File Bankruptcy FAQ

What can you expect if you file bankruptcy? As soon as you file bankruptcy, you are protected by a part of the Bankruptcy Code called the “Automatic Stay”. [11 U.S.C. §362]. This stay functions as an Order or injunction from the Bankruptcy Court, which can enforce the stay. The stay stops most legal proceedings against the Debtor. It prohibits almost all attempts to collect debts owed by the Debtor while the bankruptcy is pending. Most Chapter 7 cases will remain pending for three to four months. Chapter 13 cases may continue for 3 to 5 years. The Automatic Stay generally does not prohibit attempts to collect debts which arise after the case is filed.

The Automatic Stay can be even more important than the discharge of debts. It will stop harassment by creditors over the phone or by letter. It can stop most lawsuits. And it can be used to stop, at least temporarily, a foreclosure and give a Debtor more time to pay a mortgage arrearage. However, this protection is not absolute. In some circumstances, a secured creditor can be allowed to repossess or foreclose on secured property. [SEE AUTOMATIC STAY] In most cases the Automatic Stay expires when the debts of the Debtor are discharged. The discharge provisions of the Bankruptcy Code will then prohibit almost all attempts to collect debts which have been discharged. However, after the discharge, creditors will be free to pursue debts which have not been discharged and debts which have been reaffirmed. Many liens, mortgages and secured interests in property will survive the bankruptcy unless the underlying obligation is paid through the bankruptcy.

The debtor is required to attend a “341 Meeting” (sometimes called the “first meeting”) about 30 days after a Chapter 7 or 13 Bankruptcy is filed. In most cases, but not all, this is the only appearance the debtor is required to make. The trustee will ask questions about the debtor’s filing and finances. No judge is present. The debtor’s actual appearance may last only 5 to 10 minutes. However, there may be a much longer wait for the debtor’s case to be called.

Creditors and the trustee are given time to raise various objections and file proofs of their claims (if any of the debtor’s assets are to be distributed). If no objections are made the debtor can be granted a discharge. [SEE DISCHARGE] The discharge forbids an action by a creditor to collect a debt which has been discharged. In most Chapter 7 cases a discharge will be granted roughly 60 days after the date of the 341 meeting (about 90 days after the case was filed). In Chapter 13 cases a discharge can be granted when the final plan payment has been made, typically three to five years after the case was filed.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

To file bankruptcy, do three things.

First, call our office at 651-639-0313 for an appointment. During the appointment we gather the information necessary to prepare your bankruptcy and discuss how filing bankruptcy will affect you.

Second, download, print and fill out our Bankruptcy Worksheet available at the top of this page. The worksheet contains questions about your income, assets, finances, and your debts and creditors, all information that is necessary to file bankruptcy. Many of the questions will not apply to your case. But fill out as much of the form as you can. We can help you complete the form at your appointment. YOU CAN SKIP THIS STEP IF YOU NEED TO, but it helps both of us if you’re prepared.

Finally, come to our office located at:

2151 North Hamline Avenue Suite 202 Roseville, MN 55113

Our office is in a round two story brick building on the southwest corner of County Road B and Hamline Avenue, about ½ mile east of the Har Mar shopping mall and one mile southeast of Rosedale.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

WHAT DOES A PERSON HAVE TO DO TO FILE BANKRUPTCY?

To file bankruptcy, the Debtor’s attorney will prepare documents which in most cases consist of several dozen pages.

A Petition contains general information such as your name and address, the chapter of the bankruptcy code under which the Petition is filed, statistical and administrative information, and a place for the Debtor’s signature indicating assent to file the Petition.

Along with the Petition the Debtor files a Statement of Affairs. As the name of the document suggests, you report financial information such as the income earned year to date. You list income from various sources, such as business income, social security, child support etc. You are required to list payments made to creditors within various periods of time. The Statement of Affairs poses miscellaneous questions about your financial affairs such as whether you have had any losses for fire, theft or gambling; whether you have a safe deposit box; whether you have made any significant gifts recently or any charitable contributions; or whether you have been involved in any lawsuits; and you are asked to list property you may have transferred over certain periods of time. This is not a complete list.

The Debtor also files a set of Schedules with information about your property (assets), debts (liabilities), income and expenses. These Schedules deal with the following: a. Real Estate; b. Personal Property; c. What property may be “exempt” under the Bankruptcy Code [See Exemptions, below]; d. Secured Creditors; e. Creditors entitled to “Priority” status under the Bankruptcy Code — tax debts would be one example; f. Unsecured Creditors — typically most creditors will fall into this category; g. Executory Contracts & Leases. An executory contract is a contract which still has terms remaining to be performed (aside from the payment of money); h. Co-debtors; i. Income of debtor (and debtor’s spouse); and j. Current Monthly Expenditures of the debtor. There is a Summary of Schedules and a declaration by the debtor attests the information in the Schedules is correct.

A Statement of Current Monthly Income (Form B22A or B22C) is sometimes referred to as the ‘Means Test’. Paystubs and other documents are used to calculate your current monthly income. The test is somewhat artificial since it is based on only the six months prior to the month in which the bankruptcy is filed. Thus, the debtor may have some power to select the time frame by hurrying or delaying filing. Calculation of income is then used to check whether or not your income is above or below the median income in your state for a family of your size. If your income is above the statewide median you will have to complete calculations (the means test) related to your income and various obligations. In a Chapter 7 case, if you pass the means test you are very likely eligible to file a Chapter 7. In a Chapter 13 case, the test is used to fix the duration of the Plan (and indirectly the amount to be paid). [See What Will My Chapter 13 Payment Be?]

Miscellaneous other documents will also be filed such as a statement about the compensation paid to your lawyer and a matrix with the names and addresses of all creditors. There will also be a declaration that the debtor has completed the counseling requirement. The debtor must complete the required credit counseling prior to filing. In a Chapter 7 case the debtor will file a Statement of Intention setting out the debtor’s plans to retain, redeem or surrender secured property and state whether any lease or executory contract will be assumed or rejected.

The debtor signs a Signature Declaration essentially signing on to all the documents. The attorney will electronically file the documents. In most cases the attorney also files the debtor’s pay advices (pay stubs or pay records) and pays the filing fee automatically as part of the filing.

As part of filing, the judge responsible for the case will be selected and the Trustee and United States Trustee will be notified. Shortly after filing the Bankruptcy Court will schedule the 341 Meeting (First Meeting of Creditors) and mail out notices of the filing and meeting to you and the creditors.

As you can see, filing Bankruptcy is not simple. If a genuine ‘emergency’ requires an immediate filing, a Partial Filing can be made. Just the Petition, Signature Declaration, Notice of Responsibilities and Matrix of creditors who can be quickly identified are filed. Partial filings are discouraged by the Bankruptcy Court and bankruptcy attorneys. After a partial filing, the remaining documents must be filed within a short period of time. This deadline can be stressful for both the debtor and attorney. The rapid pace of filing makes it more likely mistakes may be made by both debtor and the debtor’s attorney.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

You cannot be fired by a private employer solely because you filed bankruptcy.

Under Section 525(b) of the Bankruptcy Code no private employer may terminate your employment or discriminate in your employment solely because 1) you are or have been a debtor under the Bankruptcy Code; 2) prior to your discharge, but during or before your case started you were insolvent; or 3) you have not paid a debt that is dischargeable or was discharged under the Bankruptcy Act. [SEE ANTI-DISCRIMINATION]

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

WHAT PROPERTY CAN YOU KEEP IN BANKRUPTCY?

Most Chapter 7 filers lose NO property. But some people do lose some property which has become part of the bankruptcy estate. Most of your property will become part of the bankruptcy estate. The bankruptcy estate does not include certain property, such as ERISA qualified pensions, spendthrift trusts or certain education related accounts or interests. You can keep this property. A discussion of what property may be part of the estate would be too lengthy for this format. You must rely on your lawyer to tell you if any of your property will be part of the bankruptcy estate. Call us at 651-639-0313.

Debtors typically keep most or all of the property in their bankruptcy estate because the property is “exempt” under §522 of the Bankruptcy Code. Generally, if the total value of all your property is less than $12,725 you will lose no property. Further, it may be possible for you to keep property worth a great deal more.

In Minnesota a debtor is permitted to select ONE of two sets of exemptions, called “federal” or “state” exemptions. The property you can keep depends on the type of property and its value. For instance, the law gives greater protection to homes or cars than to cash in the bank. A debtor can only choose one set of exemptions (state or federal) and both married joint debtors must use the same set. For discussion of how exemptions are used in joint bankruptcies [SEE JOINT BKY]

These are the FEDERAL exemptions from §522(d) of the Bankruptcy Code:

1) interest in homestead (principal residence of debtor or debtor dependent)

$22,975

2) one motor vehicle

$3,675

3) household furnishings and goods, wearing apparel, appliances, books, animals, crops, musical instruments, primarily for household, personal or family use Up to $575 for any one item, $12,250 in aggregate
4) jewelry for personal, family or household use

$1,550

5) property of any kind or description $1,225 plus up to $11,500 from any unused homestead exmtn.
6) implements, professional books, tools of the trade of debtor

$2,300

7) unmatured life insurance contract owned (not credit life ins)

100%

8) certain interests in accrued dividend or interest or loan value in an unmatured life insurance contract when the owner & insured is debtor or dependent Up to $12,250 less certain payments from life ins. co.
9) professionally prescribed health aids for debtor or dependent

100%

10 A, B, C) Social security benefit, unemployment comp, local public assistance, veterans’ benefit, disability, illness or unemployment benefit, alimony, support, maintenance,

100%

10 D) alimony, support or maintenance Amount reasonably necessary to support debtor & dependents
10 E) payment under stock bonus, pension, profitsharing, annuity, or similar plan on account of illness, disability, age, death or length of service except under certain circumstances [ask your lawyer] 100%, but certain payments not covered – ask lawyer
11 A) crime victim’s reparations awards

100%

11 B, C) wrongful death claims for person of whom debtor was dependent, payments under life insurance on life of one who debtor was dependent of on date of death Amount reasonably necessary to support debtor & dependents
11 D) payments for bodily injury (not pain & suffering or money for actual monetary loss) of debtor or dependent

$22,975

12) retirement funds if exempt from taxation under IRS Code §§ 401, 403, 408, 408A, 414, 457 or 501(a) To extent exempt under tax law

These are the BASIC MINNESOTA exemptions: (There are OTHER MN exemptions, ask your lawyer about specific property) Some of the exemptions for all (100%) of a type of property may be subject to constitutional objection if they are based on a Minnesota Statute. This list contains basic exemptions, NOT ALL exemptions are listed which may be available.

Homestead occupied as debtor’s dwelling place up to 160 acres Minn. Stat. §510.02 $390,000; $975,000 if used for agriculture
Bible, library & musical instruments. Minn. Stat. §550.37, s. 2.

100%

Pew & burial lot. Minn. Stat. §550.37, s. 3.

100%

Personal goods: all wearing apparel,1 watch, utensils of debtor & family. Minn. Stat. §550.37, s. 4(a).

100%

Household furniture, household appliances, phonographs, radio, radio & tv receivers of debtor & family. Minn. Stat. §550.37, s. 4(b).

$10,350

Wedding rings or other symbols of marriage exchanged at time of marriage & in debtor’s possession. Minn. Stat. §550.37, s. 4(c).

$2,817.50

Farm machines used in farming by debtor principally engaged in farming & livestock, farm produce, standing crops. Minn. Stat. §550.37, s. 5.

$13,000*

Tools of trade; tools, implements, machines instruments, office furniture, stock in trade & library reasonably necessary in debtor’s trade, business or profession. Minn. Stat. §550.37 s. 6.

$11,500*

University apparatus, library, philosophical & chemical or other apparatus belonging to or used in instruction of youth, in any university, college, seminary or school indiscriminately open to the public. Minn. Stat. §550.37, s. 8.

100%

Exempt property claims. Money from claim on account of destruction or damage to exempt property. Minn. Stat. §550.37, s. 9.

100%

Insurance proceeds. money received or payable to surviving spouse or child from insurance payable at death of spouse or parent. Minn. Stat. §550.37, s. 10. $46,000 + $11,500 for each dependent of surviving spouse or child
Insurance Policies. Cash surrender value, loan value or accrued value of a policy. 1 policy up to $8,800
Beneficiary associations relief or other benefits payable or to be rendered to police dept. association, fire dept. association, beneficiary association or fraternal benefit association to any person entitled to assistance or certificate holder of beneficiary of cert. holder. Minn. Stat. §550.37, s. 11.

100%

Manufactured home inhabited as home by debtor (requirements for size, etc.). Minn. Stat. §550.37, s. 12.

100%

Motor vehicle (one vehicle only). Minn. Stat. §550.37, s. 12(a). $4,600; $46,000 if modified at cost of at least $3,450 to accommodate physical disability of authorized person
Earnings (exempt if not subject to garnishment under §571.911) – earnings lose character as earnings 20 days after deposit. Minn. Stat. §550.37, s. 13; Minn. Stat. §571.922. Greater of 75% of disposable wages or 40 times minimum wage
Public assistance money received from various public assistance programs. Minn. Stat. §550.37, s. 14.

100%

Salary or earnings of past recipient of public assistance for six months after returning to private employment or farming. Minn. Stat. §550.37, s. 14.

100%

Minor child’s earnings Minn. Stat. §550.37, s. 15.

100%

Claims for damages recoverable by person by reason of levy upon or sale after execution of person’s exempt property or by wrongful taking or detention of such property and any judgment. Minn. Stat. §550.37, s. 16.

100%

Rights of action for injuries to person of debtor or of relative. Minn. Stat. §550.37, s. 22.

100%

Life insurance aggregate interest in accrued dividend or interest under or loan value of unmatured life insurance contract owned by debtor under which insured is debtor or person of whom debtor is dependent. Minn. Stat. §550.37, s. 23.

$9,200

Employee benefits – right to present or future payments or payments received by debtor under stock bonus, pension, profit sharing, annuity, IRA, Roth IRA, individual retirement annuity, simplified employee pension, or similar plan or contract on account of illness, death, age, or lenght of service to extent of debtor’s aggregate interest. Minn. Stat. §550.37, s. 24. Some of these benefits may not be included in the bankruptcy estate under 11 U.S.C. §541. $69,000 plus additional amounts reasonably necessary for support of debtor or debtor’s dependent(s)
Proceeds for improvements to property; proceeds received for labor, skill or machinery contributing to improvement of real estate under Minn. Stat. §514.01

100%

Certain public benefits: worker’s compensation (Minn Stat. §176.175); unemployment comp (Minn. Stat. §268.192); veteran’s benefits (Minn. Stat. §550.38); crime victim’s comp (Minn. Stat. §611A.60)

100%

Certain accident or disability proceeds (Minn. Stat. §550.39)

100%

Pensions (if part of bankruptcy estate) public employees (Minn. Stat. §353.15); state employees (Minn. Stat. §352.96); state troopers (Minn. Stat. §352B.071)

100%

Certain federally controlled retirement benefits – civil service (5 usc §8346); foreign service (22 usc §4060); military service (10 usc §1440); railroad workers (45 usc §241m); social security (42 usc §407); veteran’s benefits (38 usc §3101). Some of these benefits may not be part of the bankrupcty estate.

100%

Rights under federal statutes for survivor’s benefits – military service (10 usc §1450); judges & certain court personel (28 usc §376); lighthouse workers (33 usc §775)

100%

Death and disability benefits under federal statutes – US government employees (5 usc §8130); longshoremen, harbor workers (33 usc §916); military service (42 usc §1717)

100%

miscellaneous federal non bankruptcy– military deposits to savings account while on permanent duty (10 usc §1035); Indian lands, homestead sales or lease proceeds (25 usc §410); Klamath Indian tribe benefits (25 usc §§543, 545); military group life insurance (38 usc §1970(g)); railroad workers’ unemployment (45 usc 352(e)); seaman’s clothing (46 USC. §11110); seaman’s wages on voyage pursuant to written contract (46 USC. §11109)

100%

If you have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

Can bankruptcy stop garnishment?

In most cases, but not all, yes.

Filing a bankruptcy starts an “automatic stay” under 11 U.S.C. §362. The stay acts like an injunction or order. It stops creditors from taking legal actions such as garnishment against the debtor or the debtor’s property. The stay may also stop a foreclosure (at least temporarily) or prevent a lawsuit from starting or continuing while the bankruptcy is pending.

But the automatic stay has limitations. Generally, it will not stop a criminal action against the debtor. It will not stop actions to establish paternity, child custody or visitation. It does not apply to parts of divorce actions. It will not stop the collection of domestic support obligations ordered by a court such as child support or alimony (spousal maintenance).

Thus, garnishment to collect child support or alimony (spousal maintenance) cannot be stopped by filing bankruptcy.

In many cases bankruptcy will do more than simply stop a garnishment. A bankruptcy might be used to recover funds already garnished. If wages or other funds are now being garnished, or if money or other property has been garnished recently, you should consult a lawyer immediately. It might be possible to recover all or part of the funds. Your right to recover garnished funds depends on how quickly you respond after garnishment, the amount garnished, the property you may be able to exempt and other factors.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

Can you use bankruptcy to get your driver’s license back? Sometimes. Keep reading.

A driver’s license can be restored if the license was suspended because of an unpaid judgment against an uninsured motorist under Minnesota Statutes, §171.182 IF the judgment is dischargeable under the Bankruptcy Code. Most judgments which result from automobile accidents will be discharged. However, some judgments may not be discharged. If the judgment was for a death or personal injury caused by the debtor’s operation of a motor vehicle (or vessel or aircraft) while intoxicated, the judgment cannot be discharged under either Chapter 7 or Chapter 13. If the debt were found to be for willful and malicious injury by the debtor it also could not be discharged in a Chapter 7 case. In other unusual situations, the debt may not be discharged. [See What Debts Cannot Be Discharged]

A driver’s license can NOT be restored if the purpose of the suspension, revocation or cancellation is to keep an intoxicated driver off the road or if the license was pulled because of one of the reasons for suspension cited under Minnesota law such as the driver is a “habitual” reckless or negligent driver or incompetent to drive a motor vehicle as determined in a judicial proceeding. See Minnesota Statutes, §171.18.

The right to drive can NOT be restored if a driver’s license is suspended because the debtor is in arrears on payment of child support or spousal maintenance (alimony) (Minnesota Statutes, §518A.65). The domestic support obligation will not be discharged. However, a Chapter 13 Plan may provide for payment of all or part of such obligations and may lead to restoration of a driver’s license under Minnesota Statutes, §§518A.65 and 518A.69.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

Bankruptcy can deal with foreclosure in several ways.

The Automatic Stay [See Automatic Stay] can provide immediate temporary relief. The Stay stops legal action against your real estate. The Stay takes effect when your Bankruptcy is filed.

You have more options if you file before the sheriff’s sale. If the sheriff’s sale has already taken place, there are fewer options. Bankruptcy may still give you a brief respite to complete the sale or redemption of the property.

Chapter 13 normally offers more flexibility with foreclosures. It may be the only way to save your home. The Automatic Stay stops any pending sheriff’s sale. In most cases mortgage arrears are made over time, perhaps over 36 months (or even longer in some cases). Chapter 13 helps in several ways:

  1. It gives the debtor time to make up back payments;
  2. Interest on the arrears stops;
  3. Late payment penalties stop;
  4. Payments on other debts may be delayed while mortgage arrears are paid;
  5. Many debts, especially non-priority unsecured debts, will not have to be paid;
  6. Some second mortgages may be removed as charges against the real estate; and
  7. It might even be possible to modify the terms of a first mortgage, that is change the term, payments or interest on the mortgage or, in a few cases, even write down the principal to the fair market value of the property.

In a Chapter 7 , the Automatic Stay will normally remain in force for about 90 days. A creditor may ask the Bankruptcy Court to lift the stay and permit a foreclosure of your property. Such an action would follow a motion, hearing and order. Whether the creditor is able to lift the Stay or the Stay is dissolved in the ordinary course of the case, the mortgage holder will have to start the foreclosure action again. This means the notice will be served by the mortgage company’s attorney at least six weeks after the new foreclosure notice is served. After the sheriff’s sale there is a 180 day period to sell or redeem the property. By discharging some or all of your other debt, the Chapter 7 case can make it easier to come up with money to reinstate the mortgage.

In either a Chapter 7 or Chapter 13 case you may not wish to keep a home because you are not able to make the payments or because you owe more on the mortgage than the property is worth. You can surrender your interest in the real estate and discharge your personal obligation on the mortgage note.

If you opt to discharge your obligation on the mortgage note and surrender your interest in the real estate, you generally are left to possess the premises (live in or rent) until 180 days after the date of the sheriff’s sale. When this period has expired, the creditor may seek possession of the premises by filing an eviction (unlawful detainer) action if you refuse to leave voluntarily.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

Can bankruptcy stop repossession? Yes, and sometimes it can even improve your car loan. Normally, a creditor can repossess a vehicle without any type of advance notice to you. Any breach of your agreement with a lien holder may give them the right to take possession of a car. A breach would normally be a missed payment but it could be many other things, such as failure to keep insurance on the vehicle. Most creditors will not repossess a vehicle unless you fall two or three payments behind. But with a history of missed payments, one missed payment may be enough.

If you are worried about repossession of your car, bankruptcy can help in several ways.

If the car has not yet been repossessed the Automatic Stay [See Automatic Stay] will stop the lien holder from seizing the vehicle. Once a bankruptcy has been filed, a creditor may not seize any property of the debtor unless the stay is lifted. If the stay is not lifted, it will continue until a discharge is granted or denied or until the case is dismissed or closed.

In a Chapter 7 Bankruptcy, the creditor can wait until the discharge, dismissal or closure of the case or bring a motion to lift the automatic stay and proceed against the car. In Chapter 7 you have three options: 1. You can make up any back payment and reaffirm (renew your agreement on) the debt on the car; 2. If you cannot afford to pay the loan or if you do not wish to pay more for the car than it is worth, you can surrender the vehicle and rid yourself of the personal liability to repay the loan; or 3. You could redeem, meaning you would keep the car and pay its market value. In most cases redemption means the debtor will arrange a loan from a new lender to pay off the old loan.

A Chapter 13 Bankruptcy will give you more flexibility. The debtor can still reaffirm, surrender or redeem, but can also modify the car loan. Arrears can be made up over a 36 or 60 month period. If interest on the loan is high it can be trimmed. In some cases, but not all, the principal owed can be written down to the market value of the car.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

It is impossible to generalize about the effect of Bankruptcy on credit, but a bankruptcy may improve your credit if you have bad credit already, and may make it easier for you to improve your credit because it gets rid of old debt.

A Chapter 7 bankruptcy can be reported by a credit reporting agency for 10 years after filing. A Chapter 13 can be reported for 7 years after filing. Although a creditor is free to deny credit because a debtor filed bankruptcy, this does NOT mean debtors will not have credit for 10 years. The report of your discharge may IMPROVE your credit since creditors understand that many or even all of your debts have been removed. Also, Bankruptcy can prevent new judgments for claims which are discharged. The debtor can apply to remove court records of judgments based on discharged claims.

Some credit is so bad that it cannot get any worse. Sometimes a person has a great deal of debt that could never be repaid — certainly not in the near future — but earns a fairly good salary. In other cases liens or debts which could be discharged in bankruptcy damage a debtor’s ability to earn a living or secure credit. In these cases bankruptcy may improve a credit rating.

A credit rating is often worst just before a bankruptcy is filed. Credit will then be difficult because the creditor believes the debtor will soon file bankruptcy — discharging most unsecured debt. AFTER a bankruptcy is filed, many or even all debts may be discharged. With much less debt the debtor has more money to repay creditors. In some cases the debtor will end up with less property to be maintained.

It is more difficult for a Chapter 13 debtor to quickly restore credit, but in the long term the filing can enhance a credit rating. The ongoing obligation to repay creditors under the plan will last for 36 to 60 months. The plan will often give the debtor a respite – time in which to pay secured debts, taxes or other debts. To a creditor, the monthly drain on the debtor’s resources will make it appear more difficult to repay a new loan. But a creditor may view the Chapter 13 as a good faith attempt by the debtor to pay what was possible to creditors. Successful completion of a plan shows financial responsibility and a stable history of debt payments.

The other way to frame this question is: How quickly can I restore my credit? This depends on how bad your credit was before you filed bankruptcy, what debts will remain after you file bankruptcy, what property you will retain, your income and other resources (such as a potential co-signer, or provable impending windfall).

How good your credit will be also depends on what you will use your credit for. Many debtors are surprised to find creditors offer them new car loans shortly after filing bankruptcy. Such credit is often available, although the interest rate will sometimes be higher. If you intend to purchase a home, you should anticipate a two year wait before you qualify for FHA financing. Conventional financing, which will require a higher down payment, may be easier to arrange. Of course, it will be possible to secure financing earlier by finding a willing seller, perhaps one willing to offer a Contract for Deed. A helpful creditworthy friend of relative could be a co-signer/guarantor.

You may be better served by asking why you need credit or having a plan to reduce your need for credit. Many who live on a fixed income can sustain their standard of living better by waiting somewhat longer before replacing a used car and being selective in improvements for their home.

You should plan ahead. If a Chapter 7 is in your near future, your credit is decent and your old car must be replaced, you may want to purchase before filing. Once you have filed Bankruptcy, the payments on a new car may help you build credit. In other cases, refinancing a home mortgage or car loan may affect your scheduled Chapter 13 plan payments or make it easier to pass your Means Test. [See What is the Means Test.]

If you do not file Bankruptcy, your credit report may show negative information for 7 years from the time you become current. By filing, NEW negative reported events based on old debts can be stopped. This allows you to re-establish credit faster with an orderly plan to keep house, auto or other payments current.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

You can keep your bank account even though you file Bankruptcy.

But your bank account may be affected by your filing, and you would be well advised to consult a bankruptcy attorney before filing.

If you file a bankruptcy, an ordinary bank account will become part of the bankruptcy estate. You may exempt any funds permitted under the Bankruptcy Code. You may be able to exempt all, part or none of the funds in your account depending on the types of property you own, the valuation of the property and your preferences. If the total value of ALL your assets is less than $12,725 you will be able to keep ALL of your property. You may be able to keep property worth a substantial amount more. For a more complete discussion of your exemptions, See Will I Lose Any Property If I File Bankruptcy?

Bank accounts may also be a problem in another way. If you owe money on a loan from your bank, have a credit card from the bank, or have an overdraft on one of several accounts the bank may set off the amount owed to it. This means the bank can keep the money in an account of yours to repay money you owe the bank on another account or obligation.

Another problem may arise if you have an overdraft. Such an obligation may or may not be discharged by the Bankruptcy Court. If the overdraft were found to be fraudulent or constitute a willful and malicious tort (in a Chapter 7 case) it could not be discharged. Willful and malicious torts may be discharged in a Chapter 13 case. And the automatic stay and the Bankruptcy Court will NOT stop a possible criminal action for issuing a dishonored check. (Minnesota Statutes, §609.535). However, not every overdraft, particularly if unintentional, violates this statute. And County Attorneys (or City Attorneys) do not charge all violations. Whether criminal or not, a bank may refuse to allow you to open or maintain an account because of an unpaid overdraft. Consult your attorney if, after filing a bankruptcy, your bank conditions opening or maintaining an account on whether an overdraft has been repaid.

Have further questions that are not covered in our Bankruptcy FAQ pages, we understand. Contact us today for help and assistance with your financial issues. A simple phone call, (651) 639-0313 or email today can relieve your stress and change your life. Contact us today!

11 U.S.C. §362(a)(6). So, can creditors stop creditors from calling? Yes.

A creditor who violates the Automatic Stay can be sanctioned by the Bankruptcy Court. Sanctions for deliberate violations may include fines or even imprisonment for the most egregious violations.

However, there are exceptions to the stay for some creditors. A new debt which arose after the Bankruptcy was filed would not be covered. Other exceptions include:

a. criminal actions against the debtor;
b. many actions regarding domestic support obligations, paternity, divorce, child custody and visitation, domestic violence and division of property in divorce actions (if the property of the bankruptcy estate is not involved);
c. enforcement of certain medical obligations under Title IV of the Social Security Act;
d. various actions by the bankruptcy trustee involving property of the estate or enforcement of the Bankruptcy Code; and
e. various actions by federal government authorities including many actions to administer and enforce tax laws. There are other exceptions, many quite technical. For more detailed information, talk to a bankruptcy attorney.

Two additional caveats. First, the Automatic Stay will even prevent a creditor from acting against secured property (collateral). However, if arrangements have not been made to repay any payments on the secured debt a creditor may ask the Bankruptcy Court to “lift” the automatic stay, which would permit the creditor to enforce its lien against the debtor’s property.

Second, in a Chapter 7 case the Automatic Stay will expire when the debtor receives a discharge. The discharge is normally granted 90 days after the case was filed. A Chapter 13 discharge is granted at the completion of the Plan. Most plans last either 36 or 60 months. The discharge will then bar actions to collect, recover or offset any debt which has been discharged in the bankruptcy. It will stop lawsuits or void judgments based on a discharged claim. Discharge is an affirmative defense against a lawsuit on a debt which has been discharged. Minn. Rules Civ. Proc., Rule 8.03. There are few exceptions to the discharge injunction. 11 U.S.C. §524. But note that most, but not all debts are dis-chargeable. See What Debts Can Be Discharged in Bankruptcy?

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Can bankruptcy stop lawsuits? Yes, usually. From the moment a Bankruptcy is filed the Automatic Stay stops most legal actions to enforce claims against the debtor or the debtor’s property. 11 U.S.C. §362(a). The Stay remains in effect until the discharge is granted or denied or until the case is dismissed or closed, whichever comes first. 11 U.S.C. §362(c)(2).

A creditor who violates the Automatic Stay can be sanctioned by the Bankruptcy Court. Sanctions for deliberate violations may include fines or even imprisonment for the worst violations.

However, there are exceptions to the stay for some creditors. A new debt which arose after the Bankruptcy was filed would not be covered. Other exceptions include:

a. criminal actions against the debtor;

b. many actions regarding domestic support obligations, paternity, divorce, child custody and visitation, domestic violence and division of property in divorce actions (if the property of the bankruptcy estate is not involved);

c. enforcement of certain medical obligations under Title IV of the Social Security Act;

d. various actions by the bankruptcy trustee involving property of the estate or enforcement of the Bankruptcy Code; and

e. various actions by federal government authorities including many actions to administer and enforce tax laws. There are other exceptions, many quite technical. For more detailed information, talk to a bankruptcy attorney.

A warning: The Automatic Stay will even prevent a creditor from acting against secured property (collateral). However, if arrangements have not been made to repay any payments on the secured debt a creditor may ask the Bankruptcy Court to “lift” the automatic stay, which would permit the creditor to enforce its lien against the debtor’s property under terms and conditions set by the Court.

If a debt is discharged, the Bankruptcy Code will stop actions against the debtor by enjoining (prohibiting or restraining by court order) the start or continuation of any legal action, and enjoining the use of legal process to collect on the debt.

If a debt is NOT discharged, the creditor will be free to pursue the lawsuit after the Automatic Stay has expired or been lifted.

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Can one spouse file bankruptcy if the other does not? Both spouses are not required to join in a bankruptcy. However, it is often, but not always, advisable for both spouses to file a joint bankruptcy. A joint bankruptcy filing will normally cost only slightly more than an individual filing. But if both spouses file separate bankruptcies the total cost — the legal fees and the filing fee — could double.

On the other hand, it is not helpful for the other spouse to file if

  1. There are no joint debts
  2. There is no jointly held property
  3. There are no assets likely to be lost in the filing of a single spouse and
  4. The other spouse does not have a significant amount of debt

The credit of the non-filing spouse would not be directly damaged by a separate filing of the other spouse.

If both spouses are responsible for a debt and one spouse secures a discharge of the obligation, the other spouse remains liable for the obligation. If all the debts are owed by just one spouse it will often be advisable for only the spouse with the debts to file bankruptcy. But there are exceptions to this rule. For instance, the other spouse may have guaranteed payment of some of the debts. There are a small number of instances in which one spouse may be responsible for a debt incurred by the other spouse (for example, family necessities or obligations in a legal separation). Or the actions of the filing spouse may have the effect of creating an obligation of the other spouse — as when a spouse rejects a lease signed by both spouses, leaving the non-filing spouse wholly responsible for the obligation.

If the spouse filing bankruptcy may lose property in the bankruptcy (See Will I Lose Any Property If I File Bankruptcy?) it might be helpful for the other spouse to join in the bankruptcy to increase the available exemptions — exemptions consist of property the debtor will be permitted to keep free from the claims of the bankruptcy trustee in a bankruptcy. The addition of a spouse may even double the exemptions available to the debtors.

There are two important caveats to this answer.

First, if the spouses reside in or formerly resided in a community property state, the answer to this question is much more nuanced. Both the rights and obligations of a creditor against both spouses can be affected if just one spouse files — if community property is involved. A bankruptcy attorney will have to respond to the details of your case if you or your spouse have resided in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.

Second, sometimes it will be impossible for both spouses to file a joint bankruptcy. For instance, if one spouse filed a Chapter 7 within the preceding 8 years, that spouse would not be eligible to file another Chapter 7 case. In another situation, one spouse may owe more than was permitted for a Chapter 13 filer. Sometimes timing may dictate separate filings by the spouses on different dates, or one spouse may file a Chapter 7 while the other files a Chapter 13, 12 or even 11 — the bankruptcy of each spouse may have to be tailored to the different situations of the spouses.

Also, even if just one spouse files, some information about both spouses must appear on the bankruptcy forms. The non-filing spouse should be prepared to provide a list of all of the creditors, the nature of the claims, and the amounts. Income of both husband and wife, the source, and the amount will have to be reported. A list of all the properties of both filing spouse and non-filing spouse may also be required. Lastly, the filing spouse may need to supply information on their monthly expenses, such as food, shelter, clothing, taxes, utilities, medicine, transportation, and other expenses.

The filing spouse must provide a schedule of assets and liabilities, a schedule of unexpired leases and executory contracts, a schedule of income and expenditures, and a statement of financial affairs. Information for the whole household – including both spouses if they are living together – will be needed.

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Chapter 7 is sometimes called a liquidation bankruptcy. The debtor is allowed to keep certain “exempt” assets. Most debtors, but not all, lose no assets as part of their Chapter 7 case. If assets remain to be distributed from the debtor’s estate, the trustee liquidates the assets (reduces them to cash) and allots the proceeds to creditors who file a “proof of claim” with the bankruptcy court. Many debtors prefer a Chapter 7 filing because their case is resolved more quickly and because in many cases they will not have to make any payments to the trustee. The trustee will likely object to filings from debtors with high enough incomes to be able to pay a significant part of their debt in a Chapter 13.

Chapter 13 is designed to ‘adjust’ the debts of a debtor with regular income. The debtor proposes a plan to repay part or all of the debtor’s debts. The plan normally consists of 36 to 60 payments over 3 to 5 years and must be “confirmed” by the court. Many debtors prefer to file a Chapter 13 case because they may be able to keep more property or may want time to repay a creditor for an assortment of reasons. It may be possible to modify the terms of a secured loan — to reduce interest or change the dates of payments. Wholly unsecured second or third mortgages MIGHT be written off entirely. Also, a Chapter 13 can protect co-signers to some degree and can discharge some debts which can not be discharged in a Chapter 7 case.

Each Chapter has advantages depending on the individual debtor’s circumstances.

CHAPTER 7 CHAPTER 13
Eligibility. If debt is predominately consumer debt and income above state median for debtor’s family size, debtor must complete “means test” regarding income and expenses over last 6 months. If cannot pass means test, filing presumed abusive. No means test necessary if most debt is NOT consumer. 11 U.S.C. §707(b). No limit for debtor’s income or amount of debt. Artificial entities such as corporations can file but not certain railroad, insurance companies, banks and a few other entities. But see Discharge, below. Eligibility. Must have regular income, unsecured debt of less than $383,175 and secured debt of less than $1,149,525. Only natural individuals, NOT artificial entities like corporations, are eligible.Plan. Plan must last at least 36 months. If income above median and debtor can NOT pass means test, plan must last 60 months. Must present plan paying disposable income (gross less reasonable, necessary expenses) to trustee to make plan payments for 36 to 60 months. Plan must be feasible and pay all secured debt (if debtor keeps collateral) and priority debts (eg. taxes, alimony, support) unless the creditor(s) does not object.
Duration. Typically lasts a little over 90 days from filing to discharge. Duration. Normally lasts a little more than 36 or 60 months from filing to discharge.
Discharge. NO discharge of debts for1. Willful and malicious torts ;2. Marital property settlement debts ;3. Debts from a prior chapter 7 case in which a discharge was denied;4. Fines, penalties or forfeitures for governmental units (tho not compensation for monetary loss), whether or not convicted of a crime; and

5. Debts incurred to pay income taxes which cannot be discharged.

{Other debt not dischargeable in 7 or 13— See What Debts Can Be Discharged?}

— Only individuals -not corporations- receive discharge. 11 U.S.C. §727(a)(1).

Discharge.Can discharge debts for all debts that can be discharged in Chapter 7 PLUS:1. Willful and malicious torts;2. Marital property settlement debts – as in Chapter 7 NOT including domestic support obligations (alimony & child support);3. Debts from a prior chapter 7 case in which a discharge was denied;4. Fines, penalties & forfeitures for a government unit if not compensation for loss (other than tax penalty); and

5. Debts incurred to pay income taxes which cannot be discharged.

If cure for debt is in plan and payments remain on debt after completion of plan, debt is not dischargeable. 11 U.S.C. §1322(b)(5).

Foreclosure. Can delay foreclosure by stopping Sheriff’s sale. Foreclosure can restart -from the resetting of a new Sheriff’s sale- if stay lifted (See Can Bankruptcy Save My House From Foreclosure) or after discharge is granted or denied, or case is dismissed or closed (normally a little more than 90 days after filing). Foreclosure. Can delay foreclosure by stopping Sheriff’s sale. Foreclosure can restart -from the resetting of a new Sheriff’s sale- if stay lifted (See Can Bankruptcy Save My House From Foreclosure). If property surrendered, foreclosure may restart.
Mortgage Arrears. No help in paying off overdue mortgage payments, except that debts which are discharged will free up money that can be used to make mortgage payments. Mortgage Arrears. Overdue mortgage payments can be made up over time, perhaps over 2, 3 or even 5 years in some cases. During repayment of arrears in plan, late fees and interest on arrears stop and regular house payments are made outside of Chapter 13 plan. Debtor has more flexibility in dealing with wholly unsecured second mortgages. In some cases the claims of holders of second mortgages or home equity lines of credit can be greatly reduced or liquidated.
Vehicle Surrender. Vehicle that is collateral for loan can be surrendered and debt discharged. Vehicle Surrender. Vehicle that is collateral for loan can be surrendered and debt discharged.
Vehicle Kept. Car can be redeemed by paying secured creditor the value of the vehicle. Otherwise, the vehicle that is collateral for loan can be kept, but debt may then have to be reaffirmed. If the vehicle is kept and not redeemed, the secured debt will have to be paid or vehicle can be repossessed. Vehicle Kept. Car can be redeemed by paying creditor with lien the value of the vehicle. Otherwise, the vehicle that is collateral for loan can be kept, but the debt will have to be paid. Plan can give debtor time to pay off arrears on vehicle. If interest rate is high, debtor may modify the loan to reduce the interest rate. If loan more than 910 days old, debt may be written down to the value of the vehicle.
Reaffirmation. If secured debt not reaffirmed creditor might seek collateral even if payments are current. Reaffirmation. Debt on secured property may avoid reaffirmation since plan will govern rights of secured creditors to collateral.
Old Taxes. Tax debts which are old enough (with a few exceptions) can be discharged. For instance, many income tax obligations due and payable for more than 3 years can be discharged. Different time periods for different types of taxes. Old Taxes. Tax debts which are old enough (with a few exceptions) can be discharged. For instance, many income tax obligations due and payable for more than 3 years can be discharged. Different time periods for different types of taxes.
Recent Taxes. Recent tax obligations generally can NOT be discharged. Obligations can NOT be modified in Chapter 7. Discharge of other debts can be granted even though recent tax debts remain unpaid. Recent Taxes. Most recent tax obligations can be paid off through the plan. Interest and penalties on tax arrears stop. Older tax obligations can often be discharged with payment of only a small percentage of the obligation. All recent taxes MUST be paid through the plan or tax authority must accept payments provided by the plan.
Domestic Support. Alimony (spousal maintenance), family support and child support can NOT be discharged. Automatic stay may stop SOME but not all actions to enforce domestic support obligation after the case is filed until discharge or discharge is denied or case is dismissed or closed. Domestic Support. Alimony (spousal maintenance), family support and child support can NOT be discharged. However, domestic support obligations, including arrears, can be provided paid in a Chapter 13 plan; they can even be paid more than other unsecured creditors. Payments can be an expense, reducing required amount of plan payment. Automatic stay may stop SOME but not all actions to enforce domestic support obligations.
Student Loans. Student loans can NOT be discharged unless the debt imposes an “undue hardship” on debtor. Debt cannot otherwise be provided for in Chapter 7 case. Student Loans. Student loans can NOT be discharged unless the debt imposes an “undue hardship” on debtor. Debt can be paid in plan but cannot be preferred over other unsecured debt unless a separate class can be justified, eg. possibly as a co-signed debt. Loan payments may be an expense which can reduce plan payment.
Cosigners. No special treatment of cosigners. If debt is not discharged or paid by debtor, cosigner (guarantor) of loan can be held accountable for debt by creditor. Cosigners. Cosigners can be protected from creditors by paying the debt in full in plan. Debtor permitted to create separate class and prefer payment to co-signed debts in plan. Even interest on cosigned debts may be paid in plan.
Credit Reports. Can be reported for 10 years from filing. Credit Reports. Can be reported for 7 years from filing.
Non-Exempt Property. Non exempt property (if part of bankruptcy estate – See What Is the Bankruptcy Estate?) generally sold to pay creditors unless debtor and trustee agree on deal to purchase property. Non-Exempt Property. Debtor can keep non-exempt property if general unsecured creditors receive as much from the plan as they would get in Chapter 7.
Attorney Fees. Attorneys normally receive fees prior to filing. Typically less costly than Chapter 13 because completed more quickly and no ongoing administration and no plan will have to be modified. Attorney Fees. All or part of attorney fees commonly spread out over time through plan. Attorney fees generally paid earlier in plan than most other debts. Normally more costly than Chapter 7 because longer to complete, there is ongoing administration and plan must be prepared and often modified later.
Trustee Fees. Trustee collects $60 fee for administering each case. Trustees are also paid a commission from distributions to creditors of liquidated assets recovered in cases:25% of the first $5,000; 10% of the next $45,000; 5% of the next $950,000; and 3% of the balance. Trustee Fees. Trustee is paid a percentage of funds distributed to creditors. Capped by law at 10%. In Minnesota the percentage is presently less.

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WHAT IS A DISCHARGE?

You can think of a discharge as wiping out debts. Call us at 651-639-0313 and we will talk to you about debt elimination. If you like details, keep reading. Technically, a discharge:

  1. Voids any judgment to the extent it determines the personal liability of the debtor to a debt discharged under the case filed by the debtor (whether Chapter 7, 9, 11, 12 or 13) 11 U.S.C. §524(a)(3);
  2. Enjoins (stops or prohibits) the start or continuation of an action or an act to collect, recover or offset a debt as a personal liability of the debtor 11 U.S.C. §524(a)(2); and
  3. Enjoins certain actions against community property — ask you lawyer if you or your spouse have lived in a community property state See 11 U.S.C. §524(a)(3).

The law specifically allows the debtor to voluntarily repay a debt which has been discharged. 11 U.S.C. §524(f).

Unlike the automatic stay, the discharge does not stop actions against the property of the debtor or against guarantors of obligations of the debtor. See 11 U.S.C. §524(e); §524(a)(1)&(2). However, the personal liability of the debtor will be discharged (unless the debt is not dischargeable). For instance, the personal liability of the debtor to pay a secured debt can be discharged, but the creditor would retain its interest in the collateral.

Only natural individuals, NOT artificial entities such as corporations, can receive a discharge. 11 U.S.C. §727(a)(1).

A discharge can be denied in other cases, including (but not limited to) the following:

  1. If another Chapter 7 case has been filed within 8 years or a Chapter 13 filed in the preceding 6 years. 11 U.S.C. §727(a)(8)&(9).
  2. If the debtor has transferred, mutilated or destroyed property of the bankruptcy estate with the intent to hinder, delay or defraud a creditor or an officer of the estate a discharge will be denied. 11 U.S.C. §727(a)(2).
  3. If the debtor has concealed, transferred, destroyed, concealed, mutilated or failed to keep or preserve certain recorded information on the debtor’s financial condition or business transactions, such as books, documents, records or papers — unless the circumstances as a whole justify such act or failure to act. 11 U.S.C. §727(a)(3).
  4. The debtor knowingly and fraudulently made a false oath, presented or used a false claim, gave, offered, received or attempted to obtain money, property or advantage (or promise of same) for acting or forbearing an act. 11 U.S.C. §727(a)(4).
  5. Failure of debtor to explain loss or deficiency of assets to meet liabilities. 11 U.S.C. §727(a)(5).
  6. Failure to obey a lawful order, or to testify on a material question. 11 U.S.C. §727(a)(6).
  7. If the debtor does not complete an instructional course in personal financial management and file a certification of completion. 11 U.S.C. §727(a)(11).

A discharge can also be revoked after it has been granted but the grounds are more limited. Discharge can be revoked only if:

  1. Discharge was obtained through debtor’s fraud which the requesting party was unaware of on the discharge date;
  2. The debtor knowingly and fraudulently failed to either report property or turn over property to the bankruptcy estate;
  3. Failure of the debtor to obey a court order; or
  4. The debtor failed to give a satisfactory explanation to a material misstatement or failed to make documents or other things available for an audit by the trustee or bankruptcy administrator. 11 U.S.C. §727(d).

The discharge is normally granted roughly 90 days after filing of a Chapter 7 or shortly after the final payment of a completed Chapter 13 Plan.

For a discussion of what debts may be discharged see {What Debts Can Be Discharged?}

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DISCHARGE

All debts are discharged in a Chapter 7 case unless they are excepted from discharge by section 523 of the Bankruptcy Code (11 U.S.C. §523).

The EXCEPTIONS TO DISCHARGE UNDER CHAPTER 7 are these:

  1. Most taxes. But if enough time has passed the tax debt may be discharged. If a property tax has been owed for more than one year or you have an income tax debt more than three years old ask your lawyer if your tax debt can be discharged;
  2. Debts for money, property or related to the extension, renewal or refinancing if procured through false pretenses, false representations or a fraudulent financial statement; included are certain debts for luxury goods or services within 90 days before the bankruptcy was filed or some cash advances within 70 days before filing;
  3. Debts not listed or scheduled in a prior bankruptcy, if the failure to notify the creditor prevented the creditor from filing a claim or objecting to the discharge of the debt;
  4. Debts for fraud or embezzlement by a debtor in a position of trust;
  5. Most domestic support obligations (including alimony, spousal maintenance, family support, or child support);
  6. Debts for willful and malicious injury by the debtor;
  7. Fines, penalties or forfeitures owed to a government;
  8. Student loans and debts for educational benefits, unless repayment of the debt imposes an undue hardship on the debtor and debtor’s dependents;
  9. Debts for death or personal injury caused by the debtor’s use of a motor vehicle while intoxicated by alcohol, a drug or other intoxicant;
  10. Debts which were or could have been listed in a previous bankruptcy and which were not discharged, if the debtor waived or was denied discharge under §727(a)(2),(3),(4)(5),(6) or (7);
  11. Certain debts from a judgment or order or decree involving fraud or defalcation of a fiduciary involving a depository institution or insured credit union;
  12. Some debts for malicious or reckless failure to fulfill a commitment by the debtor to a federal depositary regulatory agency to maintain capital in an insured institution;
  13. Obligations for payment of orders of restitution in cases under Title 18 of U.S. Code, Crimes & Criminal Procedure;
  14. Incurred to pay a tax to a unit of government not dischargeable under #1, or to pay fines and penalties under federal election law;
  15. Property Settlements. Debts owed to a spouse, ex-spouse or child arising in a divorce or separation (not including debts under #5) in connection with divorce decree, order, separation agreement or divorce decree;
  16. Association Fees. Fees or assessments connected to membership associations related to the debtor’s interest in his or her dwelling if the fee arises after filing but while the debtor still has an ownership interest in property;
  17. Certain fees imposed on prisoners by a court for filing, motion, complaint or appeal and for costs and expenses assessed for such filings.
  18. Loans owed on certain pensions, profit sharing, stock bonus or related plans; and
  19. Certain debts arising from wrongful actions concerning a securities violation.

Most of the EXCEPTIONS TO DISCHARGE UNDER CHAPTER 13 are the same as those for a Chapter 7. However, the Chapter 13 discharge is broader. It permits the discharge of several debts not discharged in Chapter 7. These debts can be discharged in a Chapter 13 case:

  1. Debts for willful and malicious injury to property;
  2. Marital property settlements (not including domestic support obligations such as alimony and chbild support;
  3. Debts from a prior chapter 7 case in which a discharge was denied;
  4. Restitution, if not convicted of a crime;
  5. Debts incurred to pay income taxes which cannot be discharged; and
  6. Some other – ASK US.

If the Plan modifies the rights of a creditor by providing for the curing of a default and the last payment is due after the final Plan payment, the debt is not discharged. 11 U.S.C. §1328(a)(1); §1322(b)(5).

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