A reaffirmation is an official way to “reobligate” yourself on the loan. This involves the lender sending us a reaffirmation contract to be signed by you.
Is There a Typical Bankruptcy Client in Minnesota?
Most people who have not been confronted with the need to file for bankruptcy protection assume that the only people who file for bankruptcy are somehow reckless spenders or otherwise irresponsible with the money. But the truth of the matter is, most people pay their debts and then something happens, that affects their income or their expenses and they are no longer able to maintain their debt payments and meet necessary living expenses. Typically these events that cause people to need bankruptcy protection, fall into one of three categories: unemployment/ under-employment, medical bills or divorce.
If you will notice, those three events are not characteristic traits; people are not necessarily irresponsible because they lost their job or had their hours cut. These are things that happen in life to people and if something like this happens that affects your income and your expenses. If you are no longer able to make the payments on your credit cards or medical bills, bankruptcy is there to serve as a safety net to help people get back on their feet and move on with their lives.
Do A Lot Of People Tend To Delay In Filing For Bankruptcy?
Absolutely, most people do delay in filing for bankruptcy hoping another solution will appear. That is typically because people just have this pre-conceived notion that bankruptcy will ruin their credit and they’ll lose assets. There are so many myths out there about bankruptcy that people just assume that they are going to lose their home automatically or lose their car or their job. People assume that bankruptcy is set up to wipe away their debt, but in exchange, you are somehow going to be punished for having to exercise your bankruptcy rights. A lot of people just avoid even looking into it and eventually when they come around and do look into it, they discover that it is designed to help them get a fresh start, not to punish them.
Many times, people will try other potential solutions to resolve the debt situation before even looking into bankruptcy. I cannot tell you how many people I have met with that after we complete our free consultation say, “I wish I would have talked to you eighteen months ago, a year ago, half a year ago, or six months ago. It would have been so much easier, I would have had so much stress off of my shoulders because I would not have been pulling money out of my 401(k) to try to make ends meet or living hand to mouth trying to meet these monthly payments and avoid lawsuits and had a lot less sleepless nights if I would have just picked up the phone and sat down with you months ago”.
What Are The Top Misconceptions People Have About Bankruptcy?
The most common misconception that people have is that the laws are set up to punish the people who file bankruptcy in exchange for wiping away the debt, and that could not be farther from the truth. The bankruptcy laws are set up to give people a fresh start, so that they can get back on their feet and support themselves and their families and hopefully contribute to society. When I speak with people, it is not an uncommon question for them to ask: “Can I keep my house? Can I keep my car?” The courts do not have any interest of taking away all of your assets and throwing you to on the street. That is only going to create problems for the state welfare system.
If the court takes away your ability to support yourself when you file bankruptcy, then that is going to make a lot of problems for the government. So punishing you and taking away all your assets is not a focus of bankruptcy. The court does look at your assets, but you are afforded quite a bit of protections to protect a lot of things. The court does draw a line at some point, you cannot file bankruptcy and have a two million dollar yacht and expect to keep that. But things like your home, cars, and your household goods, are protected up to a certain amount. For example, in Minnesota you can protect up to $390,000 of equity in your home. Note that is equity, not total value. So if you had to file for bankruptcy protection and your home was worth $600,000 with a $300,000 mortgage balance against it, you would still be able to protect your home 100%. There is definitely a huge misconception that the bankruptcy laws want to extract some punishment on you in exchange for wiping away your debt.
Another big misconception is that the only people who need to file for bankruptcy are just people who are reckless spenders, or irresponsible with money and these people could have avoided bankruptcy altogether if they just would have been more responsible with their income. The average American household that carries a credit card balance today has an average of $16,000 of credit card debt. The truth is that people use credit and make payments on their debt and pay it off over time. It does not mean you are irresponsible because you use credit and make payments on it, because at the time you took out the loan or put the purchase on the credit card, the debt payments fit it into your budget. If you make payments on that debt, you are paying it down overtime with interest too. Then two years down the road somebody loses their job, it doesn’t mean you are reckless with money because your income circumstances changed.
Now you are in a situation where you have to pick and choose between paying the credit card bills and maybe being able to afford the grocery store for the week, or making the car payment, or paying any number of other expenses that you have. Hopefully, if you lose your job or your hours are cut, it is temporary situation, but it is not terribly uncommon where the situation does not get resolved as quickly as you would like. Maybe you lose your job and you get a new job, but you are not quite making what you used to make when you took out the credit card debt in the first place. That does not make you irresponsible, it happens. It is a situation where bankruptcy at that time is an option to be considered. Obviously, there can be other options as well depending on what the circumstances are.
If you are able to cut other items out of your budget that are not absolutely necessary, you might be able to make room for the credit card payment and pay it off over time. Sometimes that is not always an option. That is definitely a misconception that people have. When it happens to you and the shoe is on the other foot and you look around and say, “Okay, how do I solve this debt problem?” Bankruptcy makes a lot more sense when you have to look at it through that perspective.
For more information on Bankruptcy In Minnesota, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling today.
Chapter 13 is essentially a payment plan that you organize through the court system. Think of it as a consolidation loan with teeth.
There are 2 things you must do after your case is filed: (1) attend the meeting of creditors (aka the 341 hearing); and (2) complete a debtor’s education course via phone within 75 days from the date your case was filed. The 341 hearing is sometimes referred to as the meeting of creditors because your creditors can attend the meeting and ask you questions about the information contained in your petition.