Minnesota Bankruptcy Attorney » MN Bankruptcy http://www.bolinskelaw.com Bankruptcy Attorneys in Minneapolis, Minnesota Fri, 03 Feb 2012 21:23:14 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Bankruptcy Is Allowed Under the United States Constitution. http://www.bolinskelaw.com/bankruptcy-is-allowed-under-the-united-states-constitution http://www.bolinskelaw.com/bankruptcy-is-allowed-under-the-united-states-constitution#comments Tue, 24 Jan 2012 20:14:12 +0000 Chad http://www.bolinskelaw.com/?p=178 Congress is empowered by the Constitution of the United States of America (Article I, Section 8, Clause 4) to enact bankruptcy laws. Congress has used that power to create a bankruptcy code which governs how bankruptcy will be applied in America. One of the most powerful features in the bankruptcy code is the automatic stay imposed by creditors after the filing of a bankruptcy petition. This means that creditors cannot contact individuals who have filed for bankruptcy protection, and if they persist and contact those individuals they can be held in contempt of court.
Bankruptcy being part of the U.S. Constitution indicates that the founding fathers thought it was important for people to have a way to get rid of their debts and start fresh. This reasoning probably came about from the debtors prisons that happened in Europe and they wanted to avoid debtors prisons in the United States. In some instances we have had creditors who are angry that they are not being paid back what they are owed and that is understandable, but the bankruptcy option is also available to those creditors, should they ever experience financial hardship. Bankruptcy is part of America because of its inclusion in the Constitution and it is available to help when people or corporations need a chance to start fresh.

]]> http://www.bolinskelaw.com/bankruptcy-is-allowed-under-the-united-states-constitution/feed 0 The Cost Of Education http://www.bolinskelaw.com/the-cost-of-education http://www.bolinskelaw.com/the-cost-of-education#comments Mon, 16 Jan 2012 15:57:57 +0000 Chad http://www.bolinskelaw.com/?p=175 When getting any education it is always wise to think about the prospects available for any particular degree or vocational school. I see clients who have taken out excessive student loans for degrees that not many jobs are available. This seems especially true of for profit colleges and trade schools, that charge excessive tuition, but do not provide their graduates with a good chance for employment after graduation. The same can be true of any college if the debt is excessive. You really have to think carefully about how to repay over $100,000.00 in student loan debt with interest. I have seen clients with close to $200,000.00 in student loan debt. This debt cannot be discharged in bankruptcy, and is hard to get rid of through the bankruptcy court and the standards put in place for discharging student loans.
The other issue I have seen clients get involved with are classes for trading stocks, bonds, real estate, etc. These classed come with price tags around $12,000.00 but do not offer any information that cannot be obtained by researching on the internet. If somebody really had secrets to trade on the stock market, they would not give them out in classes. The only people who make money from these classes are the people running the classes. I have advised clients to not take these classes, and save their retirement money for retirement. I have also seen several clients file for bankruptcy after attempting what these classes suggest in real estate or stock market investing. In short you have to look at the value of what you are paying for in any class or education program. In some cases it may not be worth the cost.

]]> http://www.bolinskelaw.com/the-cost-of-education/feed 0 How Do Creditors Collect Money In Minnesota. http://www.bolinskelaw.com/how-do-creditors-collect-money-in-minnesota http://www.bolinskelaw.com/how-do-creditors-collect-money-in-minnesota#comments Fri, 13 Jan 2012 16:14:09 +0000 Chad http://www.bolinskelaw.com/?p=170 The most common method creditors use to collect a judgement is Minnesota is either a letter or call from a bill collector. Creditors will often use these techniques through a collection agency for the first nine months of the collection process. If this is not effective the creditor may send the collection file to a collection law firm. In Minnesota a few collection law firms handle the majority of collections. Once you begin to get collection letters from Minnesota licenses attorneys is when you have to watch out for a collection lawsuit.
Once the debt goes to a Minnesota collection attorney you will still get calls and letters from the law firm, but if that is not effective the creditor will simply file a lawsuit against you for the amount owed. In most cases the person being sued does not respond to the lawsuit resulting in a default judgement (it is a real lawsuit even if it does not have a court file number in Minnesota). If you do not respond to the lawsuit in 20 days the creditor can file the lawsuit with a Minnesota district court and get a judgement against you. Once they have a judgement they can send garnishment notices to your bank or employer to have money taken from you because of the debt owed to the creditor and the judgement. Once a creditor has a judgement they are less likely to negotiate, since they will be looking for assets to satisfy the judgement.
If a creditor has a judgement against you they can also send paperwork that requires you to disclose the location and amount of assets. If you do not respond to this paperwork or attend the hearing regarding the disclosure of assets, the court can issue a bench warrant for your arrest. Once the bench warrant is issued if you are pulled over for a speeding ticket, you can be brought to the county jail, until the form is filled out, or you pay the debt. It is important to open all mail from creditors once they get a judgement, ignoring the problem will not make it go away. If you have further questions give our law office a call at 952-294-0144.

]]> http://www.bolinskelaw.com/how-do-creditors-collect-money-in-minnesota/feed 0 The New Consumer Protection Agency Will It Help People Avoid Bankruptcy http://www.bolinskelaw.com/the-new-consumer-protection-agency-will-it-help-people-avoid-bankruptcy http://www.bolinskelaw.com/the-new-consumer-protection-agency-will-it-help-people-avoid-bankruptcy#comments Tue, 10 Jan 2012 17:13:05 +0000 Chad http://www.bolinskelaw.com/?p=171 In my practice is would seem that giving consumers a voice through a new federal agency would be helpful to curtail some of the abuses of the financial services industry.  I see a lot of clients who would benefit from more oversight of various industries including credit card issuers, mortgage lenders, HELOC issuers, and for profit colleges.  I see clients every day who have accumulated massive debt on mortgages they should never have received in the first place, or spending on credit cards that they did not understand would carry 30% default interest rates.  If the new federal agency can actually level the playing field between the huge banks and ordinary consumers, it has the opportunity to make a meaningful difference in peoples lives.
The other industry that needs to be regulated through this new agency is debt consolidation companies.  In my experience they rarely delivery what they promise and in fact create bigger problems for their clients.  In many cases they promise to get the client debt free, but the client ends up getting sued and garnished.  When looking at options it is important for consumers to look at all of their options including bankruptcy, in many cases bankruptcy is the better alterative to debt consolidation.

]]> http://www.bolinskelaw.com/the-new-consumer-protection-agency-will-it-help-people-avoid-bankruptcy/feed 0 How Do Creditors Get Paid In Bankruptcy http://www.bolinskelaw.com/how-do-creditors-get-paid-in-bankruptcy http://www.bolinskelaw.com/how-do-creditors-get-paid-in-bankruptcy#comments Wed, 04 Jan 2012 21:55:33 +0000 Chad http://www.bolinskelaw.com/?p=168 If you have filed a chapter 13 bankruptcy a creditor will file a proof of claim with the bankruptcy court that determines the amount the creditor is owed.  The creditor will then get paid on that claim depending on their treatment in the bankruptcy plan.  That is why if you do not know the exact amount owed to a particular creditor you should estimate the amount and the creditor will file a proof of claim if needed.  The most important thing our clients can do is make sure they have correct addresses for all of their creditors to make sure the creditors get notice of the bankruptcy.
In most chapter 7 cases creditors will not file proof of claims, since they will not get paid anything in the bankruptcy.  The only cases where a creditor should file a proof of claim is if the bankruptcy is likely to result in a dividend to the creditors.  The reason for a proof of claim being required in the bankruptcy is that credit card balances change daily, so if would be difficult to get a 100% accurate number for every creditor on a bankruptcy petition.  It makes more sense for the creditor to file a proof of claim if needed, and the Trustee or other party in interest can then object to that claim.

]]> http://www.bolinskelaw.com/how-do-creditors-get-paid-in-bankruptcy/feed 0 Minnesota Bankruptcy FAQ http://www.bolinskelaw.com/mn-bankruptcy-faq http://www.bolinskelaw.com/mn-bankruptcy-faq#comments Wed, 01 Dec 2010 19:41:51 +0000 Chad http://www.bolinskelaw.com/?p=1
  • bankruptcyfaqHow do I file for bankruptcy?
  • Can I keep my home?
  • Can I keep my vehicle?
  • Can I keep my retirement (IRA, 401(k), 403(b), pension) money after bankruptcy?
  • What is a bankruptcy discharge?
  • What is a reaffirmation agreement?
  • How much personal property can I keep after filing?
  • Are liens removed after filing for bankruptcy?
  • What is the automatic stay?
  • What is the means test for a Chapter 7 bankruptcy?
  • Can I get credit cards after bankruptcy? Can all debts be discharged in bankruptcy?
  • Can I be fired for filing bankruptcy?
  • What are the most common reasons for filing for bankruptcy protection?
  • What is the meeting of your creditors?
  • How many creditors will show up at my 341 meeting?
  • Should my business file bankruptcy?
  • How do I know what type of bankruptcy is right for my business?

    • How do I file for bankruptcy?
    In order to file for bankruptcy you will need to gather all your financial documents including: a complete list of creditors with addresses and balances owed, any collection notice from law firms or collection agencies, tax returns for the last two years, pay stubs from your employer for the last 60 days, evidence of all income received for the past seven months, and the legal description of your house. You will also need to attend a credit counseling class before and after the bankruptcy is filed.

    Can I keep my home?
    If you are a Minnesota resident you have the choice to take the Minnesota or federal exemptions. The Minnesota homestead exemption is found in Minn. Stat. Sec. 510.01, which allows a homeowner to keep up to $200,000.00 of equity in real property on less than one half acre found in a city. If your property is located outside the city you can keep up to 160 acres of land as long as the value does not exceed $500,000.00. The federal homestead exemption allows for an exemption of $18,450.00 single or $36,900.00 married equity in your homestead. The choice of which set of exemptions to use is complicated and an attorney should be consulted before determining your preferred set of exemptions.
    Can I keep my vehicle?
    Minnesota statute section 550.37 allows an individual to keep a motor vehicle valued at $3,800.00. Under the federal exemption an individual can keep one motor vehicle valued at $2,950.00. If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car, and continue paying under the existing terms; or you can buy the car from the secured creditor in a single payment for its present value (redemption). The above figures are indexed for inflation and are subject to change.

    Can I keep my retirement (IRA, 401(k), 403(b), pension) money after bankruptcy?
    Under the federal exemptions you can keep up to $1,000,000.00 in qualified retirement plans exempt from creditors in the bankruptcy estate. Minnesota Statute 550.37 subd. 24 allows for an exemption of $60,000.00 for qualified retirement plans. The $60,000.00 is indexed and changes on a regular basis.

    What is a bankruptcy discharge?
    The bankruptcy discharge eliminates the debtor’s personal liability on loans including, but not limited to, credit cards, personal loans, and business loans. This means that the creditor can no longer use the legal process to garnish wages or bank accounts. A creditor can still repossess or foreclose on secured property after the bankruptcy, but the debtor will not have personal liability for the debt. Oftentimes in order to keep secured property after the bankruptcy a debtor will have to sign a reaffirmation agreement with the creditor to keep the property.

    What is a reaffirmation agreement?
    The debtor can chose to reaffirm debts that would otherwise be discharged by the bankruptcy. Generally, when a debt is reaffirmed, the parties to the reaffirmed debt have the same rights and liabilities that each had prior to the bankruptcy filing; the debtor is obligated to pay and the creditor can sue or repossess if the debtor doesn’t pay.

    How much personal property can I keep after filing?
    Under Minn. Stat. Sec. 550.37 you are entitled to keep household appliances, furniture, tv, radio and phonographs up to a $7,200.00 in value. You are also entitled to keep clothing (including a watch), utensils, and food. Federal exemptions also allow for you to keep much of your personal property as long as it does not exceed $9,300.00 in value.

    Are liens removed after filing for bankruptcy?
    In Minnesota liens can be removed after your debts are discharged in bankruptcy. The Minnesota statute governing lien removal is Minn. Stat. Sec. 548.181. The process of removing liens after a bankruptcy discharge is time consuming and all the proper procedures must be followed for the court to remove judicial liens.

    What is the automatic stay?
    Bankruptcy Code § 362 imposes an automatic stay the moment a bankruptcy petition is filed. The automatic stay generally prohibits the commencement or enforcement of actions, judicial or administrative, against a debtor for the collection of a claim that arose prior to the commencement of the case. The stay also prohibits collection actions aimed at property of the estate itself.

    What is the means test for a Chapter 7 bankruptcy?
    You may have read that the new bankruptcy law imposes a “means test” on who can file for Chapter 7 bankruptcy. You might think this new test will prevent you from filing. Most people considering bankruptcy have no trouble passing the means test. Indeed, some lawyers think more people will qualify for Chapter 7 under this test than under the old law that provided judges with discretion on when someone was eligible for a Chapter 7 bankruptcy.

    Can I get credit cards after bankruptcy?
    After bankruptcy you may still be able to get a credit card. Most credit card issuers will allow you a secured credit card after you bankruptcy. The secured credit card will help build up your credit score following bankruptcy.

    Can all debts be discharged in bankruptcy?
    Not all debts can be discharged in bankruptcy non-dischargable debts include:
    1. Debts by fraud or false pretenses
    2. Debts incurred by a false statement in writing.
    3. Income taxes for tax debt less than three years ago.
    4. Debts incurred by committing willful and malicious injury.
    5. Student loan debt unless an undue hardship can be shown to the bankruptcy court.
    6. Spousal or child support obligations.
    7. Death or personal injury caused by person when intoxicated.
    8. Fines and penalties owed to the government.
    9. Criminal fines and restitution.
    10. Fraud while acting in a fiduciary capacity including embezzlement and larceny.

    Can I be fired for filing bankruptcy?
    No. Federal Bankruptcy law specifically prohibits an employer from firing an employee for filing for bankruptcy protection.

    What are the most common reasons for filing for bankruptcy protection?

    The most common reasons for filing for bankruptcy protection include:

    • Medical Bills
    • Job Loss
    • Credit was Over Extended
    • Tax Debts
    • Unexpected Bills
    • Divorce

    What is the meeting of your creditors?
    The meeting of your creditors is referred to as a 341 meeting and takes place 20 to 40 days after you file your Chapter 7 or Chapter 13 bankruptcy. The 341 meeting is typically a 3-5 minute meeting with the bankruptcy trustee where they will ask you some questions regarding the documents filed in your Minnesota bankruptcy petition.

    How many creditors will show up at my 341 meeting?
    Typically, no creditors actually attend the 341 meeting of your creditors. If creditors do show up at the hearing it is typically to get you to sign a reaffirmation agreement in order to keep your vehicle or home.

    Should my business file bankruptcy?
    If your business is struggling financially you need to know what your options are regarding bankruptcy. Chapter 7 and Chapter 11 bankruptcy is available to corporations, limited liability companies, and partnerships. These corporate forms are considered separate legal entities from their owners. In some circumstances the business owner may have personally guaranteed the business loans and may be forced to file an individual Chapter 7, 11, or 13 bankruptcy to escape the personal guarantee.

    The other common situation is where the business is a proprietorship without any limited liability protections. In this case the owner of the proprietorship would have to file a personal bankruptcy to get out from under the business debt. The individual would be eligible for protection under any chapter of the Bankruptcy Code, subject to the restrictions on filing a Chapter 7 or Chapter 13 bankruptcy.

    How do I know what type of bankruptcy is right for my business?
    A Chapter 11 bankruptcy may be right for your business if you would like to maintain control of your business during the bankruptcy process. Chapter 11 bankruptcy allows a company to come up with a plan to reorganize the business and eventually return the company to profitability or in some cases the company liquidates. Chapter 11 bankruptcy allows a company to restructure or consolidate their existing obligations in order to make manageable payments.

    The reorganization plan must be approved by the bankruptcy court, and is typically voted on by stockholders, creditors, and even the SEC (if the company is publically traded). The reorganization plan can be approved by the court even if the plan is not approved by the creditors and shareholders if the court thinks the Chapter 11 plan is fair to all parties. During a Chapter 11 bankruptcy a company’s stocks and bonds continue to be traded.

    Recent high profile Chapter 11 cases include Northwest Airlines and Winn Dixie Supermarket whose stock continued to be traded after the Chapter 11 bankruptcy filing.

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