Minneapolis Bankruptcy Law Blog

3 bankruptcy exemptions you should know about

Filing for bankruptcy can be a daunting situation, but the more you know, the less scary it typically becomes. One of the biggest sources of stress is the common misconception that bankruptcy will force you to liquidate your assets. On the contrary, there are several options that allow bankruptcy candidates to file and retain most — if not all — of their most valuable assets.

Bankruptcy exemptions deem certain property and assets immune to liquidation when one files, and the details of exemption laws vary from state to state. For individuals considering Chapter 7 or Chapter 13 in Minnesota, the following three exemptions may be available when you file.

What sole proprietors need to know about filing for bankruptcy

When you are a sole proprietor, it is often a good idea to keep your business and personal assets as separate as possible. For example, you may have different bank accounts for business funds and personal funds. You might even have a car that you drive only for business reasons and another that you reserve for personal use.

However, if you file for bankruptcy, your business and personal assets will likely receive the same treatment. In other words, if it is business debt that is driving you toward bankruptcy, your personal assets could be at risk in addition to the business assets. Conversely, if you are struggling with personal debt, both your business assets and your personal assets are at risk.

Limits of debt collection

Many people in Minnesota struggle with debt. In fact, in 2015, the state ranked fifth in the nation for highest student loan debt.

People with debt are familiar with the practice of debt collectors contacting them incessantly to receive payments. It can be stressful, but there are legal limits to what debt collectors can do. Anyone who deals with these collectors should understand the law so that they know when an agency crosses the line. 

Key facts about bankruptcy exemptions

Financial hardships can be difficult to handle. To aid in the process, some people choose to undergo bankruptcy for a new start.

One of the critical aspects of bankruptcy is exemptions. Just because you need assistance with eliminating debt does not mean you should have to give up everything you own. Bankruptcy laws have provisions allowing for people to keep certain items, which may be exempted out of the bankruptcy estate. There are a few key facts to understand about them.

How declaring bankruptcy affects your financial future

Overwhelming debt is a very common fact for many people today. Living in a consumer culture encourages spending beyond the ability to pay, credit cards with large limits are easy to come by and the fluctuating economy means job stability is not always a given. If you are stuck in a difficult debt situation and considering bankruptcy, you are not alone.

One of the main factors that may hold many people back from declaring bankruptcy is fear for their post-bankruptcy financial future. It is important to understand the facts in your particular situation so you can decide whether bankruptcy is the best option for you. Consulting with a qualified bankruptcy lawyer could be your first step in gaining more information. Here are some things you may want to research further as you consider your options.

Will I lose my home if I file for bankruptcy?

Many people who are considering filing for bankruptcy are afraid of losing any of their assets, but there is perhaps no greater fear than the fear of losing your house. If you have owned your home for a significant amount of time, it may be a greater emotional fear than losing other assets, as the memories you create in your home are intertwined with the property itself.

Fortunately, this fear can be assuaged in most cases. Individuals filing bankruptcy in Minnesota can protecting certain assets by utilizing either federal or state system of exemptions.

Both the federal and state exemption systems offer protections for equity in a homestead. Minnesota lists homestead real estate among its bankruptcy exemptions, up to $390,000 in equity. The federal exemptions are smaller. The exact amount of protection available will depend on the number of individuals filing bankruptcy and how the home is titled.

While your circumstances may vary, there are many things a bankruptcy can do to help you with your home. Talk to a qualified bankruptcy attorney about your concern and find out if bankruptcy is right for you.

Filing a chapter 7 bankruptcy for small business

If you are considering bankruptcy, it is important that you select the right type of plan. Different types of bankruptcy filings produce very different outcomes. For small businesses, Chapter 7 bankruptcy can sometimes be beneficial.

Depending on your particular situation and needs, this type of plan may be right for you. Take some time to learn about Chapter 7 bankruptcy and how it may benefit a small business.

Are you dealing with creditor harassment?

If you are struggling to pay your bills on time and dealing with mounting debt in Minnesota, your phone may seem like it always ringing with unknown numbers from creditors. You may also notice that your mailbox is full of bills and past due notices. This persistent harassment from creditors may be causing you to feel unsettled and overwhelmed by your situation. 

You do not need to change your phone number or get a post office box. There are ways for you to get control of your debts to put an end to creditor harassment. Take some time to review the following tactics to get some peace of mind. 

Will I lose my 401(k) in bankruptcy?

Many people are on the fence about filing bankruptcy because they fear losing assets such as their house and car. They may also believe 401(k) accounts are at risk.

The good news: Many who file for bankruptcy keep their house, car and 401(k). In fact, even if you give up your house and/or car, perhaps because you choose not to reaffirm that debt, your 401(k) should still be yours.

Prescott Pearson & Tande, PA
443 Old Highway 8 Northwest, Suite 208
New Brighton, MN 55112

Toll Free: 888-366-0827
Phone: 651-968-8096
Fax: 651-633-7562
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