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Minnesota Bankruptcy Conundrum

By Micheal Bolinske on 03-Feb-10 11:29. In Minnesota the population is fiscally conservative by nature. As one of my law school professors aptly put it, “The worst thing you could do in the Minnesota town I grew up in was kill someone, the second worst thing you could do was not pay a debt.”  Although meant as a joke because the professor represented banks in his practice, the statement has important significance.  Many in Minnesota will struggle for years attempting to repay debt while soaring interest and fees continue to add up.  In the process, many have borrowed from family and friends, depleted retirement and savings all in an attempt to satisfy creditors.

In my years of practice, I have yet to have a potential client come into my office and tell me that they planned on being so laden with debt that bankruptcy is the only option.  Many have suffered a job loss, experienced the death of a family member, have suffered a medical problem or have recently divorced.  Add to these issues the fact that creditors have universally raised interest rates to 20 to 30 percent.  The end result a repayment that would take a lifetime.

The biggest single mistake that potential clients make is not consulting with a bankruptcy attorney sooner.  Most clients are perpetual optimists who believe that things will get better.  Finances will get better, but why not start free of debt rather than by repaying inflated bills for 10 to 20 years or more?    Those funds could go to retirement and savings rather than to creditors.

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The stigma of Bankruptcy in Minnesota

By Micheal Bolinske on 01-Feb-10 14:58. One of the biggest concerns individuals have with bankruptcy is the fact that it is a public filing. Most do not want to file bankruptcy in the first place and they certainly do not want their relatives, friends and neighbors to know that they filed.   After all bankruptcy is a dirty word.

When prospective clients come to my office to talk about bankruptcy some of their greatest concerns revolve around who will find out.  Is it published in a newspaper?  Are relatives, friends and neighbors told?  Will my employer find out?  Generally the answer is no to all of those questions.

After I discuss the truth about bankruptcy and try to dispel myths,  I also discuss the hierarchy of needs.    What is more important, continuing to struggle to pay back mounting debt or worrying that others may think less of you if they do find out?  I usually point out the approximate 16,000 Minnesota Bankruptcy filings per year.  The point being, most people know someone who has filed bankruptcy, they just don’t know it because the individual does not talk about it. 

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Bankruptcy 341 Meeting of Creditors

By Micheal Bolinske on 20-Jan-10 15:14.
Many of my clients and prospective clients become very concerned when faced with the idea of a 341 meeting of creditors in bankruptcy.  For those unfamiliar with bankruptcy or contemplating bankruptcy, a 341 meeting is the chance for the trustee and any creditors to ask questions related to the bankruptcy filing.  Creditors rarely attend the meeting. Although I attempt to explain that most meetings only take 2-5 minutes, individuals are nevertheless concerned about being under oath in a public place having to answer for their debts.  

Typical questions a trustee will ask during a 341 meeting are:

Did you read the petition, schedules and related documents and did you sign them?

Is the information contained in the petition, schedules and related documents true and correct?

Did you list all your creditors?  Did you list all your assets?

Have you read the Bankruptcy Information Sheet provided by the Trustee?

Have you made any payments over $600.00 to an unsecured creditor in the 90 days?

Have you made any transfers of property to friends or relatives within the last 6 years?

Have you made any transfers of property to anyone in the last year?

Is any money owed to you by anyone or are you entitled to receive proceeds from a lawsuit or inheritance?

These are examples of questions that you will go through with your attorney prior to filing.  What I try to instill in my clients is that because the meeting is so short the trustee usually asks very few questions.  Don’t make a mountain out of a mole hill (or a 341 meeting).

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Foreclosures increase in 2009

By Chad Bolinske on 15-Jan-10 09:30. The latest numbers show that 2.8 million homes were foreclosed in 2009.  That is up 21% from the 2008 foreclosures.  It seems that the loan modification program is not as effective as many hoped.  Around half of the foreclosures occurred in California, Florida, Illinois and Arizona.  It looks like a lot of markets still have a long ways to go before the foreclosures end.  

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Bankruptcy and Businesses

By Micheal Bolinske on 14-Jan-10 11:41.
For business owners one of the toughest things is to admit that the business is not working, that is, it is not profiting.  For many despite the fact that their business has been in existence and profiting for years the recession has changed the playing field.  Many business owners find themselves in $50,000.00 to $100,000.00 or more in debt and with little to no profit to operate on.  To make up the difference business owners have taken short term loans to fill the gaps.  The loans are often credit cards and personal loans, meaning that the business owners themselves are personally liable for the debt.   The trouble starts when payments come do and the business accounts are empty.  Business owners then typically borrow from personal savings, retirement, family and friends.

In many of these cases the best option is to declare personal bankruptcy and close the business.  A business can always be started up after the bankruptcy without all the debt.  Essentially creating a more lean and mean business rather than a debt laden business and business owner. Because business owners are perpetual optimists making the decision to let the business go is difficult when the next job or sale is just around the corner.  The question I often ask business owners considering bankruptcy is, if you enjoy working for free?  Essentially when a business owner is in debt all the income coming in from the business will be going to service the debt rather than for profit.

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