Can I Do Bankruptcy Myself?

This is a common question, and a valid one considering an individual’s reason for filing and the cost of attorney’s fees.  If you are unsure about filing bankruptcy and how it may affect your property and financial future, you want to seek the advice of an attorney.  Many bankruptcy attorneys are available to meet with you at no initial cost and can help you determine if filing is right for you.

Bankruptcy is a complicated area of law and requires strong critical thinking skills.  An attorney, or individual filing on their own, must be able to understand what facts and assets are relevant in their case and how to present that information to the court.  In determining what property, you can keep after filing the bankruptcy you must be able to read and apply sections of the bankruptcy code to each asset listed.  Failure to do this properly will put that asset at risk.

A filing party is required to complete statements that disclose various transactions that occurred up to the point of filing.  All statements filed with the court are done so under penalty of perjury.  Some of these transactions may put friends and family members at the mercy of your bankruptcy Trustee without you even realizing.

Once a chapter 7 bankruptcy has been filed it cannot be voluntarily dismissed by the debtor.  Failure to follow through with the bankruptcy could mean losing property and still owing the debt that drove you to bankruptcy in the first place.  A skilled attorney can advise you on how to minimize the potential risks in your case.

To put it plainly, when it comes to bankruptcy, you don’t know what you don’t know.  Not knowing or understanding the consequences associated with filing your case is not a pass for leniency.  If you are uncomfortable or unsure about filing bankruptcy, it is best to talk with an attorney who practices bankruptcy.  Not having to do this alone will provide you with peace of mind, and that is an invaluable feeling.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Process Of A Bankruptcy

A little-known fact of filing for bankruptcy is that, soon after a consumer receives their discharge (usually within a week), that consumer’s mailbox is likely to be inundated with credit card offers. There are a few reasons for this. Firstly, credit card companies will receive notice of the discharge and that the consumer therefore has significantly less debts that would otherwise prevent repayment on a new account. Secondly, the mandatory waiting periods between bankruptcies means that a newly-filed consumer won’t be able to file for bankruptcy again anytime soon. Thirdly, believe it or not, many consumers-especially those who have struggled with debt for years-actually receive a bump to their credit scores during bankruptcy. Finally, and depressingly, filing for bankruptcy paints a consumer as a “mark”—in other words, someone who might jump to take a poor offer.

But filing for bankruptcy does not mean that a consumer will be limited to poor credit card offers. Likewise, it is not the case that a wise consumer should avoid credit card offers altogether. To the contrary, credit cards, smartly used, are the surest path to good credit after bankruptcy. Imagine a credit score like a scrolling newsfeed; new headlines are constantly being added, and old ones are constantly falling off. The goal of the savvy consumer should be to fill their creditor newsfeed with dull, reassuring headlines like “Martin Pays Bill on Time” or “Cassandra’s Visa Credit Card Turns Four Years Old.” Headlines like “Ryan’s Student Loan Remains in Default” are bad, and consumers with these sorts of headlines in their credit newsfeed should seek to bury them in more encouraging stories. Using and promptly paying on credit accounts is an easy way to do this.

But where to begin? Ideally, a newly -filed consumer should seek to open three to five credit cards after bankruptcy. This reflects a robust but not excessive level of engagement. Furthermore, these credit cards should be opened all at once, because the act of opening them, at least initially, will lower the average age of the consumer’s accounts and temporarily drop his or her credit score. This is because creditors prefer older accounts. Therefore, by opening the cards all at once, the consumer puts his or her best foot forward on each account. This bolsters his or her chances of acceptance on each card and will likely boost the cards’ initial spending limits. There are five factors a consumer should consider when selecting a credit card, and for the task of building credit, spending limit is by far the most important.

In order of importance, the five factors to consider when applying for credit cards are spending limits (higher is better), annual percentage rates (lower is better), annual fees (best avoided), security deposits (inconvenient), and rewards (always appreciated, but not a priority). The ideal credit card, therefore, is one with a sky-high spending limit, basement-level APR, no annual fees, no need for a security deposit, and great rewards. These sorts of cards are reserved for only consumers with the most stellar credit scores, however, so getting to that point will require making some sacrifices in the meantime. A consumer who can afford it would be wise to ignore rewards altogether and to pay high security deposits for secured credit cards with low APRs, no annual fees, and high spending limits.

Spending limits are important because credit utilization ratio is a key factor in calculating a consumer’s credit score. Ideally, a consumer is using his or her credit cards often, paying them off promptly, and only utilizing around 30% of their available spending limits. Therefore, a consumer with three credit cards with a combined spending limit of $3000 should seek to never carry a combined balance larger than $1000 between all three cards. Therefore, the higher the combined credit limit, the more wiggle room available to the smart consumer. Secured credit cards are convenient for increasing spending limits because the initial spending limits are set by the amount of the refundable deposit, not by the consumer’s credit score.

Consumers who have struggled with debt in the past, however, should be prepared for a possible setback: just because a person is willing to put a deposit down for a secured credit card does not mean that, even with the deposit, they will be approved. If this happens, there is no reason to panic. Most banks offer secured credit cards for their customers, and these cards have much higher acceptance rates than other secured credit cards. Good credit is not necessary for opening a bank account, just an initial deposit of a minimum amount. Therefore, consumers without a bank account need not worry about what will happen if they attempt to open one: most banks will set up an account for any customer with an income and an initial minimum deposit. Once an account is opened with the bank, applying for a secured credit card should be a simple process.

Starting out, building credit can be a frustratingly slow process. A consumer may not be able to qualify for three to five good credit cards initially. It is important for a consumer in this position to stay focused on the future and stay vigilant against exploitative credit card offers. Sites like nerdwallet.com and thepointsguy.com can be helpful for comparing credit offers. However, just as there are deceitful credit card offers, there are deceitful credit card rating sites. It is therefore important not only to research any credit card before applying for it; it is also important to do at least a little research on the credit card rating site one uses to compare credit cards. Selecting the right credit cards is, for most people, the most difficult part of the credit-building process. Once the cards are applied for and received, automatic payments can and should be set up. After this step, the process becomes simpler: just use the cards and check their balances regularly to make sure they are being paid off and aren’t being maxed out. A little effort in the beginning goes a long way. And with the proper preparation, the road to good credit is not only smooth—it is surprisingly short.

 

By

Reagan Healey

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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How Often Can I File Bankruptcy? How Many Years Do I Have To Wait?

How often can I file bankruptcy?  How many years do I have to wait?

 

Chapter 7 and Chapter 13 bankruptcies are both protection from creditors granted to individuals or companies who legally file for bankruptcy.  A Chapter 7 bankruptcy is only 90-day from filing to discharge and you do not file a plan of repayment.  A Chapter 13 lasts from three to five year and provides for repayment of debts by a court-approved plan.

 

When you file either a Chapter 7 or a Chapter 13, you purpose is to discharge your debt.  There are time restrictions on when you are eligible for a discharge, if you have a previous filing.

 

If you have file a previous Chapter 7 and want to file another Chapter 7 you must wait eight years from your previous filing date to be able to file another chapter 7 and be eligible for a discharge. (example: chapter 7 file date of 2/1/2001.  This debtor would be eligible to file a chapter 7 again 2/2/2009)

 

If you have file a previous Chapter 13 and want to file another Chapter 13 you must wait two years from your previous filing date to be able to file another chapter 13 and be eligible for a discharge. (example: chapter 13 file date of 2/1/2001.  This debtor would be eligible to file a chapter 13 again 2/2/2003).  However because a chapter 13 usually takes 3-5 years to complete and receive a discharge, Debtors will generally be eligible after discharge.  It is when a case is dismissed and not completed that the calculation becomes most important.

 

If you have file a previous Chapter 13 and want to file a Chapter 7 you must wait six years from your previous chapter 13 filing date to be able to file a chapter 7 and be eligible for a discharge. (example: chapter 13 file date of 2/1/2001.  This debtor would be eligible to file a chapter 7 in 2/2/2007)

 

If you have file a previous Chapter 7 and want to file a Chapter 13 you must wait four years from your previous chapter 7 filing date to be able to file a chapter 13 and be eligible for a discharge. (example: chapter 7 file date of 2/1/2001.  This debtor would be eligible to file a chapter 13 in 2/2/2005)

 

By

Dawn R. Ravn

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What Is A Chapter 13 Bankruptcy?

What is a Chapter 13 Bankruptcy?

A Chapter 13 Bankruptcy is a debt adjustment repayment plan.  There are several different reasons that a person may be filing a Chapter 13 and several universal requirements that must be satisfied through your proposed repayment plan.  First, we will cover the main reasons why an individual might file a Chapter 13 as opposed to a Chapter 7.

  • Income exceeds the house hold median limit set by each state- In most instances where household that are seeking bankruptcy fall above the median income level the bankruptcy court will determine that you have the ability to repay some, or all, of your creditors with the help of bankruptcy protection.
  • Previous Chapter 7 bankruptcy was filed less than eight years ago in a case where the debt was discharged (this is six years from the date of filing for previously filed Chapter 13 cases)
  • Catching up on secured debt where the filer wishes to keep the collateral (usually a primary vehicle or homestead)- your repayment plan will account for the payment of all secured arrears and give the filer protection while they work to get current
  • Protection of certain assets that would be liquidated in a Chapter 7 Bankruptcy
  • Payment of priority and secured State and Federal tax obligations
  • Payment of property tax arrears owed on the filer’s homestead
  • Payment of child support arrears
  • Protection from garnishment of private student loans
  • Lowering the interest rate on an auto loan
  • In some cases a person may be able to cram down or strip off secured loans (this will depend on the age of the secured loan and the amount of equity you hold in the property)

A Chapter 13 repayment plan must be written to satisfy several requirements, regardless of the driving factor.  A Chapter 13 plan must:

  1. Contain a minimum of 36 months and a maximum of 60 months of payment for filers who are below the median income level. Filers who are over the median income level must have 60 months of plan payments provided for in their proposal.
  2. Pay all priority debt in full over the duration of the plan. Some of the more common priority debts include:
    1. Arrears owed to a child support or spousal maintenance recipient
    2. Tax obligations incurred for the last three to four years that have come due (the number of years determined to be priority will depend on what time of the year the bankruptcy is filed)
    3. The balance remaining balance of any attorney’s fees and expenses owed to your bankruptcy attorney
  3. Payment of all secured taxes owed to the Federal or State taxing authority with interest (this includes property tax debt)
  4. Satisfy the Best Interest test- the creditors that would have been paid through the liquidation of assets in a Chapter 7 must receive at least the same amount over the course of the Chapter 13 repayment plan
  5. Satisfy the Best Efforts test- in most cases a Chapter 13 plan payment must consist of a filer’s full disposable income. This is what is left over each month after an individual pays their regular living expenses.  Your attorney will help you put a budget together that accounts for incidentals and other necessary expenses.

A Chapter 13 Bankruptcy is meant to make your debt repayment more manageable by stopping the collection process, reducing or eliminating interest, and eliminating debt as would be in a Chapter 7.  If a Chapter 13 is right for you it should reduce your financial pressure, allowing you to repay what you are able, and provide protection from your creditors.

 

By

Alyssa F. George

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Joint Bankruptcy Filings

It is a difficult decision for most people to face whether or not to file bankruptcy. Further complicating this for some is the decision of whether or not to file jointly. This is an option that is available only to married couples. A marriage can affect a bankruptcy filing in many ways, including the ability to file jointly, something exclusive to married persons and their spouses.

How do you determine if you should file jointly or individually?  The first consideration should be what type of bankruptcy you are looking at. When you are married, your spouse’s income is included in your budget, as are their expenses. For some, this inclusion could be the difference between a Chapter 7 or Chapter 13 bankruptcy. In many cases, the inclusion of a spouse into the budget calculations can make it make sense to file jointly in a Chapter 13, if both spouses can take the hit on their credit or will see a net positive at the end of the plan period.

The next thing to consider would be the types of debt that you and your spouse have. If you have debts that are owned jointly with a spouse, it is generally in the best interest of both spouses to file together. Joint debts are owned equally by both, meaning that both spouses are responsible for 100% of the balance. To file individually would remove the liability of the filing spouse and leave the non-filing spouse as the only one left responsible for that 100% balance. This includes tax debts that were filed jointly, authorized users on credit cards (whether or not the card was actually used by said user), and medical debts in many states, including Minnesota and Missouri. These considerations can also make joint filing the better choice for married couples.

Finally, with some firms, like Hoglund, Chwialkowski, and Mrozik, PLLC, there is little to no cost difference between filing individually and filing jointly. However, if it is a close set of circumstances and both parties file individually at separate times, there will be separate filing fees, as well as significantly more attorneys’ fees, sometimes double the cost or more. It can be a much more straightforward, and easier process in certain circumstances to just file jointly and wrap everything up in one proceeding.  It is always best to be prepared for all options, and for both spouses to speak with an attorney about how filing jointly or separately may affect their unique situation.

By

Barry N. Moore, Jr.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Chapter 13 Repayment Plan

A Chapter 13 is a repayment plan where certain creditors are paid back in full and others receive a payment of less than what is owed to them. The repayment plan is typically between three and five years depending on the household income of the person filing. The amount of the payment varies drastically from one situation to the next. Some people pay back only 1% of their debt and others pay back 100%. The payment can also be changed through the course of the plan if a person’s situation changes.

Ideally, a payment in a Chapter 13 should be the difference between a person’s net income and necessary living expenses. Necessary living
expenses include rent, transportation, daycare, food, healthcare, and clothing among other things. The court also allows expenses for school activities and entertainment. The idea is that a person filing a bankruptcy is agreeing to pay his/her disposable income into the Chapter 13 for a set period of time or a
commitment period. After this time, the debtor gets a discharge which wipes out any leftover unsecured debt that was not paid back during the repayment plan. Certain debts like student loans survive the Chapter 13 discharge. If at any point a person manages to pay off all the claims filed in the case, then
the case ends.

Chapter 13

The payment in a Chapter 13 can be determined by a few other things as well. Certain types of debt set a floor in the case. Basically, enough money must be paid into the bankruptcy to pay these debts in full for the plan to be approved. These debts include priority taxes (typically comprised of the last three years of taxes) and arrears on domestic support orders. There are other debts that a person filing bankruptcy may chose to include in their case. These set a floor of their own. If a person is filing a bankruptcy to stop a foreclosure, then a person can use a Chapter 13 to catch up on their mortgage arrears through the repayment plan. All the arrears must be paid to do this. A person may also choose to pay for a vehicle though the plan to avoid a repossession or in some cases to pay a lower amount for the vehicle than the contracted amount. That debt must be paid in the plan and creates another floor in the case.

There are many ways to design a Chapter 13 that allow a person to meet these floors. For example, a repayment plan could start off at a lower amount and then the payment could be scheduled to change later on when, for example, a 401(K) loan is finished. This can allow someone who is currently struggling the breathing room necessary to pay enough into a Chapter 13 to cover mortgage arrears and prevent the loss of a home.
It is extremely important to have good legal counseling when entering a Chapter 13 as the rules and requirements are complicated.

Written by Kris Whelchel

Kris Whelchel is an attorney practicing consumer bankruptcy. She handles both Chapter 13 and Chapter 7 bankruptcy cases.

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Applying for a Home Loan After Bankruptcy

Most of us have been conditioned by movies and television to associate personal bankruptcy with a handful of frightening images—movers hauling away furniture, bank officers laughing at an application for a home loan. But not only are these images inaccurate; they also obscure a very important truth. The truth is that for someone considering filing for personal bankruptcy, the frightening part is already upon them. And the frank truth is that for someone who’s falling behind on credit card payments or medical bills, qualifying for a home loan is unlikely without making some changes.

But there’s good news after bad, and the good news is that, for most people struggling with debt, filing for bankruptcy is the end of the frightening part. Depending on whether a person files under Chapter 7 or Chapter 13, their debts will either be discharged or reduced to a short-term payment plan set by their budget. Most creditors will be required to cease and desist attempts to collect, and the former debtor will finally be able to set about building their life without all the chaos and threatening letters. Bankruptcy is, after all, a relief service guaranteed to citizens by federal law, not a punishment.

So how long does it take to buy a house after filing? The short answer is probably around two years. The Federal Housing Administration won’t guarantee a loan until two years after discharge, and most major banks require a minimum of two years after discharge plus proof of extenuating circumstances. A few examples of extenuating circumstances are loss of employment, divorce, and poor health. In fact, most people who file for bankruptcy have suffered these sorts of hardships. These sorts of hardships are a large part of why bankruptcy protections exist. Different banks have their own policies, but for most, applying for a home loan two years after bankruptcy discharge is generally the most practical option.

But before applying for a home loan, a wise consumer should plan. Many creditors, (such as credit card companies) will be happy to extend credit to a former debtor freshly out of bankruptcy. It’s important to take advantage of the reputable offers, as lines of credit, smartly utilized, will help the former debtor to quickly establish an impressive credit score. In fact, a good attorney should advise their client on how best to go about this, so that their client can confidently set the date that they will apply for a home loan with not just a clean slate but also excellent credit.

 

by Reagan Healey

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can I get fired for filing bankruptcy?

In short – No.  Pursuant to federal law, no employer (either federal or private) “may terminate the employment of, or discriminate with respect to employment against, an individual who”:

  • Has filed bankruptcy
  • Has been insolvent before a case has been discharged
  • Has not paid a debt that is dischargeable, or the debt was discharged

Interesting enough, this protection extends to non-filing individuals that are associated with the debt (like a spouse on a joint debt).

Bankruptcy protection for your employment is based in solid reasoning and advances a common good for all.  Bankruptcy protects you from a creditor’s collection efforts; therefore, it only makes sense that it should protect you from discriminatory treatment by a creditor when that creditor is your employer.  An employer may not discriminate against you for filing bankruptcy if you were going to advance or get a promotion and not give you that promotion due to your filing bankruptcy.  In addition, an employer may not demote you for filing bankruptcy.

Now, the protection is a bit tricky when it comes to applying for a new job.  Government employers may not discriminate nor refuse to hire you because you filed bankruptcy.  In fact, to get a government job or gain a promotion, you may be required to file bankruptcy.  For example, a former client had to file bankruptcy to get a promotion that would gain her Top-Secret clearance.  The rationale is that she would not be susceptible to bribes or coercion for access to the Top-Secret information in return for money for her debts.  On the other hand, there is no protection for gaining employment with a private employer.  A private employer can deny you employment based upon your bankruptcy filing.

In short, bankruptcy laws are designed to protect a debtor achieve a fresh start.  When you reach that point where the debt gets too overwhelming and you want freedom from your debt, bankruptcy affords you that opportunity.  In addition to discharging your debt, bankruptcy law allows you the chance to start over.  Starting over is not starting over with nothing as you can keep most property that you need to reorganize.  In addition, you can keep your job and continue earning an income after the bankruptcy is completed.

 

by Jeff Bursell

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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When a bankruptcy case is filed…

When a bankruptcy case is filed, section 541 of the Bankruptcy Code provides that all the debtor’s legal and equitable interests become assets of the bankruptcy estate.  Commencement of a bankruptcy case creates an “estate”.  Put simply, your stuff isn’t yours anymore; it belongs to the bankruptcy estate.  Generally, your creditors must look to the assets of the estate for satisfaction of their claims. The estate consists of all property interests of the debtor at the time of case commencement, subject to certain exclusions and exemptions. For the most part, your bankruptcy estate consists of all of the property that you own when you file for bankruptcy.

What property is included in the bankruptcy estate?  All of it—without exception. When you file for bankruptcy, you tell the court about your property by listing it on Schedule A/B.  The types of property you’ll list include:  real estate (residence, building, or land); vehicles (cars, vans, trucks, tractors, sport utility vehicles, motorcycles, watercraft, motor homes, ATVs, etc); personal and household items (furnishings, electronics, collectibles, sports equipment, firearms, clothes, and jewelry); financial assets (bank, stock, and retirement accounts, business interests, legal claims, tax returns, etc); business-related property and any other assets you own

Categories of Property

Property you own and possess when you file. If you own something and it’s in your possession, it’s part of your bankruptcy estate, even if you owe money on it. Property you possess but that belongs to someone else (like your friend’s DVD collection) are not part of the estate.

Property you own but don’t possess when you file. Even if you don’t possess an item of property that you own, it’s still in your bankruptcy estate. Examples of this type of property include security deposits held by your landlord, money in a lawyer’s trust account, the daughter’s car titled in your client’s name, or property that you’ve loaned to someone.

Property you are entitled to receive. If you have the legal right to property but have not yet received it, it’s still in your bankruptcy estate. Examples include wages, commissions, tax refunds, vacation pay, an inheritance, insurance policy proceeds from an event that has occurred already, and accounts receivable.

Some types of property that you acquire within 180 days after filing for bankruptcy. If you acquire or become entitled to the following items within 180 days after you file for bankruptcy, the property becomes part of your bankruptcy estate:

  • an inheritance
  • property you receive or have a right to receive from a marital settlement agreement or divorce decree, and
  • death benefits or life insurance policy proceeds.

Revenue generated by other property in your bankruptcy estate. This would encompass any earnings produced by contracts that were in effect when you filed for bankruptcy. For example, if you wrote a book before you filed for bankruptcy, any royalties you collect afterwards are part of your bankruptcy estate.

Property that you fraudulently transferred prior to your bankruptcy. If you sold property during the two-year period prior to your bankruptcy for substantially less than property is worth, or if you gifted valuable property during this period, the transfer may be “fraudulent” and the property considered part of your bankruptcy estate. The trustee can sue to get the property back.

Preference payments. Bankruptcy law does not allow you to “prefer” one creditor over another. If you paid creditors more than a certain dollar amount before your bankruptcy filing (the time period differs depending on the type of creditor), the payments may become part of your bankruptcy estate. This means the trustee can sue your creditor to get the money back.

Protecting your Assets in your Bankruptcy Case

Every state has different rules on what property the debtor is allowed to protect and what value the debtor is allowed protect or “exempt” for that property. The Bankruptcy Code allows an individual debtor to protect some property from the claims of creditors because it is exempt under federal bankruptcy law or under the laws of the debtor’s home state. 11 U.S.C. § 522(b). Many states have taken advantage of a provision in the Bankruptcy Code that permits each state to implement its own exemption law in place of the federal exemptions. In other jurisdictions, the individual debtor has the option of choosing between federal exemptions or the exemptions available under state law. Thus, whether certain property is exempt and may be kept by the debtor is often a question of state law.  Minnesota allows debtors to choose between state and federal bankruptcy exemptions. This means that your attorney has examined both sets of exemptions and elected the exemptions that better protect your assets.

 

The bankruptcy petition filed includes a schedule of “exempt” property And law allows married couples filing jointly to each claim a full set of exemptions, unless otherwise noted.

An exemption limit applies to any equity you have in the property. Equity is the difference between the value of the property and what is owed on the property. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500.

 

Filing bankruptcy under Minnesota exemptions does not mean that you have to give up all of your property. Through exemptions, you can keep a certain amount of your assets safe in bankruptcy. Many exemptions protect specific types of property, such as a motor vehicle or your wedding ring. Sometimes an exemption protects the entire value of the asset. Other times, an exemption protects up to a certain dollar amount of an asset. If you can exempt an asset, then you don’t have to worry about it being taken or affecting your bankruptcy.

If your specific asset does not have an exemption or goes over the dollar amount allotted to protect the asset, then that asset becomes fully or partially non-exempt (not protected in your bankruptcy).  To keep a non-exempt asset in bankruptcy, a debtor must generally pay the trustee the value of the non-exempt asset.  The debtor also has the ability to turn that asset over to the trustee if they do not want to pay to keep it.

 

by Dawn Ravn

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Chapter 13 is a Repayment plan …

A Chapter 13 is a repayment plan where certain creditors are paid back in full and others receive a payment of less than what is owed to them. The repayment plan is typically between three and five years depending on the household income of the person filing. The amount of the payment varies drastically from one situation to the next. Some people pay back only 1% of their debt and others pay back 100%. The payment can also be changed through the course of the plan if a person’s situation changes.

Ideally, a payment in a Chapter 13 should be the difference between a person’s net income and necessary living expenses. Necessary living expenses include rent, transportation, daycare, food, healthcare, and clothing among other things. The court also allows expenses for school activities and entertainment. The idea is that a person filing a bankruptcy is agreeing to pay his/her disposable income into the Chapter 13 for a set period of time or a commitment period. After this time, the debtor gets a discharge which wipes out any leftover unsecured debt that was not paid back during the repayment plan. Certain debts like student loans survive the Chapter 13 discharge.  If at any point a person manages to pay off all the claims filed in the case, then the case ends.

The payment in a Chapter 13 can be determined by a few other things as well. Certain types of debt set a floor in the case. Basically, enough money must be paid into the bankruptcy to pay these debts in full for the plan to be approved. These debts include priority taxes (typically comprised of the last three years of taxes) and arrears on domestic support orders.  There are other debts that a person filing bankruptcy may chose to include in their case. These set a floor of their own. If a person is filing a bankruptcy to stop a foreclosure, then a person can use a Chapter 13 to catch up on their mortgage arrears through the repayment plan. All the arrears must be paid to do this. A person may also choose to pay for a vehicle though the plan to avoid a repossession or in some cases to pay a lower amount for the vehicle than the contracted amount. That debt must be paid in the plan and creates another floor in the case.

There are many ways to design a Chapter 13 that allow a person to meet these floors. For example, a repayment plan could start off at a lower amount and then the payment could be scheduled to change later on when, for example, a 401(K) loan is finished. This can allow someone who is currently struggling the breathing room necessary to pay enough into a Chapter 13 to cover mortgage arrears and prevent the loss of a home.

It is extremely important to have good legal counseling when entering a Chapter 13 as the rules and requirements are complicated.

Written by Kris Whelchel

Kris Whelchel is an attorney practicing consumer bankruptcy. She handles both Chapter 13 and Chapter 7 bankruptcy cases.

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Bankruptcy & Child Support

Bankruptcy allows most debts to be wiped away and is meant to give the debtor filing a bankruptcy a fresh start. However, some debts do survive bankruptcy.

Child support is not a debt that can be discharged in a bankruptcy. Child support has been placed in a special category of debts that automatically survive a bankruptcy discharge.

When a person, who owes child support, files a Chapter 7 bankruptcy, that person must still pay the ongoing child support obligation as well as any arrears. The ongoing support will continue through the bankruptcy and after the bankruptcy as if no case was ever filed. Any arrears will pass through the bankruptcy and continue to exist as if the bankruptcy never occurred as well.

When a person, who owes child support, files a Chapter 13 bankruptcy, that person must continue to pay their ongoing obligation and any arrears will need to be paid through the Chapter 13 repayment plan. A Chapter 13 bankruptcy is essentially a repayment plan where a person can pay back certain debts over the course of a three- to five-year period.

A Chapter 13 can provide a method to get back on track with child support arrears as it allows a person to have a repayment schedule where all the person’s disposable income is used to bring the child support obligation current. In some circumstances, entering into a Chapter 13 repayment plan will stop license suspensions or other legal action.

Either bankruptcy can allow a person a chance to focus their efforts on paying back a debt that cannot be eliminated.

Written by Kris Whelchel

Kris Whelchel is an attorney practicing consumer bankruptcy. She handles both Chapter 13 and Chapter 7 bankruptcy cases.

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Debt Consolidation Versus Bankruptcy

A debt consolidation or frequently called debt management plan is a voluntary program to help clients resolve credit problems and pay debts through one monthly payment. The client typically pays their payment into a type of escrowed savings account and the servicer of the debt management plan will typically negotiate with creditors to attempt to lower interest rates, stop late and over-limit fees, lower monthly minimum payments and pay off debts in fewer than 5 years. The disadvantages of a debt management program are that the servicer cannot always guarantee that all creditors will engage in the plan, and at times the creditors will still pursue outside legal action against the client which will still create a need for a bankruptcy filing to protect money and property. Additionally, the creditors will still be reporting negative remarks on the client’s credit report during the debt management plan, as they are not receiving their regular monthly payments in a timely fashion.

While many people engage in debt management plans in order to avoid bankruptcy, many times they will still pursue bankruptcy at a later time due to issues with credit resolution and lawsuits during that plan. Chapter 7 bankruptcy can effectively discharge the debt in a 90-day period, provide legal protection and with Hoglund Law, our clients are enrolled in a program 720creditscore.com in order to rebuild their credit within 2 years. This is a much shorter time frame and much greater benefit than a debt management plan. If Chapter 7 is not an option, often times a Chapter 13 will still greatly benefit someone considering a debt management plan, as the client would only be required to pay their disposable income (what they can afford versus what they owe) into the plan over 3 or 5 years while offering them legal protection from creditors. Additionally, Chapter 13 clients are also enrolled in the credit repair program to ensure they will have a high credit score when they are done with their Chapter 13 bankruptcy.

Therefore, it is important to consult with a bankruptcy attorney who can assess your options to ensure protection and the best avenue to rebuilding credit. Under most circumstances, a debt management program is going to be a last resort in the event that bankruptcy is not beneficial to their situation.

Please contact Hoglund Law to set up a free consultation to go over all the options that may be available to you to handle your existing debt.

Written by Ann Hagerty

I have a passion for working directly with clients and helping them navigate difficult financial decisions. I love practicing in bankruptcy because it is one of the rare opportunities in life where someone can start fresh and free themselves of financial stress.

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Credit card and medical debt

Credit card and medical debts are two of the most common debts that our clients are struggling with when we meet them for the first time. Thankfully both credit card and medical debts can be included in a bankruptcy filing. In a chapter 7 bankruptcy all credit card and medical debt is fully discharged (wiped away). In a chapter 13 bankruptcy, a portion of your credit card or medical debt is repaid through a structured payment plan based on what you can afford to pay towards those debts.

While you cannot pick and choose which debts to include or not include, you can choose to voluntarily repay any creditor after the bankruptcy is over. This means that you cannot choose to file bankruptcy for your medical debt only or your credit card debt only. You must list all debts that you have at the time of filing. For example: if you have $15,000 of medical debt that you want to get rid of but a credit card with a $5,000 balance that you want to keep, both debts must be listed, and both will be included in the bankruptcy. In this example, when the bankruptcy is over you would no longer have any legal obligation to pay the $5,000 credit card back, but you could choose to do so voluntarily if you wanted. It is very likely, however, that the credit card company will close the account either way. It is best to start fresh entirely once your bankruptcy is complete.

 

by Megan M.R. McCarthy

Written by Megan Rowley McCarthy

Megan joined Hoglund, Chwialkowski and Mrozik in September 2014, as an associate bankruptcy attorney.

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Retirement Accounts in Bankruptcy

A common question when someone is considering filing for bankruptcy protection is whether they can keep their retirement account through the process or if they would need to surrender the funds to the creditors. The good news is that in a majority of bankruptcy cases, retirement accounts are exempt from creditors, so you will not lose your retirement account in the bankruptcy.  It is important to point out that the retirement account exemption applies to funds while they are in a qualified retirement account. If the funds are cashed out of the account prior to filing a bankruptcy, the cashed out funds will no longer be protected as retirement funds.  You should always consult with an experienced attorney before cashing out any retirement accounts.

Of course there are always special circumstances where a typical retirement account may not be protected. In order for a retirement account to be exempt, the account needs to be ERISA qualified. The most common retirement accounts, 401(k), 403(b), TSP, PERA, MSRS, TRA, are generally all qualified accounts. IRA’s are also generally qualified, but the courts have ruled certain IRAs are not exempt. These include inherited IRAs or IRAs from a divorce. If you have an IRA and the funds were all from your earnings, it is exempt and protected from creditors. There are also other accounts that people may consider their retirement funds, but would not be protected as a retirement account in a bankruptcy. These include stock accounts and non-qualified annuities. But they may be protected under another exemption.

Bankruptcy exemptions can be complicated and there are many gray areas. You should consult with an experienced bankruptcy attorney to know for sure what retirement accounts are exempt and protected from creditors through the bankruptcy process and wait to make any changes to those accounts until after consulting an attorney.

Written by Gina Beckman

1. Gina Beckman is a graduate of St. Thomas School of Law, where she studied bankruptcy law and was accepted into the bankruptcy clinic. She was also accepted into an externship with a bankruptcy judge. She has been practicing bankruptcy law for 4 years.

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Can you Keep your House and Automobile in a Bankruptcy?

Filing chapter 7 bankruptcy Is a big decision that comes with many worries and questions.  Some of those worries include whether you can keep your house or whether you can keep an automobile in a chapter 7 bankruptcy.

The equity in your home and your automobile is protected by “exempting” it from your chapter 7 bankruptcy case. Every state has different rules on what property the debtor is allowed to protect and what value the debtor is allowed protect or “exempt” for that property.  (this is listed as your state’s exemptions).  Each state also determines whether its residents can use the state exemptions, the federal exemptions or whether you have the ability to choose what works best for your situation.

If you file for Chapter 7 bankruptcy, generally you can keep your house as long as:

  1. The equity in your home is fully exempt, which means fully protected by the state laws of bankruptcy, and
  2. As long as you are current on your home.

If you have fallen behind on your house, a chapter 7 will not help you keep your house or get current on your house payments.  A chapter 7 may help you remain in your home a bit longer – but inevitably will result in foreclosure.  At this point, a Chapter 13 could be a viable option to help you keep your house; as long as your income allows for you to provide for a chapter 13 payment and cure the arrears on the home

 

If you file for Chapter 7 bankruptcy, generally you can keep your automobile as long as:

  1. The equity in your automobile is fully exempt, which means fully protected by the state laws of bankruptcy, and
  2. As long as you are current on your automobile.

As with a house, if you are behind on your automobile, a chapter 7 will not help you keep your automobile or get current on your automobile payments.

 

by Dawn Ravn

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Filing Bankruptcy: Before or After a Divorce?

Divorce is one of the most common reasons that people consider filing bankruptcy. On top of being a taxing time emotionally for many, it can also be a large financial burden. Along with other issues, the impact on both parties’ financial situations and their debts can be too much for some to handle.  Bankruptcy can be a solution for this, and there are many things to consider when it comes to the timing of such an undertaking.

The first thing for most to consider is whether they should file jointly, or separately. There are many benefits to filing jointly. The filing cost is the same whether the bankruptcy petition is joint, or individual, and filing jointly often has little increase in attorney’s fees, while filing individually can double those fees, or more.  There may be other factors to consider, such as your income and how that can affect your eligibility for certain types of bankruptcy.

Chapter 7 is a very quick version of bankruptcy often referred to as a liquidation. This type of bankruptcy is designed to handle certain kinds of unsecured debts such as credit cards and medical bills and can be completed in only several months.  However, household income and expenses can affect your ability to qualify, therefore waiting until after a divorce can sometimes be the quicker and easier route for an individual to take.

Chapter 13 is a more comprehensive type of bankruptcy in which certain debts are paid through a 3 – 5 year plan, either in part or in full. This type of bankruptcy can be the better choice for some, in order to protect certain assets or to address certain kinds of debt. Income is again a consideration here as it could affect how much the plan payment is.  Also, some divorces can be contentious, and it may be wise to consider the relationship with the ex-spouse before entering into a 3 – 5 year legal process with them amidst a divorce proceeding.

Bankruptcy can help make a divorce proceeding easier by eliminating the need to decide which spouse will be responsible for which debts through that process, especially through the quicker process of a Chapter 7 liquidation. In such cases filing bankruptcy before a divorce can be especially helpful when combined with the cost saving considerations of a joint bankruptcy discussed earlier.

If you want to discuss when filing bankruptcy may work best for you, speak with an attorney today.  Many attorneys offer free consultations and can help guide you towards the decision that will best help you.

 

by Barry Moore

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Are there disadvantages to filing bankruptcy?

The answer to that question completely depends on your financial situation before filing.  If you have perfect credit, can pay your bills on time and in full each month and could pay off all your medical and/or credit card debt in less than a year, then there could be disadvantages to filing bankruptcy.

However, if you are searching for bankruptcy information, chances are you do not fit into this category.  If you have debt that you cannot service, if your credit score is sink faster than the Titanic or if you are facing constant threat of a lawsuit, then the advantages of filing bankruptcy far outweigh the disadvantages.

The real question to research is – what are the advantages to filing bankruptcy?  The number one advantage to filing bankruptcy as opposed to not filing is your ability to obtain a fresh start.  The United States does not have a debtor’s prison, but the strain from debt piling up can act as a prison to financial freedom.  In most cases, you can discharge your debts (such as credit cards, medical, other loans and some taxes), keep your assets and move forward with life in about three months.

Once you file bankruptcy, your credit report will have to be cleaned of all inaccuracies.  You should know that you are protected by Federal Law when it involves the information contained on your credit report.  Bottom line – your credit report should be accurate.  For example, if after bankruptcy, one of your credit lines is still showing a balance or still in collections, then you have a right to demand that they fix the credit report.  You want to dispute all inaccuracies to make sure that your FICO score is not lowered because one of your credit lines fails to report accurate information to your bureaus.

After you get your inaccuracies all fixed, you should focus your attention to your credit score.  To improve your credit score, you can read many of the books available regarding credit score repair.  Our office provides a service for our bankruptcy clients through www.720creditscore.com.  With the help of 720 Credit Score, you can obtain a credit score of 720 in as few as 12 months.

Disadvantages to filing bankruptcy fade away rather quickly when you ask the right questions: where is your credit score now? Can you get out of debt within 1 year? Do you have lawsuits pending?  If your answers to these questions are yes, then bankruptcy could be the most positive thing you do to improve your financial life.  Do not let fear get in the way of financial freedom.

by Jeff Bursell

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Chapter 13 Can Release the Pressure of Auto Title Loans

Many car owners turn to car title loans to try and get through a financial crunch. Car or truck title loans have become a much more common attempt to prevent a financial crisis: about 2 million Americans took out these types of loans in 2015. The concept sounds very appealing; there is a family crisis and cash is needed immediately to deal with it. The borrower can keep driving the car they need to get to work or school and the emergency is also handled. There are two types of payment terms for title loans; either all the emergency cash is paid back in one payment a short time later, or the balance borrowed can be paid back in installments over a slightly longer period of time. However, this temporary relief comes at a hefty price for many; a recent federal study found that 1 in 5 vehicle owners who took out a title loan ended up losing the car or truck to repossession. Once the car or truck is taken by the title loan company, the borrower is left without transportation and must again find a way to quickly get cash to have the vehicle returned by paying off the entire balance of the title loan. These loans sometimes have different terms than general financial principles would dictate. Usually, when a car or truck is given as collateral for a loan by the owner, the interest rates are low because the value of the car or truck or SUV serves as a kind of insurance that the financer will not lose any money. The terms of the contract say the financer can take the vehicle and sell it to recover the money borrowed if the borrower does not pay on time. Title loans, however, have some of the highest interest rates in the consumer finance world; typical interest rates can be higher than 300%. These higher interest rates make it much more difficult to pay off these loans. Paying back only the amount borrowed without paying all the interest means there is still a balance outstanding and that remaining balance must be paid as well. Consumers who want to get these types of loans are not able to negotiate lower interest rates with the financers and have to accept the interest rate offered in order to get the loan.

Cash-strapped consumers can get out of the financial corner these loans can create by meeting with an experiences attorney and using a powerful concept in a Chapter 13 reorganization called cramdown. Car and truck owners can restructure the loan secured by the vehicle as part of the overall reorganization and keep their necessary transportation. Terms that are otherwise not flexible can be made more manageable by reducing the interest rate to a court-ordered level and giving families enough time to pay the balance at the new interest rate over more time than typically allowed under the initial contract. Chapter 13 cramdown of car and truck loans are just part of the relief available to consumers who have debts secured by their vehicles and a consultation with an attorney who is familiar with the relief available to people in a chapter 13 case can mean the difference between having the financial pressure created by pursuing creditors trying to repossess someone’s only means of transportation and having a financial plan in place that works and allows for financial peace of mind.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Why am I paying an attorney to help me file bankruptcy when I am doing all the work?

This is one of the most common questions I receive during the free consultations provided by our firm. It seems like a fair question at the outset, but the reality is, filing for bankruptcy is more complicated than most people realize. There is a lot of document gathering that needs to be done by the client that cannot be done by the attorney. This gives the impression that the client is doing all the work. However, there are a lot of nuances to the bankruptcy code that can have devastating affects if not addressed properly. That is the reason that it is wise to pay an attorney to help file your bankruptcy.

One of the biggest nuances is protecting the equity in your home. There are limits on how much equity an individual can protect before they may have to turn over other assets. The attorney must help the client understand what assets, if any, may be at risk. A plan must then be formulated on how to handle those assets; whether it is to sell before filing or pay the bankruptcy estate to keep the asset. If you don’t own a home, there are still plenty of other reasons to hire an attorney.

Another potential asset at risk in a bankruptcy is a tax refund. Depending on how large your tax refund is going to be and how many other assets you have, it may be that you need to wait to file your bankruptcy so you don’t have to turn over a portion or all of you tax refund over to your bankruptcy estate. Careful planning by an attorney could save you more money than you pay in attorney fees.

So while your attorney may ask you to gather a lot of documentation to file your case, you could be out more money than if you had hired them.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Debts and Divorce

If you have been involved in a divorce, you may be wondering what happens to the debt that was divided in your divorce agreement. You may also wonder what happens if your ex files for bankruptcy. These answer depend on a few factors surrounding you and your ex.

If the debts you split in your divorce agreement were joint, you are still on the hook for paying the full amount even if your ex is awarded the full debt amount in the divorce. However, you can be reimbursed by your ex if you back the debt. To do this may require to go through the court system if your ex does not voluntarily pay you back. Going through the courts to collect may cost you more than filing for bankruptcy.

On the flip side, if you were awarded a joint debt in the divorce agreement, filing for bankruptcy does not get you off the hook to reimburse your ex if they pay the debt. Filing for bankruptcy only prevents the creditor or collection agencies from collection efforts. The divorce agreement can still force you to pay damages to your ex for violating the divorce decree.

If you are considering a divorce, it may be wise for you and your spouse to file bankruptcy together before filing for divorce. Doing so can cut down on the headaches described above. It can also cut down on the costs of your bankruptcy and your divorce. Contact us today for a free consultation to review your options.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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A Default Judgment Has Been Entered Against Me, How Can I Protect Myself?

If you missed the deadline to fight a lawsuit against you and you do not have a viable defense, a default judgment will be entered against you. Once the judgment is entered against you, the creditor will be able to initiate a garnishment action by which they can attach to money in your bank account or wages.

The creditor will issue a garnishment summons on a third party such as your employer or bank, by which the third party will be required to withhold the funds from your wages or set aside funds out of your financial account.

A creditor cannot generally garnish more than 25% of your wage earnings or any at all if you make less than $290/week. If you have a levy on your bank account, you will need to fill out a form claiming 75% of the amount taken is exempt called a “Debtors Exemption Form” and providing documentation that the income in your account came from wages. If the garnishment is through your employer, they will generally calculate the 25% and set it aside for your creditor.

Additionally, if you received any of the following sources of government assistance in the past 6 months, you are considered to be 100% exempt from garnishment:

  • Minnesota Family Investment Program
  • Work First Program
  • Medical Assistance
  • General Assistance
  • General Assistance Medical Care
  • Emergency General Assistance
  • Minnesota Supplemental Aid
  • MSA Emergency Assistance
  • Supplemental Security Income
  • Energy Assistance and
  • Emergency Assistance.

If you believe you are exempt from garnishment, you need to fill out the same “Debtors Exemption Form” indicating all your funds are protected, along with proof of the assistance received and the previous 60 days of bank statements. You cannot simply call the creditor’s attorney; you must respond to the garnishment summons in writing by claiming the exemption.

Garnishments are very serious and can cause serious financial hardship for anyone trying to deal with the involuntary repayment of your debt. Bankruptcy is another way to stop the garnishment and is often times an opportunity to recover some of the funds that were taken from you. If you wish to avoid further garnishments or levies, please set up your free consultation with one of our experienced bankruptcy attorneys.

Written by Ann Hagerty

I have a passion for working directly with clients and helping them navigate difficult financial decisions. I love practicing in bankruptcy because it is one of the rare opportunities in life where someone can start fresh and free themselves of financial stress.

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Duration of Chapter 13

Chapter 13 bankruptcies have a minimum commitment period of three years and a maximum of five years. This means that the repayment plan in a Chapter 13 will last somewhere between three and five years. A number of considerations determine this.

The first consideration is whether a debtor is below or above the median income. The median income is the median income for the household size of the debtor in the state the debtor lives in. If the debtor is below the median income, the debtor can elect a three-year plan. If the debtor is above the median income, then the debtor must have a five-year plan.

If the debtor is below the median income, the debtor may choose to enter a repayment plan that lasts longer than three years. For example, if the debtor is filing a Chapter 13 in order to pay mortgage arrears and stop a foreclosure, then debtor may elect to file a five-year plan. The debtor may choose this to keep the payment in the Chapter 13 more affordable. All mortgage arrears must be paid back in full over the course of the plan. Stretching the plan over 5 years would allow for a lower payment in some circumstances. The debtor could also elect to have the plan duration be any number of months between 36 (three years) or 60 (five years).

 

By Kris Whelchel

Written by Kris Whelchel

Kris Whelchel is an attorney practicing consumer bankruptcy. She handles both Chapter 13 and Chapter 7 bankruptcy cases.

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I Received a Complaint Saying My Creditors Are Suing Me, What Do I Do Now?

If you received a lawsuit document indicating the creditor is attempting to sue you, it can be a worrisome situation. When you receive the initial complaint, it indicates a law firm is representing the creditor to further pursue their claim against you.

The first step in the process is for the creditor to serve you with a “Summons and Complaint” document indicating the nature of the lawsuit. In the paperwork, it will set forth the factual allegations and legal complaints against you. They can “serve” the lawsuit on you in one of two ways:

  • by delivering it to you personally or leaving it at your home with a person of suitable age and discretion; or
  • by mail, if you agreed in writing to accept service of the Summons and Complaint by mail and signs a form that indicates your acceptance.

 

If you wish to contest the lawsuit, you need to serve the creditor’s attorney with a form called an “Answer.” If you do not provide the Answer in the time period of 20 days, the creditor may enter a default judgment against you which allows them to take further action.

There are several defenses against the lawsuit; however, not being able to afford to pay the debt is not a defense. Some of the available defenses are: improper service, statute of limitations, FDCPA violations, lack of standing, proof of payment, fraud, mistaken identity and lastly bankruptcy.

Filing bankruptcy is a protection against a lawsuit served upon you and can be used as a defense to stop any further action. When you receive any lawsuit document, it is important to consult with an attorney who can give you advice about your specific situation. One of our experienced bankruptcy attorneys can sit down with you and review the lawsuit to give you the best advice towards your next steps.

 

By Ann Hagerty

Written by Ann Hagerty

I have a passion for working directly with clients and helping them navigate difficult financial decisions. I love practicing in bankruptcy because it is one of the rare opportunities in life where someone can start fresh and free themselves of financial stress.

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My Credit Score After Filing Bankruptcy:

Your credit score will take a hit after filing a chapter 7 bankruptcy. If your score was low before you filed, the drop will not be as significant as if your score is high. The fact that you filed bankruptcy will show up on your credit score for about 10 years, but that alone is not going to keep you from getting that new car, apartment, house, etc. Needless to say, the fact that you filed and a drop in your credit score is not the end of the financial world. The key is what you choose to do after the bankruptcy. Rebuild.

Filing your chapter 7 bankruptcy will the stop the bleeding in the injuries caused by your debt. As soon as your case is filed the creditors stop calling, wage garnishments and bank levies come to an end, foreclosure or repossession actions come to a halt, and minimal payments are no longer required.  Once the stress of creditor harassment comes to an end, it is time to rebuild your credit. This is an endeavor we do not want you to undertake alone. Our office works with the 720 Credit Score program to help our clients rebuild towards their financial goals after filing. 720 Credit Score is a seven step program that guarantees your credit score will be 720 or higher within 12-24 months after receiving your chapter 7 discharge. Call us today to set up an appointment and learn more about this program.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Social Security Income and the Means Test

When filing a Chapter 7 or 13 bankruptcy, a debtor must show that he passes the means test. The means test is basically a series of calculations that are supposed to show, in theory, whether or not the debtor has enough income to be able to pay back his creditors. To perform the means test, one must determine what the debtor’s income is. Almost all sources of income are to be taken account of on the means test. The amount of the income is determined by taking the six month average of the debtor’s various sources of income.

Social Security Income gets special treatment on the means test. It can be completely excluded. That means that Social Security Income does not have a negative impact when the means test is used to determine if someone may qualify for a Chapter 7.

The means test is not the only determining factor on what type of bankruptcy a person is allowed to file. The actual budget of a person is taken into consideration as well. This budget is represented on Schedules I and J. If Schedule J, shows a substantially positive amount, chances are that the debtor will not be able to qualify for a Chapter 7.

Social Security Income can also be excluded from a debtor’s budget. Therefore, it will not have an impact on a person’s qualification for a Chapter 7 here either.

If an individual wishes to file a Chapter 13, he may elect to include their Social Security income on his budget, so that he can show he does have enough income to afford a repayment plan.

 

By Kristen Whelchel

Written by Kris Whelchel

Kris Whelchel is an attorney practicing consumer bankruptcy. She handles both Chapter 13 and Chapter 7 bankruptcy cases.

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What is a Bankruptcy Trustee and what does it have to do with my Bankruptcy Case?

When you file a Chapter 7 bankruptcy, not only will you be working with an attorney, you will also work with bankruptcy trustee. While you will be working closely with your attorney throughout the whole filing process, you will not meet the trustee until the meeting of the creditors (also known as your 341 hearing).

The trustee is a third party, appointed by the United States Trustee, she herself is not a government employee. She does not represent you and she does not represent your creditors. The trustee represents the bankruptcy estate, and has several duties in doing so.

The trustee’s duties include:

  1. Conducting the meeting of creditors;
  2. Investigating your assets and claimed exemptions;
  3. Checking for fraud or inaccuracies and making objections when appropriate;
  4. Reviewing your right to a discharge;
  5. Sending any required notices related to domestic support obligations;
  6. Determining whether there any non-exempt assets to liquidate and distribute amongst your creditors;
  7. Gathering, protecting and preserving any non-exempt assets of the estate, or
  8. Ensuring statement of intention provisions are followed;
  9. If applicable, filing a report stating that no assets have been found

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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How Will a Bankruptcy Affect my Credit?

People often wonder how filing for bankruptcy will affect their long term credit. Some have the misconception that a bankruptcy will ruin their chances of ever having a good credit score. While it is true that a bankruptcy will stay on a credit report for ten years it is not the end for a person’s chances at having good credit.

In the short term a person’s credit might take a drastic hit after filing for bankruptcy. This depends on the credit score at the time of filing. The higher the score before filing the further it will fall. For example a person with a score of 680 before filing could see it fall to 550 while a person with a score of 780 could fall to 560. If a score is in the 500s or lower at the time of filing there may not be much change.

After the bankruptcy a person can begin to rebuild. Having a bankruptcy on your record will be a negative mark for some potential creditors. It may take some time after filing before a person is able to get a new loan. However, many people are surprised to find they are able to get car loans and new credit cards relatively quickly. The interest rates may be high and the credit limits low, but it is a start. By being careful and paying back any new debt on time a credit score can start to rebuild. While the bankruptcy may show up on a credit report for ten years a score can be repaired within a few years. The bankruptcy is a fresh start for people looking to build a secure financial future.

Sources:

Bankruptcy timeline: Rebuilding credit

https://www.bankrate.com/finance/debt/bankruptcy-timeline-rebuilding-credit-1.aspx

How to Rebuild Your Credit After Bankruptcy—Fast

https://www.huffingtonpost.com/curtis-arnold/how-to-rebuild-your-credi_b_5790860.html

Credit Report Q&A

https://www.myfico.com/crediteducation/questions/credit_problem_comparison.aspx

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can my Garnished Funds be Recovered After Filing a Bankruptcy?

The short answer is yes. The long answer is yes, but it depends on the situation. If a creditor has garnished a debtor’s funds there are ways for the debtor to recover some of the money after filing bankruptcy.

Any funds taken by garnishment or levy within the 90-days prior to the bankruptcy filing can potentially be recovered. If the total amount is $600 or more a debtor can make a claim for the return of the funds. However, in a bankruptcy a debtor can only protect a certain dollar amount of their assets. If the debtor has already exceeded the amount which could be protected the garnished funds cannot be recovered. In that situation the bankruptcy court may attempt to recover the funds and then distribute them evenly to all the debtor’s creditors.

If the creditor refuses to return the garnished funds a debtor does have the option of filing a claim with the bankruptcy court. The court may compel the creditor to return the funds. However, it does cost money to file the claim so a debtor will need to weigh the cost of the claim against the amount that could potentially be recovered.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can I Keep my Yearly Bonus in a Chapter 7 Bankruptcy?

Some employers give their employees yearly bonuses and holiday bonuses. If you are thinking of filing a Chapter 7 bankruptcy, there are a few things you should know if you have just received a bonus, or if you are expecting a bonus within the next year.

As a general rule, if you have received a bonus within the last six full months, the bonus may be included in calculating your income to determine whether you qualify for a Chapter 7 bankruptcy. When you file a Chapter 7 bankruptcy, the United States Trustee will average your last six full months of income to decide whether you qualify for a Chapter 7. For example, if you file for a Chapter 7 bankruptcy in July, the trustee will look at your average income from January to June. If you have received a bonus within these six months, the Trustee will include the bonus in your average income. If the bonus is a large bonus, it may affect whether you qualify.

One possible solution is to wait until your bonus falls off of the six month average before filing for bankruptcy. Suppose that you received a bonus on January 1. If you file for bankruptcy in July, this bonus will likely be included in your six-month average to determine whether you qualify (January to June). But if you wait to file until August, your January income will no longer be included to determine whether you qualify for bankruptcy, so you may have an easier time qualifying.

You should keep in mind that the Trustee can also look at any bonuses are you entitled to receive within the next year after you file for bankruptcy. Future bonuses do not factor into whether you qualify for bankruptcy, but a future bonus may be considered an asset in your case. The reason for this is that even if you have not yet received a bonus, if you are entitled to the bonus at the time you file your case, it is considered an asset in your bankruptcy. Depending upon the other assets that you own, you may be able to keep your bonus, or you may have to give up the bonus to the trustee when you do receive it. Whether you can keep your future bonus when you file for a Chapter 7 bankruptcy depends on the facts of your case. You should consult your attorney if you are expecting to receive a bonus within the next year, to determine whether you can keep your bonus.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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How Bankruptcy Effects Credit Score

No ifs, ands or buts, your credit score will drop.

How low?

It depends. What does your credit score look like now? If your credit is fairly unblemished prior to filing, you can expect a large drop in your score. However, if your credit is already tarnished and full of negative items, your score may see only a slight drop. A 2010 FICO report showed that an individual starting with a credit score of 780 could drop to 540 and an individual with a 680 score could fall to 530. While these are only examples, they demonstrate that an individual with a higher score to begin with has a farther way to fall, but both individuals land in close proximity (530-540). Until you file, it is impossible to state where you will land. Your credit score may be affected more or less.

How long will the bankruptcy negatively affect your credit score?

A bankruptcy will stay on your credit report for 10 years. BUT, as time passes and positive information supplements your report, the impact becomes less and less debilitating. Further, if you are motivated to rehabilitate your credit, it can be done. Your credit score can be rebuilt in 1 – 3 years.

So how do I move on and rebuild my credit after I file for bankruptcy?

Start by verifying that your credit report is free from errors. The major credit reporting bodies are TransUnion, Equifax, and Experian. Check that your report from each of these institutions is accurate and lists your pre-bankruptcy debts as “included in BK.” From there, be sure to check back on your credit score regularly (every 4 months). Eventually, you will be able to request that the pre-bankruptcy debts be removed from your report altogether.

Next, make an honest assessment of your finances and what led you to file bankruptcy in the first place. If you fail to recognize what went wrong the first time, you will likely fall into the same pattern and end up in the same trouble as before. Once you have recognized these financial faults, weed them out and start taking action to establish positive credit.

Right after filing it will be difficult to borrow money. Why? Because you are considered a greater risk to the lender, often referred to as a subprime borrower. As a result, you will likely be offered higher interest rates and greater penalties for defaulting. On the other hand, some credit card companies may find you to be a better risk and will start sending you offers immediately after you file bankruptcy. This belief that an individual who has just filed is a good risk for credit card companies is rooted in the fact that bankruptcy law forbids individuals to receive a second discharge in a Chapter 7 bankruptcy within eight years of the first filing. Meaning: a debtor cannot rid himself of the responsibility of newly acquired credit card debt for another eight years.

Remember this: THERE IS HOPE. YOUR CREDIT IS NOT LOST FOREVER! It may take some self-assessment and discipline, but it is absolutely possible. It will be more difficult at first, but as was alluded earlier, as time passes the positive elements to your credit will increase and the “bad” will begin to dwindle.

 

 

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

View all author posts →