AT A GLANCE:
- How can I qualify for Chapter 7 in Minnesota under the new law?
- What is Chapter 7 Bankruptcy?
- The Bankruptcy Discharge
- The Credit Counseling Requirement
- Watch me on YouTube
Kelly
Law Office
1013 Ford Road
Minnetonka, MN 55305
Phone: (952) 544-6356
Fax: (952) 546-3690
Mobile: (612) 735-3797
dave@kelly-law.com
Serving St. Louis
Park, Golden Valley, Hopkins, Plymouth, Wayzata, Minneapolis-St.
Paul
QUALIFYING FOR CHAPTER 7 IN MINNESOTA
Under the new statute, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), all the factors which applied before still do apply as to whether you qualify for Chapter 7. However, added to that is a difficult means test that many will have trouble satisfying. The good news, however, is that
-
The means test applies only to consumer bankruptcies. If your debts are primarily business in nature, the means test provisions don't apply to you. Your debts are "primarily business" if more than half of your debt, going literally by how much you owe, was incurred in connection with self-employment or in connection with a business enterprise.
-
Assuming we are talking about debts which are primarily consumer debts, the means test will not be applied to anyone who has an income below the median for the state in which they live. So one of the first questions will be, where is your income compared to the median.
Here are the median income numbers as provided by the U.S. Trustee's office for residents of Minnesota. These figures went into effect on February 1, 2008, based on data from the U.S. Census Bureau.
|
1 EARNER |
2 PEOPLE |
3 PEOPLE |
4
|
5
PEOPLE |
6
PEOPLE |
7
PEOPLE |
8*
PEOPLE |
|
$45,217 |
$60,377 |
$70,695 |
$83,797 |
$90,697 | $97,597 | $104,497 | $111,397 |
* Add $6,900 for each individual in excess of 8.
If the income for your household is below those shown in this table, you should be able to file Chapter 7 without worrying about the means test. If you have a household income above the median, you may be able to pass the means test as long as you are not too far above the median. The means test involves complicated calculations, based in part on the actual facts of the case and based in part on IRS and Census Bureau statistics. I have an expensive computer program ready to run these numbers for you, just call me and make an appointment for a consultation.
Watch me on YouTube
Here's a link to an introductory video which I have posted at YouTube. Please ignore any advertising or additional links which may appear from YouTube after my video is over. Anything after the video is material from them, not from me, and I am not responsible for it:
WHAT IS CHAPTER 7 BANKRUPTCY?
This is the kind of bankruptcy which is the usually first choice of individuals who are in serious financial difficulty. It is very well suited to consumer debts, but often works well for self-employed individuals and small businesses too. It is commonly called a "straight" bankruptcy, and is also often referred to as a "liquidation." The bankruptcy court appoints a trustee who reviews what assets the debtor has available for distribution to creditors. Those would be only the assets that the debtor is unable to claim as exempt. If some assets are available, the creditors are notified. Those who submit claim forms will be given their proportionate share of the available assets, but that is ordinarily all they are going to receive.
Most assets which are basic necessities of life are exempt from seizure by the trustee either under federal or state statutes, and a skillful bankruptcy lawyer can help most clients claim almost everything they own as exempt. If there is some large asset which is not going to be exempt, the Chapter 7 bankruptcy may be a bad idea. One of the other types of bankruptcy such as a Chapter 13 wage earner plan may be more helpful. The most important task for the lawyer in a Chapter 7 bankruptcy is to make sure that the assets are protected under the exemptions to the greatest extent possible. That brings us to the next question.
THE BANKRUPTCY DISCHARGE
If a debt has been incurred through fraud or a number of other really nasty forms of conduct, such as injuring someone by drunk driving, the creditor may have grounds to file an objection. If no such objections are filed, the next step is that the bankruptcy court issues an order called a "Discharge" which states that the debts are gone, and orders the creditors to leave the debtor alone. Unlike the probate court example, the bankrupt person gets to start over again in this life free of the past financial problems. It's a fresh start, and the improvement in some debtors' circumstances can be almost like magic.
If a debt has been incurred through fraud or a number of other really nasty forms of conduct, such as injuring someone by drunk driving, the creditor may have grounds to file an objection. If no such objections are filed, the next step is that the bankruptcy court issues an order called a "Discharge" which states that the debts are gone, and orders the creditors to leave the debtor alone. Unlike the probate court example, the bankrupt person gets to start over again in this life free of the past financial problems. It's a fresh start, and the improvement in some debtors' circumstances can be almost like magic.
The credit counseling REQUIREMENT
Prior to filing of either a Chapter 7 or a Chapter 13, a certificate of completion of an informational consumer credit counseling program is required. Here is a link to the list of the providers that have been approved for this program. Prior to being discharged, another course is required, for which the following agencies have also been approved. The easy way to complete the programs is either on line or by phone. We have had very good experience with Family Means, and we are hearing good things about Money Management International. At Money Management International, the initial program usually only takes about half an hour when done by telephone and costs about $50.
Kelly Law Office represents bankruptcy clients throughout the Twin Cities - Minneapolis, Minnesota area including Champlin, Crystal Bay, Dayton, Eden Prairie, Excelsior, Hamel, Hopkins, Howard Lake, Long Lake, Loretto, Maple Plain, Minneapolis, Minnetonka Beach, Minnetonka, Mound, Navarre, Osseo, Rogers, Saint Bonifacius, Saint Paul, Spring Park, Wayzata, Young America, Bloomington, Edina, St. Louis Park, Wayzata, Plymouth, Maple Grove, Brooklyn Park, Anoka, Shakopee, Hastings, Eagan, Burnsville, Buffalo, Waverly, Montrose, Hennepin County, Anoka County, Carver County, Scott County, Ramsey County, Dakota County, and Wright County.
The information you obtain at this site is for general information purposes on and is not legal advice. You should consult the attorney of your choice for individual advice regarding your own situation. The use of the Internet for communications with the firm will not establish an attorney-client relationship and messages containing confidential or time-sensitive information should not be sent.