Frequently Asked Questions

(To either display or hide the contents for a Frequently Asked Question, click the question.)

Can I save my home?

This is the first question our clients often ask us. They typically are very relieved when we give them the good news.

Yes, the vast majority of Minnesotans can keep their homes when they seek bankruptcy relief. But recognize, a bankruptcy does not entitle you to a free house. You have to keep making the mortgage payments and you need to be caught up on your payments.

Please note that creditors, other than mortgage lenders, can almost never kick you out of your home. This is information that many bill collectors do not want you to know about!

The overwhelming majority of people we see on a day-to-day basis are able to exempt their homes which prevents other creditors from taking your home from you and your family. Minnesota has a generous homestead exemption. Exemptions are things you can keep after the bankruptcy. The amount of the exemption is determined by the market value of the home minus any mortgages or certain liens.

By eliminating much of your debt, more money will be available to make house payments. Also, a bankruptcy gives you some breathing room to negotiate further in modifying home loans to payments which you can more afford.

Knowing this information makes people much less nervous and it gives them peace of mind about the process.

Nevertheless, each person's situation is different. You need to talk to a bankruptcy lawyer who understands how bankruptcy and real estate law can best help you and your family.

Feel free to leave your contact information using one of our contact us buttons or forms on this website to set up a free friendly consultation. Or just call us.

What are the benefits of a Chapter 7 bankruptcy?

Chapter 7 bankruptcy is a great way for many to get a Fresh Start. A Chapter 7 bankruptcy can do a lot! It can eliminate many categories of debt in a very short time frame: such as loans, credit card debt, medical debt, car loan debt, back utility debts, some but not all back taxes and back unpaid rent among others.

There are certain types of debts that generally you cannot get rid of: certain tax debts, child support, alimony, criminal fines, damages for fraud and intentional wrongdoing, and most student loans among others. Chapter 7 bankruptcy does not wipe out liens on vehicles or homes. Even so, a Chapter 7 bankruptcy can help address these types of debts by freeing up money otherwise required to pay debts that can be eliminated.

Chapter 7 bankruptcy also can help stop garnishments and creditor harassment. All in all, Chapter 7 bankruptcy does a lot and provides a Fresh Start for many.

When you file, you look at all your property. Some, most, or all of your property may be exempt because Chapter 7 bankruptcy is designed to leave you with enough to start over and get a financial Fresh Start. Exempt means you can keep the property after the bankruptcy and it does not go to your creditors.

If some of your property is not exempt that property may be taken or sold and distributed evenly and fairly to all your creditors even if creditors receive only only five or ten cents on the dollar of what you owe.

If all your property is exempt, your debts will be eliminated and you can keep all of your things – life goes on but without the debt.

Always consult with an experienced bankruptcy lawyer if you are considering a Chapter 7 bankruptcy. Please note: Not everyone qualifies. You may or may not qualify for a Chapter 7. If not, your best option may be to go on a payment plan in a Chapter 13 bankruptcy. Working with an experienced bankruptcy attorney is critical in determining whether you qualify for a Chapter 7 bankruptcy.

Questions? Please call us for a free consultation or send us a note with one of our contact us buttons or forms on this website.

What are the benefits of a Chapter 13 bankruptcy?

In a Chapter 13 bankruptcy, you make monthly affordable payments that will go to your creditors. A Chapter 13 bankruptcy has many benefits.

For example, Chapter 13 allows you to pay back amounts that you owe on car loans or mortgage loans. You can pay the back amounts owing even if the creditor does not agree. By being in a Chapter 13 payment plan, you can prevent repossession and foreclosure. It is a very valuable tool. It may allow you to keep property that you could have lost to creditors if you had filed a Chapter 7 case.

The Chapter 13 plan payments are designed to be affordable for you and are typically much less than what could be negotiated through creditors directly or through "debt settlement companies" located in other states – many of whom offer payments that that are not much lower that what the credit card companies offer.

At the end of the Chapter 13 plan, credit card, medical and many other types of debt will be completely eliminated as a reward for completing the plan.

There are other great reasons to file a Chapter 13. One can use a Chapter 13 to pay many back taxes and child support debts which you could not normally eliminate in a Chapter 7 case.

Further, if your household income is too high for a Chapter 7, a Chapter 13 may be the best option. People find that Chapter 13 plan payments are much less than they would have to be normally without filing.

Knowing whether you qualify for Chapter 7 or Chapter 13 or if a Chapter 13 bankruptcy would be best even though you qualify for Chapter 7, is complicated and you need to have a skilled bankruptcy attorney go over your specific situation in detail before making your decision.

We can help you sort this out. To set up your free consultation, just call us or use one of our contact us buttons or forms on this website to send us information. All information received is kept confidential for your protection.

Will my credit be affected?

For many people, if you are having debt problems, your credit is already bad. If your credit is good or great, your credit will take a hit in a bankruptcy. The good news: you can reestablish your credit very quickly.

Don’t be fooled by the credit card/banking industry and mainstream media. Their motivation is to NOT have you file a bankruptcy.

True, it may a take a bit more to qualify for a home loan but overall your credit can move up relatively quickly. Therefore, your credit will not be “wrecked” for seven or ten years. To the contrary, you will likely get credit card offers in the months after you file. Don’t listen to the doomsayers.

But be careful, after a bankruptcy you should be very cautious about using credit. To enjoy a fresh start you need to be wise and savvy about the way you handle money. In a tough economy you owe it to yourself to make smart choices!

What property can I keep if I file?

Many people think they will lose everything. Fortunately, in Minnesota we have exemptions. Exemptions are property that you can keep after the bankruptcy. Generally, this includes, your home, vehicle, household goods – even retirement accounts and pensions. Note: exemptions are very complicated and you must have a bankruptcy attorney to over your specific situation.

There are dollar limits on many types of exemptions. Expert legal advice is absolutely critical so you can keep take advantage of the exemptions laws to the maximum extent possible.

Does bankruptcy affect home and car loans?

In a Chapter 7 bankruptcy, debts are generally separated into secured debts and unsecured debts. If a debt is secured, it is usually tied to a specific piece of property like house or car. When you file, the debt goes away but the lien remains. You have the option of continuing to make your house payments to stop the lender from foreclosing. If you keep you house payments current, you can keep your house. If you have a vehicle lien, the debt’s gone. They can take the car back and you would not owe anything else.

But you can keep the vehicle often times if you sign paperwork that you will be liable on the debt after the bankruptcy. You need to carefully consult with an experienced bankruptcy attorney about this process as it is very complicated and there are pitfalls for the unwary!

If you do get behind in your house or car payments during or after a Chapter 7 bankruptcy, you may be able to file a Chapter 13 bankruptcy and pay back the past due amounts on a car loan or a home mortgage.

It is critical that you discuss these issues with an experienced bankruptcy attorney because they are complicated and each person’s situation is different. Please feel free to contact us for a free consultation so we can see what options may be best for you.

Must I list all of my creditors?

You have to list everyone that you owe money to. Family, friends – all creditors without exception. You can’t have any “secret” creditors that you can leave off. Let’s say you have a credit card that you want to continue using after the bankruptcy and you don’t want them to know about it. You cannot do that despite what your buddies around the water cooler might have said.

Legally, you MUST list everyone – even if it is inconvenient for you . If you intentionally leave off a creditor you are likely committing a federal crime and you may be in HOT water with the federal government! Your bankruptcy case could be thrown out and a bankruptcy judge could rule that you cannot eliminate any of your debts! Not fun.  No joke. This is not a game folks!

Do not pay back friends, relatives or close business associates without first consulting with a bankruptcy attorney. If you do, these individual may have to pay the bankruptcy trustee for the money you paid to them.

A representative of your creditors called a bankruptcy trustee or other government officials may double check all your property and creditors to see if anything is missing. They are very good at smoking out fraud. Be honest and don’t take chances – you’ll sleep better if you do. You do not want anything to jeopardize your debts being eliminated.

Can I sell or give things away before filing?

The bankruptcy law in Minnesota is relatively generous – designed to allow filers to keep the things needed for a Fresh Start. A few households, however, have too much property to keep and some of it must be turned over to help pay creditors in Chapter 7 bankruptcy. Sometimes bankruptcy filers start thinking: Simple!– I can just hide my stuff by giving it to my family or close friends so I don’t lose things in the bankruptcy – what could possibly go wrong?

This can get you into HUGE trouble. Don’t give away money or property – or “sell” them for pennies on the dollar to friends or relatives before the bankruptcy. Don’t give the title to your lake property to your mom before you file! This could be a crime and you could endanger your right to have your debts eliminated in a bankruptcy – not to mention making mom awfully mad!

Basically, don’t do anything unusual or major with your property or finances until you have discussed it thoroughly with a bankruptcy lawyer.

Bankruptcy law is complicated and even though you may be well meaning your actions may cause serious blunders if you don’t get and pay attention to the right legal advice! This means do not listen to your buddies giving you advice over a beer on these issues!

Bankrutcy trustees can look up your assets on on-line databases such as real estate records and motor vehicle titles.  Hidden property is often revealed by former spouses, jaded girl/boyfriends and former business partners where relationships have gone sour.

Don’t take any chances. Be sure to report all of your property.

Will bankruptcy wipe out judgments?

Debts from court judgments are eliminated in bankruptcy with some narrow exceptions. Judgment debt for credit card debt, medical bills, old car loan debt or debt for second mortgages can usually be eliminated. Typically, when someone has a judgment against you, they have a lien on any real estate you have in the county in which the judgment is filed. Luckily, in Minnesota, judgment liens cannot attach to most homes. Most people's homes are exempt from creditor - including judgment liens. However, you may have to file some paperwork with the state court if you need to sell or refinance your home or other real estate.

Mortgages on real estate are different from judgment liens andin most cases they are not removed in the bankruptcy. Some judgment liens are still valid even though the underlying debt is eliminated unless part or all of equity in the property is exempt from creditors in the bankruptcy. Also, there are certain tax liens on property would still be valid even if the underlying tax liability is eliminated in the bankruptcy.

 Whether judgment liens are valid or if your property is exempt is complicated. You would need to go over these issues in detail with an experienced bankruptcy attorney who is also knowledgeable about real estate law. Every situation is different

Feel free to leave your contact information using one of our contact us forms or buttons to set up a free friendly consultation so we can go over your individual situation and see what options are best for you.

Can I use my credit cards before filing?

Some credit card purchases are acceptable and some are not. In general, debts can be discharged in bankruptcy only if the debtor intended to repay the amount borrowed at the time a debt was incurred. Using credit cards for necessities such as gas, needed car repairs, etc., will likely be allowed. It is, however, important to avoid luxury purchases. Obviously, if you are having financial problems, luxury purchases should be avoided. Do not take any cash advances on credit cards in the three months before you file.

It is also important to avoid loading up on debt before filing as a way of “sticking it to the big banks”.  You may not be able to get rid of these debts if you took out the debt with no intention to pay. Never “load up” on debt intentionally before a bankruptcy when you are not going to pay it back.

Creditors’ lawyers and investigators are on the look out for unusual spikes of spending before a bankruptcy. They aggressively challenge people who load up on debt right before a bankruptcy. But always, always talk to a bankruptcy attorney and get their advice before doing anything out of the ordinary.

You can’t get something for nothing. Don’t endanger your right to get your debt eliminated in your bankruptcy by making dumb moves! The bankruptcy system is designed for honest debtors who have come on hard times not scammers who are trying to game the system!

Fresh Start Minnesota © All Rights Reserved.

1935 West County Road B2, Suite 350, Saint Paul, Minnesota 55113
Telephone: 612.655.1308 or 651.636.7960.