Oppressive debt affects every aspect of your life, including your mental health and well-being. Though heavy financial burdens can seem like an unsolvable problem, the St. Paul bankruptcy attorneys at Martin & Hedervare PLLC can help. When you contact our firm, you meet with an experienced lawyer who focuses on bankruptcy matters, and who is committed to helping you find the right debt solution.
The Benefits of Filing For Chapter 7 Bankruptcy in Minnesota
Here are some of the many advantages of declaring Chapter 7 bankruptcy:
A fresh start: Once you file for Chapter 7 bankruptcy in Minnesota, collection agencies and creditors must stop hounding you for payment. That means no more phone calls or letters. If your wages were garnished, the garnishment immediately stops. In addition, foreclosure proceedings are paused. If you can bring your mortgage payments up to date during the foreclosure delay, you will probably even be able to hold onto your home.
Discharge of debt: If you qualify for Chapter 7 relief, you will not be required to create a repayment plan because your eligible debt will have been discharged, or wiped out. This is the case regardless of how much debt you were in.
Future income: With very few exceptions, you will be able to keep your future income (for example, if you become entitled to inherit something within 180 days of your case filing date, it might be counted towards your assets for the purposes of the bankruptcy court).
Speed: Some cases are resolved in as little as three months. After the case’s conclusion, you will also be able to get lines of credit again.
Chapter 7 bankruptcy is also referred to as liquidation bankruptcy, which means that it is important that you find out which of your assets can be exempted, or protected, in going through the bankruptcy process. Assets that cannot be exempted must be turned over to the court for the benefit of your creditors unless you pay the court the value of those assets. In many cases, that’s a relatively small price to pay for financial freedom and emotional well-being.
Qualifying for Chapter 7 Bankruptcy in Minnesota
Chapter 7 bankruptcy is the most common form of debt relief for individuals, families, and businesses. Before petitioning the court for relief under Chapter 7 of the Bankruptcy Code, it is important to understand the benefits and consequences, and whether filing for Chapter 7 bankruptcy in the Twin Cities is right for you.
Two main criteria to file for Chapter 7 bankruptcy in the Twin Cities
There are no minimum debt, age range, or family size eligibility conditions for Chapter 7 bankruptcy. Instead, you need only meet three requirements:
You have not filed for Chapter 7 bankruptcy in the last 8 years
You pass the means test
Your typical monthly household budget shows the court you cannot afford a payment plan under Chapter 13 or outside of bankruptcy
If there is a Chapter 7 bankruptcy on your credit report where you received a discharge within 8 years of the date of filing, you will not be able to file for Chapter 7, but you may be eligible to file for Chapter 13 bankruptcy in Minnesota. Similarly, if you earned above a certain income level, you may not pass the means test, in which case you will probably need to file for Chapter 13 bankruptcy.
Minnesota Means Test
Chapter 7 of the United States Bankruptcy Code is known as the fresh start solution. In this type of case, our Minnesota bankruptcy lawyers help you compile their debts, then evaluate income and expenses with an eye toward whether the court is likely to review the budget and determine that your family should receive a discharge of the debts that are overwhelming you. There is also the much discussed but little understood second level of analysis called the Means Test. The Minnesota Means Test analysis begins with your household income and compares it to the U.S. Census Bureau Median Income by Family Size. If your income is above this threshold, further information is required to determine if you qualify for Chapter 7. Below are the annualized figures for Minnesota for 2018:
Once clients pass the Means Test, we file for Chapter 7 bankruptcy in Minnesota Bankruptcy Court. At that instant, creditors and collection agents must stop hounding you, wage garnishment stops, and foreclosure proceedings are paused. Your St. Paul bankruptcy attorney will be available to walk you through the process and answer any questions you have, but you will usually only meet with the bankruptcy trustee once. A bankruptcy trustee is another attorney who is appointed to review your case. Within 3-6 months of filing for Chapter 7, your bankruptcy is complete and you are debt-free.
With Chapter 7, you can expect:
Wage garnishments and creditor harassment to stop immediately
Any foreclosure proceedings to be paused
There is no minimum debt required to file
Only one meeting with the bankruptcy trustee
Your eligible debts to be wiped out in 3-6 months
Any income you earn after bankruptcy is all yours
Your Minnesota bankruptcy lawyer can advise you on the specifics regarding your case, but it is important to know that Chapter 7 has some caveats:
Any cosigners on loans included in bankruptcy are responsible for the balance
You cannot discharge student loans, child support, criminal restitution and certain other debts
In a small number of cases, some of your property goes toward wiping out your debt
Once you file Chapter 7 bankruptcy and get a discharge, you may not file Chapter 7 again for at least 8 years
Is Chapter 7 right for you?
Even if you pass the means test and are ready to file for bankruptcy in St. Paul, you still want to be sure that Chapter 7 is the best debt solution for you.
If you pass the means test, you will surrender your nonexempt (unprotected) assets to a bankruptcy trustee for liquidation or pay the trustee their value to keep them. If you choose to surrender the property, the trustee will sell your property and use the proceeds to pay off your creditors. Whatever debt remains after paying off your creditors with your liquidated assets is discharged or wiped out. While you will likely be able to use some exemptions, such as the Homestead Exemption, to keep almost all of your big properties, you may end up losing your second home, boat or car in Chapter 7 bankruptcy. A discussion with a bankruptcy attorney should always include a detailed discussion of what you own, because any undisclosed assets will be subject to forfeit to the court if you file for bankruptcy relief. The court takes a very dim view of not disclosing all assets in the paperwork that is filed with the court.
The right time to file for Chapter 7 bankruptcy in Minnesota
Every bankruptcy case is different, and your attorney can advise you on the specifics of your case. But there are a few things to keep in mind as you prepare to file for Chapter 7:
The means test reviews income for the last six months. If you had a high-paying job until three months ago, it might not be the best time to file.
If you recently made large credit card purchases. If you made large luxury purchases in the last 60 days, those debts are considered non-dischargeable and you will still have them on your record once bankruptcy is complete.
If your debt is not mostly composed of credit cards, medical bills and personal loans. Bankruptcy can wipe out these debts, but it does not discharge other financial obligations such as student loans, child support, alimony or criminal restitution, among others.
Find financial relief with our Minnesota Chapter 7 attorneys
There is more to life than fearing phone calls and knocks on the door. Make your life better with the Twin Cities bankruptcy lawyers at Martin & Hedervare PLLC. We use our combined 38 years of experience to find specific debt solutions so you can have a fresh financial start. Call our firm at (651) 243-2974 or contact us online today to schedule your risk-free consultation.
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