Don't Let The Holidays Jeopardize Your Bankruptcy

If your New Year's resolution is to file for bankruptcy, there are some steps you should take to prevent your debt from not being discharged.

One of the greatest mistakes that people make during the holidays is over spending. It's very easy to become wrapped up in the season of giving, however your trustee won't appreciate the sentiment if you're gifting your assets to friends and relatives. Once you file for bankruptcy the trustee will look for any assets that were transferred, whether it was money or property. You risk your bankruptcy case being dismissed if it's perceived that any assets were gifted to defraud the bankruptcy system.

If bankruptcy is on the horizon, chop up those credit cards. Even if you have available credit you should refrain from using it. When you file for bankruptcy the credit card companies will review the past 90 days to see if you used your credit cards without making an effort to pay for the items bought. If you purchased holiday gifts with your credit cards and made no attempt to pay off the debt, that debt may be considered non-dischargeable. The same goes for taking out a cash advance within 70 days of your bankruptcy. It can also be presumed to be non-dischargeable if no attempt was made to repay the loan.

Filing for bankruptcy is complex. Before making any holiday purchases that could jeopardize your bankruptcy dischargeablity, have a consultation with Minnesota Bankruptcy Attorney Gregory Wald.

The Benefits of Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows people with an income the option of creating a plan to repay part, or all of their debt when they are experiencing hardship. This is why it’s known as the “Wage Earner’s Plan.” When filing for Chapter 13, the debtor has agreed to a repayment plan of their debts over a course of three-to-five years.

In the instance that you have filled for Chapter 13 Bankruptcy and are still experiencing financial hardship, you have options. The worse thing you can do would be to stop making payments to your trustee. Once payments stop being made, you can expect your bankruptcy case to be dismissed without discharge. This means that all of the debt and harassing phone calls from creditors that you received before you filed for bankruptcy will once again be back.

Rather than stopping your payments, speak to your Minnesota bankruptcy attorney about a Hardship Discharge. A Hardship Discharge wipes debts clean even though the repayment plan has not been completed.

This option is only available if:

• The debtor’s failure to complete their payment plan was due to circumstances beyond their control. 
• The creditors have received at least as much as they would have in a Chapter 7 liquidation case.
• Modification of the plan is not possible. As an example, you could have an injury or illness that prevents sufficient employment that would fund a modified plan. 

Hardship Discharges are a lot more limited than a typical Chapter 13 discharge and it does not apply to debts that are non-dischargeable. Do not ignore your financial situation any longer. Contact Minnesota Bankruptcy Attorney Gregory Wald, he will give you all of your options. Live free from worry by removing the burden of debt.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

If you are thinking about filing for bankruptcy, contacting an experienced attorney is your first step. Below we will list some differences between filing for chapter 7 and chapter 13 bankruptcy to give you an idea of what to expect.

When Chapter 7 Is Beneficial To You:

• Chapter 7 is known as the “fresh start bankruptcy” because it gives its recipients a fresh start.
• If you have little property other than basic necessities like furniture and clothing.
• If you have little or no money left over each month after paying for basic expenses, or if you are not even meeting your basic expenses.
• A benefit to filing for chapter 7 is that most unsecured debts can be discharged. A discharge means the debt is completely eliminated.
• The process of filing for chapter 7 is a rather quick one. You can receive your discharge in just a few months.
• Once you file, creditors can not contact you once the automatic stay is in effect or after debts have been discharged.
• Upon filing for chapter 7, repossessions, foreclosures, wage garnishments, and harassment all stops.
• A way to decide if you are qualified to file chapter 7 is by the “means test” and the completion of the required session with a credit counselor.

When Chapter 13 Is Beneficial To You:

• Chapter 13 is the adjustment of debts for someone with a regular income.
• If you have significant equity in a home or other property and you would like to keep it.
• When you have a regular income and can afford living expenses but cannot afford to keep up with scheduled payments of debts.
• An advantage to filing chapter 13 is being able to keep your property while spreading out past due payments of a period of 3 to 5 years.
• You make one monthly payment to your bankruptcy trustee and will have no contact with creditors during the protection period of 3 to 5 years.
• Any individual debtor whose unsecured debts are below $360,475 and whose secured debts are less than $1,081,400 is able to file under chapter 13 bankruptcy.

Rest assured that once you file for bankruptcy your quality of life will greatly improve. You will no longer face harassing phone calls from creditors and with the help of your attorney, you will be fit with a bankruptcy plan that will benefit you and your family. Get the fresh start that you deserve by contacting your Bankruptcy Attorney Gregory J. Wald.


Gregory J. Wald, Attorney at Law
1500 Northland Plaza
3800 American Boulevard West
Bloomington, MN 55431
Telephone: 952-921-5802
Toll Free: 1-866-747-1130
Fax: 952-831-1346
BankruptcyMinn.com
Gwald314@msn.com

Student Loans and Bankruptcy

In today’s society many students are faced with the uncertainty of landing a job right after graduation--in addition to that, students are weighed down by student loan debt. There is an option if you find yourself having difficulty paying back your student loan. Chapter 13, also known as “The Wage Earner’s Plan,” develops a plan for you to pay back debt over a period of time.

Most Bankruptcy courts rely on a test called “The Brunner Test,” in order to determine whether a student loan is dischargeable in bankruptcy. However, in Minnesota the less restrictive "totality of the circumstances" test is used. The way the courts evaluate the loan’s dischargeability comes down to whether you have shown “an undue hardship.” The “totality of the circumstances” test requires that the debtor not be able to maintain the minimal standard of living if forced to repay the loans. The court can look at all relevant considerations, including:

(1) your past and present financial resources, and those that you can reasonably rely on for the future;


(2) your reasonably necessary living expenses for you and the your dependents; and

(3) “any other relevant facts and circumstances surrounding each particular bankruptcy case

It helps to get a hardship discharge if you have tried to make payments on the student loans. If you or your children have chronic medical problems or mental health problems, this will be taken into consideration.

Once you file for bankruptcy, you are automatically protected against creditors. They can’t collect from you until the courts give them permission to do so.

There is an idea that higher education leads to financial success, however most people will feel the economic strain for years to come.

After filing for Chapter 13 bankruptcy, you will have a plan for repayment. Usually repayment is based on current and future income. A Chapter 13 plan is for 3 to 5 years. For help with a Chapter 13 bankruptcy plan, consult Minnesota Bankruptcy Attorney Gregory J. Wald.