You could not find a single person who will tell you that life is easy. It is not. In fact, sometimes it seems like life is purposefully cruel –dealing blow after blow, hit after hit, and just when you think there might be a moment of relief, life kicks you again when you are down. One of life’s lowest blows is overwhelming debt. Debt creeps into your life and when it finally sinks its fangs in, it is already too late. You are buried alive by it and suffocating –already weakened by the other curveballs that life has lobbed at you. It may seem hopeless. But it is not. 

Many people make New Year’s resolutions to exercise more, eat healthier, or be kinder to others. But what about resolving to address your financial situation? A lot of people facing financial stress and debt tend to sweep it under the rug. It may feel so overwhelming that they think there is nothing that can be done about it. This is not the case, however, as our experienced bankruptcy attorneys have helped many people overcome even the most serious financial situations. The following are only some debt-related resolutions that can make for a happier 2019.

The language of bankruptcy attorneys can seem like Greek to the non-attorney. What does it mean for a Chapter 7 trustee to “liquidate” assets? When would the trustee do such a thing anyway? When we say, a Chapter 7 trustee will “liquidate” assets, we mean the Chapter 7 trustee will sell the assets and reduce the physical assets to money. You can’t take physical assets and distribute those assets to creditors. Instead, you sell the assets, reduce the assets to money, and disburse those proceeds to creditors pro rata and based on a set of priorities.

This is a great question to ask. Normally, debts that are forgiven are taxable income to you. For example, if you had 100k in debt and your creditors all said- forget about it and wiped it out that is fantastic, except, you now will have to pay taxes on the 100k. Why? Anytime an entity writes off a loss on their taxes it is income to someone else. Make sense?  Now, let’s be clear, paying taxes on 100k is better than paying 100k. If your tax bill is 35k you just saved 65k.

Just like there is good cholesterol and bad cholesterol, there is also good debt and bad debt. The average Minnesota household has about $134,000 in debt. But much of this debt is secured debt, like mortgages and auto loans. Most people do not mind paying these loans, as long as the terms are reasonable and they like the car, house, or other collateral.

If you are living in or around Woodbury, MN and suffering from overwhelming debt, you are not alone. Each year, more than 15,000 Minnesotans file for bankruptcy protection because the debt simply becomes unmanageable. Suffering from overwhelming debt is mentally and physically stressful. If you find yourself in this position, there are a few things to do right now.

Technically, the answer to this question is “yes.” However, there may be some debt that you do not want bankruptcy to clear.

There’s a significant difference between secured and unsecured debt. Secured debt includes things like home mortgages and auto loans. If the debtor violates the security agreement, the moneylender has the right to repossess the collateral. That right remains in place whether the debtor files bankruptcy or not. Unsecured debts are things like credit cards and medical bills. As outlined below, these debts sometimes have collateral consequences as well. But in most cases, they are quite limited.

All bankruptcy wipes out debt. The type of bankruptcy you need to file usually depends on the type of debts you owe.

David Debtor had some unexpected medical bills last year. His daughter had emergency surgery out-of-network and he ran his car off the road one night. He now owes tens of thousands of dollars that he can’t afford to pay. He tried to retire the debt as best he could. But his payments hardly made a dent and put him behind in other areas. He’s not quite at the desperation point, but he is getting close.

Sports fans have been anxiously waiting and the time is almost here: March Madness. As you gear up for a series of exciting games and limitless chicken wings, there’s one preparation that any dedicated basketball fan takes very seriously: picking a winning bracket.

If you’re one of the thousands of Minnesota residents who is considering filing for either Chapter 7 or Chapter 13 bankruptcy, follow these simple tips to help you get the most out of your Minnesota bankruptcy.

For the last three weeks, I’ve written about the function of bankruptcy to serve the twin purposes Congress set out in passing bills that codified bankruptcy law into the Bankruptcy Code: treating creditors fairly and allowing debtors to live with dignity.  I’ve written about why the bankruptcy debtor has to list assets and liabilities accurately in her schedules, about the specific features of chapter 13, the benefits of the automatic stay in bankruptcy and the requirement that the bankruptcy debtor list all of her creditors in her bankruptcy paperwork.  This week, I’ll continue to look at how bankruptcy law and procedure seeks to meet the policy goals of Congress.

If you live in Minnesota and you are contemplating filing a Chapter 7 or Chapter 13 Bankruptcy, you might feel nervous about doing so. After all, you don’t file bankruptcy every day. You will have a lot of questions about doing so. You may feel nervous about filing bankruptcy.

You may have heard or seen advertisements claiming that this firm or that firm offers low-cost bankruptcy filing. But do you know what that advertised “low price” will actually cost you?

Typically, if someone else pays a person’s debts, the IRS considers such payments to be taxable income. Prominent exceptions include certain student loan repayments and gift repayments. Based on that analysis, many people think the answer to this question is a resounding “yes.” But it is actually a surprising “no,” because bankruptcy discharge is different from debt repayment.

Last week, I wrote about the nuts and bolts of bankruptcy - how bankruptcy “works.” In doing so, I concentrated on the paperwork any bankruptcy debtor has to file with the court: the bankruptcy petition, schedules and statements.  And I wrote about those documents through the lens of the two goals of bankruptcy: to treat a debtor’s creditors fairly, and to allow the debtor to live with dignity.  This week, I want to take a deeper look at how bankruptcy law attempts to satisfy those two goals.