Minnesota Chapter 13 Bankruptcy
Chapter 13 bankruptcy is frequently referred to as a “wage earners” bankruptcy. A Minnesota Chapter 13 bankruptcy allows an individual to repay some of their debt through a plan. The bankruptcy plan will typically provide creditors with a payout ranging from 10% to 100% depending on the financial situation of the individual filing for bankruptcy.
A Chapter 13 bankruptcy is frequently a good option for individuals who have a steady source of income and happen to fall behind on their house or car payments. The Chapter 13 plan allows an individual to catch up on past due house or car payment by making payments through the Chapter 13 plan. One of the requirements to get a plan confirmed is that the debtor has some disposable income to pay to creditors.
The length of a typical Chapter 13 bankruptcy is either 36 or 60 months. If a debtor’s household income is under the median income for their county, the repayment plan will be 36 months. If the debtor’s household income is greater than the median income for their county, the debtor will have to make a 60 month repayment plan. In Hennepin County, Minnesota, for example, the median income for a household of one person is currently $43,965, so that would be the criteria for determining the number of months of repayment.
A Minnesota Chapter 13 case starts with the filing of a petition. Once the petition is filed with the court, a 341 meeting (creditors meeting) is scheduled approximately 30 days later. This meeting should take between five and fifteen minutes depending upon the complexity of the case. The purpose of the meeting is to verify that all information on the bankruptcy petition is accurate as of the date of filing. Creditors can appear at the 341 meeting, but in a typical Chapter 13 case no creditors will appear at the meeting. The following information needs to be produced at a 341 meeting in Minnesota: picture identification, proof of social security card, most recent pay stub, and current bank statements including the balance on the date of filing.
After the 341 meeting the court sets a confirmation hearing on the Chapter 13 plan. If everything looks good on the Chapter 13 plan the court will approve the plan and the individual will then be responsible to make the regular payments for the duration of the plan in order to get a discharge. A Minnesota bankruptcy lawyer will be able to advise you regarding your estimated plan payments and the requirements to get a Chapter 13 bankruptcy confirmed.
One of the main advantages of the Chapter 13 bankruptcy over other forms of debt consolidation is that credit card companies will not be able to charge interest during the Chapter 13 plan. This allows an individual to pay off principal on credit card debts instead of interest-only payments. In a typical Chapter 13 bankruptcy case, debtors are paying about 30% interest on any past due credit cards. So on $100,000 in credit card debt at 30% interest, the debtor must pay at least $30,000 per year just to stay even on the credit cards. This means that interest-only payments are around $2500 per month just to keep the credit card balance from increasing. Individuals should consult a Minnesota bankruptcy lawyer to determine if a Chapter 13 bankruptcy is a good option for them.