Twin Cities Chapter 13 bankruptcy attorneys help you regain control of your finances
Significant money troubles can affect anyone. At the Twin Cities bankruptcy law firm of Martin & Hedervare PLLC, we serve clients in dire straits who need help getting their lives back and getting their finances under control, starting with a free in-office consultation.
We do not judge our clients for their debts, but rather draw on our chapter 13 bankruptcy law experience to help them get out from under their economic burden.
Also known as debt restructuring or debt reorganization, Chapter 13 of the U.S. Bankruptcy Code allows individuals with regular income to compile their debts and make reasonable payments toward creditors for a period of 3-5 years. At the conclusion of the repayment term, all remaining eligible debts included in the bankruptcy are discharged.
Our Twin Cities bankruptcy lawyers can determine if Chapter 13 bankruptcy is right for your unique situation. We review your income, assets, expenses and types of debts to ascertain the amount you can afford to pay each month, and then we file for Chapter 13 in Minnesota Bankruptcy Court. Utility disconnections, repossessions, foreclosures, tax levies, and wage garnishments stop as soon as the case is filed. Under Chapter 13, you are not expected to surrender your home, car, or any other possession as part of repayment.
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.
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.
You can avoid foreclosure with Chapter 13 Bankruptcy. 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.
It is possible to lower interest rates and modify auto loans. 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.
Keep your home and car. 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.
Keep non-exempt property and avoid liquidation. 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.
The Minnesota Chapter 13 Bankruptcy Process
When people hear the word “bankruptcy,” they may imagine a situation where their possessions must be sold to pay off their debts. However, Chapter 13 is aimed at reorganizing debt rather than eliminating it through the liquidation of assets. Below is an overview of the Chapter 13 bankruptcy process for Minnesota.
Deciding whether to file bankruptcy is a difficult and complex question. Before filing you should consult an experienced bankruptcy attorney to ensure your rights are protected.
Prior to filing for Chapter 13 bankruptcy, Minnesota debtors have to receive a briefing from approved credit counseling agency. Most agencies provide this briefing over the phone or online. The course typically takes about 90 minutes to complete. This course must be taken within the 180 days before the petition is filed with the court.
After you have completed counseling, your attorney may file a bankruptcy petition with the federal bankruptcy court. Upon filing, your attorney will present on your behalf a list of creditors and the amount of money owed to them, your source of income, a list of your assets, and a detailed breakdown of your living expenses. Once the petition is filed, an automatic stay goes into effect which will prevent creditors from attempting to collect on the debts owed. Actions like garnishments, repossessions, and foreclosures have to stop when your case is filed, and this is often the biggest source of immediate relief.
Within 15 days of filing your petition, a plan of repayment must be submitted. The plan is basically a 3-4 page summary that tells the court and all of your creditors how the payments you make over the course of the plan will be distributed. Your debts are put in separate categories, and each category of debt gets a different treatment. How much your plan has to pay is based primarily on how much money is left after paying your living expenses that are detailed in your petition. No two plans are exactly alike, as no two financial lives are exactly alike. Within 30 days of filing, you must start to make payments to your trustee, even if the plan is not yet approved by the court.
The meeting of creditors, also called a 341 meeting, is held 20-40 days after you file bankruptcy. The hearing itself is relatively informal, and the judge in your case is not present. Your attorney goes to the hearing with you, but you answer all the questions about your finances. During this meeting, the debtor is required to appear and testify, under oath, about their financial condition, assets, and debts. The trustee will direct the meeting and ask most of the questions, but creditors may also attend and question the debtor. Typically, creditors will attend if there are questions about the proposed repayment plan.
Next, a bankruptcy judge determines whether your proposed plan is feasible and if it meets the criteria for confirmation during a confirmation hearing. The court has the final say in determining the legitimacy of the plan. However, creditors may object to the proposed plan if they believe any of the rules the plan must follow are not being met. If the plan meets the required bankruptcy codes and is fair, it will be approved.
Finally, it is the responsibility of the debtor to meet the terms of the repayment plan. The debtor may not miss any payments. After three to five years, if the repayment plan criteria is met, a judge will discharge the debtor. The debtor will be absolved of any remaining dischargeable balances. Exactly how long your plan agrees to make payments for and what debts, if any, would survive or be changed by the bankruptcy varies based on the individual plan.
Don’t let the Repayment Plan concern you
The amount of the payment is based on what your budget says you can afford, not on the total amount of debt owed. Your repayment plan is determined based on your monthly income minus your monthly expenses, and in some cases the interest rates on secured debts can be reduced. In Chapter 13, a trustee is appointed to collect payments and distribute them to creditors according to the plan filed with the court. Each plan submitted to the court is tailored to fit the particular situation presented by that person, so no two Chapter 13 plans are exactly the same.
Once you complete a Chapter 13 plan, the judge signs an order saying all the debts that are eligible to be wiped out are discharged, whether you paid off all of your debt or a small percentage. You will not have creditors bothering you or trying to intimidate you any longer. You will be free from your debt and you are able to keep your secured and unsecured assets.
Find financial relief with our Twin Cities Chapter 13 lawyers
The Minnesota bankruptcy lawyers at Martin & Hedervare PLLC use our combined 38 years of experience to find the right debt solution for you. Call our firm at (651) 243-2974 or contact us online today to schedule your risk-free consultation.