DEEP IN DEBT? We can help!

BANKRUPTCY STILL ALIVE You have doubtless heard that Congress passsed, and George W. Bush signed, a law that was effective Oct. 17, 2005 which was supposed to end bankruptcy. It did not do that. What it did do was throw up some roadblocks, such as a mandatory pre-bankruptcy credit counseling session, and requires more information from you, and more work from me.

COURT FEES INCREASED Oh sure, first Congress makes bankruptcy harder, then they raise the court filing fees. The court filing fee for a chapter 7 is $299.00 as of April 10, 2006, and a chapter 13 is $274.00 as of April 10, 2006.

Basic bankruptcy information

Chapter 7 In a chapter 7 you turn over your non-exempt property to a person called a trustee; however, each person is allowed $9000+ worth of "stuff" plus $8000 worth of household goods plus a car worth $2775.00 in equity. So, most people don't lose anything but their debts. Not every kind of debt can be discharged in a chapter 7. You do NOT lose your house or your car, although of course you must keep making the mortgage payments. The car loan or mortgage "stick" to the car or house even though you file bankruptcy.

Chapter 13 Chapter 13 is a payment plan bankruptcy. It is most useful when you are, for example, behind on a house payment or a car payment but you want to keep the house or car. You make your payments to the trustee, who then splits your one payment up amongst all of your creditors.

Court In either type of bankruptcy, you meet once with a trustee (an attorney, not a judge; the meeting is usually in a conference room, not a court room). The trustee’s job is to verify in person the information we put down in your paperwork. Creditors have the right to come to the meeting, but rarely do so. Bankruptcy is typically not published in a newspaper--the "legal notices" you see are generally mortgage foreclosures.

Alternatives Alternatives to bankruptcy include Consumer Credit Counseling Services. There are a lot of "debt counselors" on the net, some reputable, some not. Here in central Minnesota there are the Village (320-253-5930), TriCap (320-251-1612), Caritas (320-252-1280) (all in St. Cloud) and Lutheran Social Services in Willmar (320-235-7916). Whether or not you file a bankruptcy, these agencies can be a good source of help in budgeting. On the other hand, I have not seen a debt settlement agency (where you pay a company to settle your bills at a discount) do much for anyone I have spoken to or worked with. Under the new law, you are required to get a certificate from one of the counselors on an approved list before you file. There are about a dozen counselors on the approved list, only four of which have Minnesota offices, so necessarily most of this required counseling is done over the phone or by internet.

There is a great deal more to bankruptcy than this, of course; that's why we offer a free first visit.

Other good sources of information are http://www.abiworld.org and http://nacba.org