Oh the humility of being alive. Some of us go through life and never receive a DWI. Some of us should have received a 100 DWI’s and never receive one. Some of us never incur overwhelming debt, and yet, some of us will. Have you ever had a brain tumor? Me neither and yet 1000's of Minnesotans every year have them. Much of the time, life events’ are out of your control- seriously, they are. No one dreams of having a brain tumor or incurring overwhelming debt. This is not a place most of want to be. Yet, each year, over 10,000 good Minnesotans file bankruptcy. Why? The reasons are varied but most bankruptcies fall into one of 5 categories.
Top 5 Reasons People File Bankruptcy In MN
1. Business Failure. Did you know most businesses do fail? It’s a fact. And yet, the American dream of owning your own business, being your own boss, controlling your destiny is really strong. We have all heard the stories of the immigrant who came to America with $5.00 in his pocket and now he is worth multi-millions. America really is a country where just about anything is possible through perseverance and hard work. When someone starts out with a dream of owning their own business they don’t go into it thinking it will fail. They believe that the business will make income and eventually a profit and hopefully a really big profit! As the overall economy goes, we want people starting businesses, because those businesses produce jobs that earn paychecks that get used to buy other products and services and that is what sustains the overall economy. The trade off is when those businesses fail, bankruptcy is there to allow for a fresh start and for the entrepreneur to pick up the pieces of his/her life and move on. The reason is no one goes into business wanting it to fail. In other words, the entrepreneur does not defraud his creditors by trying to run a business that produces jobs and tries to make a profit.
2. Income Drop. Sometimes businesses are forced to reduce overhead to stay alive and competitive. Sometimes those same businesses need reduce or eliminate positions too. Whatever the reason, incomes rise and fall with the success of the business. Over the years, we have seen clients whose income has fallen simply because overtime has been eliminated. If you are a person whose lifestyle has become accustomed to overtime hours, the loss of those hours will result in a lifestyle change and even possibly bankruptcy. How many of us can lose $1500.00 a month in income and still survive?
3. Divorce or Relationship Break Ups. Relationships break up, that is just a fact of life. The fall out from this can be financially devastating. Not only are you incurring a decrease in income, your significant other’s income, you are also likely incurring legal costs and the costs of setting up a new household. This is in addition to your need to continue to pay your normal bills and debt incurred before your separation. We find that many people in long term relationships where there is joint debt both may need to file a bankruptcy. If one person is unable to pay a joint debt, it falls on the other person. If that person is equally unable to pay the joint debt plus their own, there is very little room to move and the necessity of a bankruptcy increases.
4. Medical Problems. We humans are frail. Medical problems are a fact of life. No one has perfect health and immortality. Everyone has health issues. Some suffer bigger health problems than others. When you suffer from medical problems you shouldn’t have to worry about the cost of the medical care. While I agree that we should all be covered by health insurance, what we really need is quality health insurance, not bare bones, heaven forbid you need to use this health insurance. What good is health insurance that leaves a person broke, or worse, bankrupt? The quality of health insurance is for a separate day. Suffice it to say, our bodies break down- and when they do, it can result in medical bills that are overwhelming. If you or a loved one have had a serious medical illness, you know that the medical bills that result from the medical illness can shock the conscience.
5. Bad Financial Decisions. Have you ever seen the commercial where the tree branch falls on the car or the person drives the car through the garage door or drives by another car and rips the door off? Oh us humans, we do silly and stupid things sometimes- so what? As human beings we make decisions sometimes that in hindsight maybe we should not have made. Big deal? Think about dating- how many people did you date that in hindsight you say, what was I thinking right? A lot! The same thing can be said for financial decisions. How many times can you say gee, maybe I should not have done that or bought this, or paid for that, or helped this person out etc. We are human are weak.
By the way, we have seen fortunes lost over night. Sometimes financial peril takes months and months to rear it’s ugly head but sometimes it can happen overnight such as when you lose all your money to a guy on line you thought was your boyfriend but really is a con artist. A person in these shoes feels especially bad. You feel embarrassed for allowing yourself to be duped by a professional con artist, and you feel bad because you have lost so much for nothing!
2 Ways To Deal With Overwhelming Debt
Like waves of the ocean, you will not stop making bad financial decisions, but you can learn how to deal with them. I realize there are better words in the English dictionary than the word “bankruptcy,” but “bankruptcy” serves a very useful purpose in society. If you are Larry, who suffered from cancer, and looking to file bankruptcy in Eden Prairie, bankruptcy is the medicine he was looking for.
Before you reject this idea, consider this: how long does it take most people to dig out of an overwhelming debt hole? Your credit sucks for years because you are likely going to try debt consolidation, which is a complete waste of time, and what about your life during that time? Good grief, making payments on overwhelming debt, coupled with bad credit anyway, is going to make for a life filled with anxiety and dreariness. Who wants to live like this? That is the problem with non bankruptcy solutions- they keep you in a place where your credit stinks and you are miserable.
Even if you are current on your payments to the bank, your credit worthiness suffers because banks worry that they will be the straw that breaks the camels back. So, even if your credit score is high and you are current on your payments, your credit worthiness suffers anyway.
So, aren’t I just the bad news bear uh? Well, not really. There are ways an Eden Prairie Bankruptcy Attorney can help you to solve debt problems and get your life back now as opposed to waiting. It’s called a Chapter 7 Bankruptcy and a Chapter 13 Bankruptcy.
Chapter 7 Bankruptcy Explained
If a doctor said I have the perfect medicine to get rid of your infection and get rid of it immediately, would you take it? Of course you would! A Chapter 7 bankruptcy is like pushing a reset button your life. You get your life back now, not later. The debt is gone now, not later. Your credit improves now, not later. What? Are you telling me I may in fact improve my credit if I file chapter 7 bankruptcy?
This is why so often clients who actually file a bankruptcy and get their lives back say their only regret is that they had wished they would have filed the bankruptcy right away! That is right, Minnesotans always tell our Eden Prairie Bankruptcy Law Firm their only regret is waiting to file the bankruptcy- they wish they would have filed years ago. Why? Because they realize that the medicine they take with a Chapter 7 Bankruptcy permanently heals their financial ailment and gets their life back immediately.
They look back at all the misery they went through, with no money for food or rent or gas and with crappy credit and they feel bad for the amount of time their family had to needlessly suffer. If you are living in Eden Prairie or any where else in Minnesota for that matter, the lesson is very clear. Waiting to get your life back sucks! Filing a bankruptcy and getting your life back now is wonderful!
This is powerful stuff. If the urge to avoid the bankruptcy was met with an equally powerful urge to get your life back, maybe so many Minnesota families would not have to suffer as long as they do. But, you know what? That is human nature- not to suffer- but to want to avoid the “b” word. So many view it as a failure and not what it really is- a new beginning! Instead of a failure, Minnesotans should view chapter 7 bankruptcy as a really powerful medicine that has an amazing ability to cure your financial ailment and really fast!
Chapter 13 Bankruptcy Explained
If a doctor said to you, that he/she has a medicine that will solve your overwhelming debt problem in a way in which you would lose no assets, creditors are barred from collecting from you while you are in the plan, and the creditors receive 0% interest would you be interested?
The plan described above is a government sponsored debt consolidation plan called a Chapter 13 Bankruptcy. The idea in a Chapter 13 Bankruptcy is that you make payments back to your creditors based upon what you can afford to pay. So, for example, Todd from Eden Prairie, Minnesota files a Chapter 13 Bankruptcy and can only afford to pay $200.00 a month for 36 months, that is his plan payment. After 36 months, Todd will have paid $7,200.00. If Todd’s credit card debt totals 50k, Todd will not have paid nearly enough to pay all of his creditors in full. So, what happens to the balance of $42,800.00? It gets wiped out, tax free, forever! That is some amazing stuff right?
So naturally you ask yourself a basic question: why would Todd try debt consolidation where his creditors are not bound by the debt consolidation plan, Todd will likely pay his debt in full with interest, or maybe slightly lowered interest, and the payments for Todd will be so large, Todd will not be able to pay his other reasonable and necessary bills over the next five years? Sound good to you? Not me!
The problem with traditional debt consolidation is the payment is so large you cannot afford to make payments. I feel bad for Minnesotans who try this first even though it is most people’s first instinct to try. I am not sure of the statistics, but I would guess the vast majority of debt consolidation plans fail. Conversely, a chapter 13 plan is “confirmed” by the Bankruptcy Court and the creditors are barred from collecting from you while you are in the plan. So, for those of you looking to get their lives back, and as soon as possible, and a payment you can afford to pay, nothing beats a Chapter 13 Bankruptcy.
Contact Us For A Free Strategy Session
If you are looking to get your life back now and avoid the pain of waiting to get your life back, nothing beats the medicine of a Chapter 7 and Chapter 13 bankruptcy. With either bankruptcy, the overwhelming debt problem is under control so that your family can pay its’ reasonable and necessary expenses and breathe again.
Life without overwhelming debt is beautiful. Life with overwhelming debt does not! For further information get in touch with by calling and visiting with the best local Eden Prairie MN Bankruptcy Attorneys Near You.
