How Chapter 13 bankruptcy can help your high-income family
In order to file for Chapter 7 bankruptcy in Minnesota, you must pass what is known as a means test.
In order to file for Chapter 7 bankruptcy in Minnesota, you must pass what is known as a means test. This assessment determines, based on a variety of factors including your household size, monthly income and debts, whether or not your financial needs merit a Chapter 7 filing. If your income is too high, this test may disqualify you from receiving the benefits of this type of protection.
However, even if you do not qualify for Chapter 7, you can file for Chapter 13 bankruptcy. In fact, this chapter may be more beneficial for your family depending on your circumstances. Chapter 13 freezes interest on your debts when you file, and you will work with your attorney to break down your assets and propose a payment plan in court, in which you pay only what you can afford over the term of the plan. At the end of your plan, the remaining debt is discharged, and you are no longer liable for payments on those debts.
The payment plan will typically last three to five years and will consist of one manageable bill per month, interest-free. As such, if you’ve incurred debts in the tens of thousands of dollars, particularly on a credit card with a high interest rate, choosing Chapter 13 bankruptcy may actually be the better path for your family. The amount of interest you would pay on this type of debt alone would outweigh the attorney’s and trustee fees associated with this protection. Atlas Law Firm allows you to pay their attorney fees through your plan, which means you don’t pay any attorney fees before your case is filed.
It is important for those considering Chapter 13 to work with an attorney. In some cases, the trustee of your plan may attempt to take your tax refunds while you repay your creditors, putting these funds towards your debt. You may be able to avoid this by restructuring your assets and the amount you have deducted from each paycheck.
If you’re struggling to pay your bills, you may want to consider contacting a Minneapolis bankruptcy lawyer to discuss your options. The professionals at Atlas Law Firm can guide you through this process and provide honest advice.