How to File for Bankruptcy in Minnesota

Bankruptcy filings in Minnesota nearly doubled between 2007 and 2009.  For thousands of people, the threat of bankruptcy still hangs over their heads.  There are other options for those who are buried in debt, so it is important to get knowledgeable advice from a competent source, such as a bankruptcy attorney.  They not only have the knowledge, but the commitment to help a debtor find the best solution for their circumstances.

Finding a Bankruptcy Attorney

However, not everyone who calls themselves a bankruptcy attorney has the skills and experience a debtor needs.  It is important that they take the time to find qualified candidates, get written estimates of services and fees, and interview each candidate, with research in hand about their track record.

Bankruptcy Options

Once a debtor and their lawyer determine that bankruptcy is the wise choice, they must decide which type they are eligible for and which provides the most benefit.

• The rules have tightened on Chapter 7 filers since 2005, causing many filers to convert to Chapter 13 at some point in the process.  However, Chapter 7 is a good choice for those with few assets to be liquidated since the majority of consumer debt can be discharged under this plan.
• Chapter 13 allows the filer to save their property if they have enough disposable monthly income to make smaller debt payments according to a revised payment plan secured by their bankruptcy trustee.  Their debts can then be paid off in three to five years.

Minnesota Exemptions

Most of those who file for bankruptcy protection in Minnesota choose Chapter 7 (87%).  Those filers can claim a number of property exemptions to avoid liquidation.  They may choose either state or federal exemptions, although they may not mix the two.  State exemptions include:

Filing the Petition

The filing process begins once the filer and their lawyer have chosen their options, prepared their assets, and completed credit counselling.  After that:

• The court puts a stay on all credit collections
• The bankruptcy trustee examines the case and processes the petition
• The trustee, all creditors, the filer and their attorney attend a 341 meeting to be informed of the plan and answer any questions

If the petition is granted, the Chapter 7 filer has many of their debts discharged and the Chapter 13 filer has a repayment plan that will allow them to be debt-free in three to five years.