strong> payment, garnishment will stop, harassing phone calls<br />
will stop, <strong>for</strong>eclosure will be postponed or stopped, depending on the<br />
bankruptcy you choose, and after the bankruptcy is complete,<br />
remaining debt will be discharged.<br />
As mentioned above, bankruptcy will allow you to eliminate your debts,<br />
keep most if not all of your assets, and give you a fresh start. You can<br />
also begin to rebuild your credit. You cannot rebuild your credit until<br />
your debt problem has been resolved. <strong>Bankruptcy</strong> is usually the fastest<br />
way to solve your debt problem. Most people are able to rebuild their<br />
credit rather quickly after bankruptcy. Banks will be willing to lend<br />
money <strong>for</strong> the purchase of a car the day after your discharge, albeit at a<br />
higher interest rate. Income and employment are, of course, a factor.<br />
Banks will send you solicitations <strong>for</strong> car loans and credit card offers after you<br />
file bankruptcy. We caution you to be careful about the offers. Check the fine<br />
print and beware of high interest rates, annual fees and other<br />
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hidden costs. We recommend that our clients get a pre-paid credit<br />
card from their bank and keep using it and re-filling it every month.<br />
What are the Lasting Effects?<br />
There’s no denying that successfully filing <strong>for</strong> bankruptcy will affect<br />
your credit, but perhaps not in the ways you anticipate. Yes, a Chapter<br />
7 filing will stay on your credit report <strong>for</strong> ten years. A Chapter 13 will<br />
likely remain <strong>for</strong> seven years (although it could be up to ten).<br />
What does this mean? It could affect your eligibility <strong>for</strong> leases or loans,<br />
impacting your ability to purchase big ticket items like a home or<br />
automobile. It could stop you from qualifying <strong>for</strong> other credit offers like<br />
credit cards. Underwriting guidelines will govern when a bank will be<br />
able to approve you <strong>for</strong> a mortgage loan.<br />
However, you may find that just the opposite is true. For many people,<br />
a successful bankruptcy filing is something of a clean slate. You get to<br />
wipe away the majority of your debt and begin rebuilding your credit<br />
from scratch, instead of struggling to dig your way out of a deficit.<br />
In some ways, a successful bankruptcy can help you to regain control of your<br />
life. It’s not easy admitting that you’ve lost all control of your finances, and<br />
you certainly don’t want to give up a family home in the process.<br />
When you no longer have a mountain of debt weighing you down and<br />
creditors breathing down your neck, though, you can begin to see a<br />
hopeful future ahead and start planning again, even if you do have to<br />
be a lot more careful with your finances moving <strong>for</strong>ward.<br />
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It is important that you actively rebuild your credit, rather than just<br />
waiting <strong>for</strong> time to pass. It is sometimes said that no credit is worse<br />
than bad credit.<br />
Other Options<br />
Filing <strong>for</strong> bankruptcy may not turn out to be your best option, as an<br />
experienced bankruptcy attorney can tell you. There are other options<br />
to explore in many cases, depending on your particular situation.<br />
You may be able to negotiate reductions in bills and set up viable<br />
payment plans with creditors, <strong>for</strong> example. After all, their goal is to<br />
recoup any portion of what you owe, and they may be willing to bend a<br />
lot in order to make that happen.<br />
If you’re being harassed by creditors, you may be able to file a claim<br />
against them under the Fair Debt Collection Practices Act (FDCPA) and<br />
reduce the amount you owe in part or in full. In short, you might not need to<br />
file <strong>for</strong> bankruptcy at all. The first step to finding out is to contact a qualified<br />
legal firm to discuss whether or not bankruptcy is right <strong>for</strong> you.<br />
http://hellerthyen.com/is-bankruptcy-right-<strong>for</strong>-me<br />
Call Us Today: (320) 654-8000