The Benefits of Filing for Chapter 13 Bankruptcy in Minnesota

For most people, the word bankruptcy is associated with many negative images. However, filing for bankruptcy can be an important step for people caught in severe financial circumstances due to any number of factors such as job loss or expensive medical bills.

In 2017, more than 750,000 bankruptcy cases were filed in the U.S. Before filing for bankruptcy, you should consult an experienced Minnesota bankruptcy attorney who can give you sound advice and help get you on the path to financial stability.

Why Choose Chapter 13?

Filing Chapter 13 bankruptcy allows a debtor to propose a three- to five-year repayment plan to the court and creditors that offers to pay off all or some of the debt from the debtor’s future income. A Chapter 13 payment plan can be a powerful tool to get a handle on debts that might otherwise overwhelm a family’s ability to deal with them individually outside of the bankruptcy process.

One attractive aspect of filing Chapter 13 instead of Chapter 7 is that it offers individuals a chance to save their homes from foreclosure. By filing Chapter 13, individuals can prevent or stop foreclosure proceedings and give themselves a chance to catch up on delinquent mortgage payments during their repayment plan.

Homeowners with second mortgages on their homes may, under certain circumstances, request that the court declare the second mortgage lien avoided. These rules are complex, and the chances of success are best discussed with an attorney.

Another benefit of Chapter 13 applies to car and truck owners. It is possible to propose a Chapter 13 plan that lowers the interest rate paid on the balance of the loan, even if the original contract interest rate is higher. Certain long term loans can also be modified to pay the fair market value of the car, even if it is less than the remaining balance of the loan. These types of modifications become permanent when the Chapter 13 plan is completed and the court enters a discharge.

Debtors who wish to keep secured assets, such as a home or car, may choose Chapter 13 bankruptcy if the equity in secured assets is greater than can be protected with Minnesota bankruptcy exemptions. One important note, in Minnesota you have the right to choose between the federal exemption statutes or the state statutes.

Additionally, Chapter 13 can be an attractive choice for people who wish to hold on to their non-exempt property, such as luxury items, valuable collections, or second homes, which might otherwise be liquidated during a Chapter 7 bankruptcy process. If the debtor can make new payments to their creditors, while simultaneously making back payments through their proposed repayment plan, they will be able to maintain ownership of all their property and assets.

The option of filing for relief under Chapter 13 may be a viable option for someone who has received a discharge in a case filed under Chapter 7 within the last 8 years as well.

Schedule a consultation with a knowledgeable Twin Cities bankruptcy attorney

Navigating bankruptcy is a complex process that requires careful attention for each individual case. At Martin and Hedervare PLLC, we will help find the right debt solution for you in the Twin Cities, Minneapolis, and St. Paul communities. Call our firm at (651) 243-2974 or contact us online today to schedule a consultation.

Marie Martin
About the Author: Marie Martin
Marie F. Martin is an experienced bankruptcy attorney serving the Twin City area. She represents Minnesota families in bankruptcy court, and has handled thousands of Chapter 7 and Chapter 13 cases from beginning to end.