Medical Bankruptcy

A 2007 Harvard study found that nearly 70% of bankruptcy cases are related to medical issues.  With today's high deductibles, the situation hasn't improved.   Illness can mean time off of work and reduced income.  Bankruptcy eliminates medical debt, but only the medical bills that are owed as of the date of filing your bankruptcy petition.  If you are currently running up medical bills you have a couple of bankruptcy options: You can wait until your medical problems are over and then file a Chapter 7 case.  If you can't wait that long, you can file a Chapter 13 bankruptcy case and gain protection from your creditors until you are done incurring the medical debt.  At that point, you may be able to convert your case to Chapter 7 and include all of the medical debt owed at that point.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.  

HELP! I'VE BEEN SUED!

When credit cards, bank loans, medical bills and other debts become seriously delinquent, the creditors usually send them to a collection agency first.  If the collection agency can't collect the debt, then it may go to a collections lawyer who will sue to collect the debt.  You will know that you have been sued in Minnesota when you receive a Summons and Complaint in District Court or a Complaint in Conciliation Court.  

When you are served with a lawsuit, it is like a slap in the face!  Please don't panic.  There are things that you can do.  If you dispute the debt in a District Court case, you will probably need a lawyer to defend you.  If you dispute a Conciliation Court, you can go to the hearing yourself and explain your reason for disputing the debt to the judge.  If you don't dispute the debt and your debts are otherwise manageable, you could call the collections lawyer and try to make payment arrangements.  If you have other debts, it might make sense to file bankruptcy instead.  A bankruptcy will stop a lawsuit to collect a debt, even after the lawsuit has started.  If the creditor has already obtained a court judgment against you, bankruptcy can stop the creditor from ever trying to collect the judgment against you.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation. 

 

Discover the Difference Between “Debt Management Plans” and Filing Bankruptcy

Credit counseling companies were originally created by the banks to collect debts for them.  They offer "debt management plans" where by people can consolidate their debts and pay them off in full over a period of five years.  They try to negotiate lower interest rates for the credit cards so that they can be paid off over a reasonable period of time.

Even though they may be able to reduce the interest rates on some credit cards, the monthly payment under a debt management plan is usually larger than the combined minimum payments on all of a person's credit cards.  For this reason, debt management plans are not feasible for most people who are struggling financially.   They offer budgeting advice that can sometimes be useful.  However, the advice is frequently to get a second job (i.e., work yourself to death).   It is very difficult to get credit while you are in a debt management plan.  One couple who paid into a debt management plan came to see Minnesota bankruptcy attorney Greg Wald after they made payments under the plan for two years.  They wanted to buy a house, but the mortgage company told them they could not have a mortgage because they were still in a debt management plan.  The mortgage company told them it was too bad they didn't just file a bankruptcy instead.  The FHA will qualify people for mortgages two years after they complete a bankruptcy case.  They realized at that point that they made a big mistake and eliminated their debt immediately with a Chapter 7 bankruptcy.

Avoid a “BIG” mistake!  Contact Minnesota bankruptcy attorney Gregory Wald at (952) 921-5802 or visit them on the web at bankruptcyminn.com.  Discover the difference between “debt management plans” and filing bankruptcy before it’s too late.

How Often Can I File Bankruptcy?

When a person has filed bankruptcy in the past, they may want to know how long they must wait to file bankruptcy again.   If a person has filed a Chapter 7 bankruptcy petition and received a discharge of their debts, they must wait 8 years before they can file another Chapter 7 petition.  However, the waiting period to receive a discharge in a Chapter 13 case after a previous Chapter 7 case is only 4 years.  Sometimes unfortunate circumstances create a need for a second bankruptcy in less than 4 years after the filing of a Chapter 7 case.   You can file a Chapter 13 case less than 4 years after filing a Chapter 7 case and receive court protection from your creditors, but you won’t receive a discharge of your debts.  It sometimes makes sense to file such a case to prevent foreclosure of a residence or to receive court protection from creditors.

The waiting period to file a Chapter 13 case after a previous Chapter 13 case is only two years from filing date to filing date.  Since the typical Chapter 13 case lasts for three years, there is rarely any waiting period for filing a Chapter 13 case after a previous Chapter 13 case.  The waiting period to file a Chapter 7 petition after a Chapter 13 petition is 6 years.

The Problems That Occur When Filing Bankruptcy Without An Attorney

WHAT HAPPENS AFTER I FILE FOR BANKRUPTCY?

Filing for bankruptcy can be a daunting and emotionally draining experience. Going it alone will only make the task even more monumental. It doesn't have to be so bleak though. Sometimes in life we need a reboot, if you will. Many of great financiers, moguls, and millionaires alike have filed for bankruptcy. As well have average salary earners, college students, contract holders et al. The point is, at one time or another many of us have been "in over our heads".

Once you file the petition there are a number of documents you must submit to the court and your Trustee within specific time frames. Failure to comply may cause your case to be dismissed. Unfortunately, if you file without an attorney, there is no one who will tell you what has to be filed and when. Which is why whenever dealing with anything above parking ticket a lawyer is your best course of action.

The Bankruptcy Court sends out a notice of your bankruptcy filing to all of the creditors listed in your schedules. This notice advises the creditors that you have filed for protection, which chapter you filed and advises them that an "automatic stay" is in effect, preventing creditors from pursuing any further efforts to collect the debt. This would include staying a foreclosure sale, wage garnishment, and even a civil court proceeding or trial. Criminal cases are not stayed, nor are child support hearings.

For more information regarding bankruptcy, chapters, filing, or simply answering any questions you may have, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

Can Tax Debts Be Simply Eliminated Through Filing For Bankruptcy?

There are many ads on the TV and radio that claim tax debts can simply be eliminated through filing for bankruptcy. Unfortunately, this is not always true.

Income tax debts are able to be discharged in Chapter 7 bankruptcy if all of the following is true:

• All tax returns for the tax debt you're seeking to discharged must have been filed at least two years before filing for bankruptcy.
• The tax debt must have been due at least three years prior to filing your bankruptcy petition. 
• You must have filed a return for the tax at least two years prior to filing your bankruptcy petition. 
• The income tax debt has to have been assessed by the IRS a minimum of 240 days prior to filing your bankruptcy petition. 
• If a fraudulent tax return was filed or you attempted to evade paying the taxes by, for example, using a false Social Security number, bankruptcy won't be able to eliminate this debt. 

Certain events like a prior bankruptcy or an offer-in-compromise with the IRS can toll (stop) the running of these time periods. There are entire books written on how to interpret the rules for discharging a debt in bankruptcy. Be sure to obtain competent advice.

Unfortunately, even if you qualify to have your tax debt eliminated, your bankruptcy will not rid you of prior tax liens. If the IRS placed a lien on your property before bankruptcy was filed, the lien remains. This requires the debtor to satisfy the balance before they are able to sell the property. If the tax lien does not attach to any property, the IRS may abate (remove) the lien.

For more information regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com for a consultation.

Failing To Complete A Credit Counseling Course Can Ruin Your Bankruptcy Case

Did you know that failing to complete credit counseling can ruin your case? In both Chapter 7 and Chapter 13 bankruptcy, credit counseling is required. One course must be completed within 180 days before your case is filed and another must be completed before the case can be discharged.

As a rule of thumb, it's best to have the second course completed prior to the meeting of creditors. This is approximately one month after filing. If this course is not completed, it is possible to have your discharge refused.

You can find a list U.S. Trustee approved credit counseling agencies here: http://www.justice.gov/ust/eo/bapcpa/ccde/cc_approved.htm

There are some exemptions from this requirement limited to people who are mentally ill, disabled, or on military duty in an active combat zone.

For more information regarding credit counseling courses, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802.

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

Once Bankruptcy Is Filed, The Trustee Will Look Into The Past 90 Days Of Spending To See If You Attempted To Defraud The System

Tis the season for giving... and racking up debt. If you're planning on filing bankruptcy after the holidays you'll want to avoid these common mistakes, it could seriously jeopardize your bankruptcy.

We all get into the holiday spirit of gift giving while failing to think of ourselves. Draining your checking account, without setting any funds aside is a huge mistake. Bankruptcy fees must be paid for in cash, not a credit card, so it's imperative that money is set aside to give you the fresh start your finances so desperately need.

Do not go on a shopping spree compliments of your credit card before filing for bankruptcy. If it looks like you were "loading up" on credit cards without intending to repay them, you might have to repay at least a portion of the funds that you borrrowed.

Never give away your assets as gifts this holiday season, or ever if you're planning on filing for bankruptcy. If you give a gift to a relative that is worth $200 or more, the trustee of your bankruptcy case may demand the return of the gift so that it can be sold and the funds distributed to creditors. In some cases, charitable contributions can also be reversed. Giving away significant assets to avoid losing them in bankruptcy is considered fraudulent. Your debts might not be eliminated in bankruptcy if you attempt this.

For answers to questions regarding your specific situation, contact Minnesota Bankruptcy Attorney Gregory J. Wald at 952-921-5802 or at BankruptcyMinn.com to set up a consultation.

Speak With A Bankruptcy Attorney About A Hardship Discharge

Filing for Chapter 13 gives people with a source of income the choice of devising a plan to repay some of their debt when they're experiencing a financial hardship. This is why Chapter 13 is also known as the "wage earner's plan."

In the instance that you've already filed for Chapter 13 bankruptcy, yet you are still experiencing a financial hardship, there are options. If you find yourself in this predicament do not simply stop making payments to your trustee. Once you do that you can expect your bankruptcy case to be dismissed without discharge.

Don't ignore your problem. Speak with your bankruptcy attorney about a Hardship Discharge. This type of discharge will clear debts and give you a fresh start, even though your repayment plan has not been completed.

This option is available to you if:

• The failure to complete your repayment plan was due to circumstances beyond your control. 
• Your creditors received at least what they would have gotten out of a Chapter 7 liquidation case. 
• Modification of your plan isn't possible. For example, you sustained an injury or illness that prevents adequate employment that would finance a modified plan. 

Hardship Discharges do not apply to any debts that are non-dischargeable, so it's much more limiting than a Chapter 13 bankruptcy. There are many facets to a Hardship Discharge which is why it is important to speak to your bankruptcy attorney.

Do not feel trapped by your finances. You do have options for dealing with your debt. Contact Minnesota bankruptcy attorney Gregory Wald at 952-921-5802. He will go over your Chapter 13 case and give you all the best options specific to your situation.

Set Yourself Up For Success After Bankruptcy

Now that you've successfully discharged or restructured your debts in bankruptcy, it's time to think about your financial future. Here are some important steps to take to ensure your success:

• Compile a list of any debts that were discharged in bankruptcy. Certain debts such as student loans, child support, spousal support, and some types of taxes are not eliminated in bankruptcy cases. Be sure to pay any debts that were not discharged in a timely fashion to keep your finances in good standing.
• Keep all of your bankruptcy papers in a safe place. In the event that a creditor mistakenly attempts to collect a discharged debt, you will have proof that it was included in your bankruptcy. If you happen to lose your discharge order, another copy can be obtained from the clerk of bankruptcy court.
• Keep an eye on your credit reports after your bankruptcy. Make sure that your credit report reflects your discharged debts as having a zero balance. According to a recent government study, one in five consumers have an error in a credit report issued by a major agency.
• Since most types of liens survive bankruptcy discharges, verify the balance on any liens you may have. Know how much you owe and continue making payments on time if you wish to keep the secured property. If you fail to do so, your creditors may enforce the lien.
• Set aside money for an emergency fund. It is important to have enough money saved in case situations arise such as a job loss, car repairs, medical expenses, or other emergencies. Experts recommend having enough money saved to cover at least three months of expenses.
• Create a realistic budget. Refrain from buying things that you can't afford, or need -- Especially when it comes to using credit. Try to use cash for your purchases when possible. Don't succumb to the high interest credit card offers that you'll be getting in the mail after your bankruptcy, because there will be plenty of offers.

Setting yourself up for success after bankruptcy is important so that you don't fall into old bad habits. For more information on bankruptcy and life after, contact Minnesota Bankruptcy Attorney Gregory Wald today at 1-866-747-1130.

What Happens When You Can't Repay Your Tax Debt?

It is possible to eliminate your federal income taxes in Chapter 7 bankruptcy if all of the following conditions are met:

• Your tax debt is from income taxes. Any taxes other than income, such as payroll taxes or fraud penalties, will not be eliminated by bankruptcy. 
• You didn't defraud the system. If you filed a fraudulent tax return, or tried to avoid paying taxes in any way, bankruptcy won't discharge your debt. 
• Your income tax debt must be at least three years old. It must be three years from the date the tax return was due to be eligible for bankruptcy. 
• You must file the tax return. The tax return debt you wish to discharge must be filed at least two years before filing for bankruptcy. 
• You must meet the "240 day rule." Your income tax debt must have been determined by the IRS a minimum of 240 days before you file for bankruptcy, or must not have been assessed yet. This time limit can be extended if collection activity was suspended because of an "offer in compromise" or a prior bankruptcy filing. 

Previous bankruptcy cases or offers in compromise can stop the running of these time periods. If you meet the requirements mentioned above, you may qualify to have your income tax debt eliminated in Chapter 7 bankruptcy. It is important to know that filing for bankruptcy will not eliminate any tax liens. Filing for Chapter 7 bankruptcy will only help prevent you from getting a tax lien in the first place.

Contact Minnesota Bankruptcy Attorney Gregory Wald at 952-921-5802 if you have tax debt that you would like eliminated through bankruptcy.

Co-signers and Bankruptcy

Bankruptcy provides a fresh start for many, but what happens when some of your secured debt, such as a vehicle, has a co-signer? If you are planning on filing for Chapter 7 bankruptcy, and in doing so surrendering secured property, you should understand that the protection of bankruptcy only covers the person filing, not the co-signing party.

Lets say that your sweet Granny Ann helped you to get a new car by co-signing on the loan with you. After a few years you realize that your auto loan payments are just too high and you are drowning in debt. When you decide to file for Chapter 7, even though you have surrendered the vehicle, sweet Granny Ann is still legally responsible for the remaining balance. However, if sweet Granny Ann also decides to file for Chapter 7 bankruptcy, she could then discharge her own legal responsibility for the remaining balance.

This is the reason that most married couples are urged to file a joint petition. However, if a married couple does not have any joint debt then it may not be necessary to file bankruptcy together. In Minnesota, you are not automatically liable for all of your spouse's debts, but you are responsible for your spouse's debts incurred during the marriage for necessities of life, including medical bills.

In a scenario where the person filing for bankruptcy is the co-signer on a debt, lets say it’s sweet Granny Ann and she co-signed with you on your car, she must still list the vehicle and debt in her bankruptcy. She would be able to explain on her schedule that the vehicle actually belongs to her grandchild and that her grandchild makes all of the payments. This typically does not affect the contract between the grandchild and the lender, this would just eliminate Granny Ann’s duty as a co-signer.

There are many complex circumstances and legal issues that can effect co-signers when filing for bankruptcy. Contact Minnesota bankruptcy Attorney Gregory J. Wald today if you have questions about this matter or would like to set up a consultation.

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.

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.