Many of the people I meet have their accounts at a credit union. Usually they like their credit union and assume that the credit union likes them back. And that may be true, generally.

Bankruptcy is often feared, and the decision to file for bankruptcy can be a difficult choice. But, bankruptcy can be necessary for someone facing overwhelming debt, because it can give them a fresh start financially. If you wonder whether bankruptcy is the right choice for you, let’s talk.

When you file a chapter 7 bankruptcy, the United States Trustee (which is a part of the Department of Justice that oversees bankruptcy cases) appoints a person whose title is "trustee". The US Trustee will invariably select someone for "the private panel of trustees" -- a list of people who are pre-qualified to serve. Technically your creditors could elect a different person at the first meeting of creditors, but I have never seen that happen. By the way, what I am saying here is about trustees in a chapter 7 case. In other chapters there are trustees, but they function very differently.

Since mortgage rates seem to be on their way up, we may run into more folks buying their home on a contract for deed. In case you don’t know, a contract for deed is a device under which you agree to pay the purchase price to the owner of the house over time instead of getting a mortgage and paying the seller with that loan. (Some states refer to this as an installment land contract.) Contracts for deed often have relatively small down payments, monthly payments that are largely interest only, and must be paid off in (balloon) in three to five years.

So, let’s say you bought your home that way. And today you got a “Notice of Official Proceeding in Bankruptcy Court” in the mail. You open the letter, wondering what’s up, and find out that the person who sold you the house filed their own bankruptcy.

A prior post talked about the situation where you are the buyer on a contract for deed, are current, and the seller files bankruptcy. (Basically the message is: You’re okay for the term of the contract).

But what if you are behind on your contract for deed? Then the situation can be an emergency. The reason is this: In Minnesota a contract for deed can be canceled (terminated) by giving a particular notice which gives the buyer 60 days to catch up. (There are a few oddball situations where the timing would be different.) If you don’t catch up within that 60 days you lose your purchaser’s interest and all the payments you have made and any equity you have built up.