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Elderly bankruptcy filings have tripled, causing specific concerns

According a study prepared for the AARP’s Public Policy Institute, “the rate of bankruptcy filings among Americans 55 and older has nearly tripled since 1991.” The results of this study are a cause for concern because the results “indicate that financial security is progressively eroding for many older Americans.” (As printed in Consumer Bankruptcy News, Volume 18, Issue 16, 2, July 3, 2008.) A logical question may be why some of these older Americans are filing bankruptcy, especially where many may be exempt from the actions of their creditors. Unfortunately, many of these older Americans choose to file to stop creditor harassment or file as a means of estate planning so their relatives do not have to “deal with the debt.” One common pitfall in bankruptcy that tends to harm elderly debtors or their family members is the creation of a life estate.

Life estates may pose a hurdle to elderly persons if they do not live in the home, but more often, the elderly person conveys real estate to a family member and reserves a life estate for him or herself. If the family member experiences financial difficulty, then the transfer of property may be an insurmountable obstacle in the family member’s bankruptcy case. This remainder interest in real property is an interest in real property that must be protected in a bankruptcy case. If the interest is unprotected, then the remainder interest becomes property of the bankruptcy estate, which causes problems for both the life estate holder and the remaindermen.

Under the Bankruptcy Code, the conveyance of a fee simple, reserving a life estate, acts as a present conveyance of the real property and, therefore, the real property becomes property of the bankruptcy estate. Rarely is it a problem to protect the debtor’s interest where the debtor is the holder of the life estate and where the debtor lives in the home of which he holds the life estate. (See Peoples’ State Bank v. Stenzel (in Re Stenzel), 301 F.3d 945, 948 (8th Cir. 2002). This debtor typically can exempt the interest in the life estate under the homestead exemption using federal or state exemptions. However, life estate issues arise when the life estate holder or the remainderman is a debtor who does not live in the home even where the debtor’s interest in the real property has not vested. See State ex rel. Cooper v. Cloyd, 461 S.W.2d 833, 838, 839 (Mo. en banc 1971). See also In re Dennison, 129 B.R. 609 (Bankr. E.D. Mo. 1991). In this scenario, the debtor’s interest cannot be protected using the homestead exemption and can be protected only under the wildcard exemption of the federal exemptions. 11 U.S.C. § 522 (d)(5).

Oftentimes, the value of the interest exceeds the allowable exemptions under the Bankruptcy Code. In these situations, the interest must be purchased from the bankruptcy estate or face the potential sale of the interest. For these reasons, life estates can be a tricky business in bankruptcy cases.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Lessons The Average Person Contemplating Bankruptcy Can Take Away From The Denny Hecker Case

Much attention has recently been given to the disastrous bankruptcy filing of Denny Hecker. Clearly, the Hecker case is not a run of the mill case; however average individuals contemplating bankruptcy should take note of the things which got Mr. Hecker in hot water. These things can happen to average individuals as well.

The most important lesson an average person should take from this case is that one should never attempt to hide assets in a bankruptcy. When an individual files a bankruptcy they are required to list all of their assets. Most people are allowed to keep their assets as long as they are properly disclosed. Not disclosing an asset will result not only in the loss of that asset, but may result in the revocation of one’s bankruptcy discharge. A discharge is the order given by the judge at the end of a bankruptcy which alleviates the bankruptcy filer’s obligation on his/her debts. If a discharge is revoked, the debtor will have a bankruptcy on their record and will still owe all of their debt.
Many people may wonder how a non-disclosed asset is discovered in a bankruptcy. Simply put, it’s not hard to find undisclosed assets. When a person files a bankruptcy, a trustee is assigned to his/her case. It is the trustee’s job to try to verify that a person has been truthful in disclosing his/her assets in the bankruptcy. The trustee will typically run a public records search on a bankruptcy filer; this search shows all car titles, boat titles and real property listed in the debtor’s name. The trustee will also examine bank records. These records will show if a debtor has recently been making large purchases.

In addition, a trustee will often review a divorce decree to see if assets have recently been awarded to the bankruptcy filer. A trustee may also get tips from creditors regarding potentially non-disclosed assets.

If a trustee finds a significant asset that has not been disclosed, the trustee may move to have the case dismissed.

Another lesson learned from the Hecker case which the average person should walk away with is that transferring assets to another person before filing a bankruptcy will not help an individual keep the asset. In fact it will cause significant legal issues for the person to whom the individual has transferred the property. It may also cause the individual filing to loss their discharge.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Debtors in Chapter 13 Bankruptcy now allowed more affordable monthly payments

A recent Supreme Court decision should allow for debtors in future bankruptcy cases to have more affordable payments. The Supreme Court in Hamilton v. Lanning has made a decision which should allow debtors to propose Chapter 13 payment plans which take the debtors’ actual income and expenses into account.

Prior to this decision, debtors’ Chapter 13 payments were calculated based on the “means test.” The means test essentially takes the six month period before debtors filed bankruptcy and uses the income earned during that period to determine what debtors should be able to afford to pay their creditors through their Chapter 13 plan. This number frequently does not reflect the debtors’ actual income or expenses. Often debtors finds that they can not afford to file a Chapter 13 case.

With this decision the number determined by the means test is now merely a starting point. Debtors may now more easily propose a plan that will take their current and future situation into consideration. This decision will give more discretion to the court to approve plans where the plan payments deviate for the means test calculation, but conform with the debtors actual current financial situation.

This change should allow more individuals to qualify to file a Chapter 13 and should increase the likelihood that those individuals will be able to successfully complete their plans.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Mutual debt incurred in a divorce decree is non-dischargeable in a bankruptcy

Debts owed to ex-spouses through a provision in a hold-harmless provision in a divorce decree are automatically non-dischargeable in a bankruptcy filing, according to a court ruling.

A recent Court of Appeals decision (In re the Marriage of: Jason Paul East vs. Yvette Francis East, File No. 74-FX-05-000284) provides that the ex-spouse of an individual filing a bankruptcy does not need to make a formal objections to the discharge of obligations assigned to the filing former spouse through a marriage separation or dissolution proceeding. In others word, a hold-harmless obligation in the favor of a former spouse automatically can not be discharge through the bankruptcy.

The court stated that language used in the exception to discharge set forth in the Bankruptcy code, 11 U.S.C. Section 523(a)(15)(2006) is clear and should be interpreted as written.

The court also found the an aggrieved former spouse does not need to participate in the bankruptcy since the nondischargeablity of the debts outlined in a hold-harmless clause is automatic. The former spouse does not need to file an objection in the bankruptcy.

This case emphasizes the bankruptcy court’s limited ability power to undo the decisions made in a family court. A Chapter 7 Bankruptcy Proceeding can not provide relief for a debtor assigned debt through his divorce.

This decision should cause family law practitioners to pay special attention to the issue of debt assignment in a separation or dissolution proceeding.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Mortgage Modifications in Bankruptcy

A new set of rules regarding the impact of a bankruptcy on a mortgage modification has taken effect as of June 1. Under these rules, a bankruptcy will not disrupt a HAMP modification.

Before this rule change, the filing of a bankruptcy would often disrupt the modification process. A modification typically will take several months to get set up. After it is set up, there is often a trial period usually lasting about three months. After the trial period the modification would be made permanent.

It used to be the case that if a bankruptcy was filed before the modification was made permanent, that the bankruptcy would halt the modification and the process would have to be started again. A new rule prevents the disruption of this process by a bankruptcy filing. Now a person can file a bankruptcy without having the modification halted.

In addition these new rules make it so that a mortgage company can not deny a HAMP modification because of a debtor did not sign a reaffirmation agreement after a bankruptcy filing. (A reaffirmation agreement essentially pulls a loan out of a bankruptcy. If an individual signs a reaffirmation agreement, they fully obligate themselves on the debt again. This is not always in the best interest of the debtor and mortgage companies often do not offer reaffirmation agreements if a person is behind on his/her mortgage. In addition, some mortgage companies simply do not offer the agreements.) It used to be the case that if an individual filed a bankruptcy and did not reaffirm the mortgage, the mortgage company would refuse to work with the person on a modification. Mortgage companies are no longer allowed to use the bankruptcy and the subsequent failure to reaffirm the mortgage as a basis deny a person a modification. In other words, a person may still receive a HAMP modification following a bankruptcy.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Can you end up in jail for not paying your debts?

The simple answer to this is “no, there are no debtor’s prisons.” Unfortunately, despite the lack of debtor’s prisons, some people are ending up in jail because of bad debt.

Minnesota law does not impose prison sentences because of bad debt, but Minnesota law which is rather pro-creditor provides a mechanism which allows a creditor to have a debtor arrested.

Creditors are able to manipulate Minnesota laws to apply pressure to debtors by having them arrested. The individual is not arrested for not paying a debt. They are arrested for contempt of court.

In Minnesota a creditor can sue an individual giving them notice of the suit through the mail. If the debtor does not read his mail carefully, the debtor might not even know he has been sued. In Minnesota a creditor can after not receiving a response from the debtor go to court and get a default judgment.

Once a creditor has a default judgment, he is able to send the debtor disclosure forms. If the forms are not filed out and returned to the creditor promptly, the creditor can have the debtor held in contempt of court and go back to court and request a bench warrant. These are given out as a regular course of business.

Once a bench warrant exists, different counties handle the matters differently. Some counties, for example Anoka County, have their police officers go out and actively seek the debtors. The debtors if found are arrested and dragged to jail where they are booked and detained. Often the debtor has to post bail. The bail is often set at the amount the debtor owes the creditor. Sometimes the debtor will be released without bail if the financial disclosure is filled out there and then.

Other counties, like Dakota County do not actively seek debtors, but will pursue the warrant if the debtor is stopped for another reason.

If you have fallen behind on your bills, it is imperative that you always read your mail. Not reading your mail can have severe consequences.

Never let your mail pile up. Never throw out your mail without reading it.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Credit Card debt still can be discharged in a bankruptcy

Since the radical changes in the Bankruptcy Code in 2005, many people incorrectly believe that credit cards can no longer be discharged in a bankruptcy. However, there is nothing in the specific nature of credit card debt that makes them nondischargeable in a bankruptcy. Section 523 (a) of the Bankruptcy Code sets out a variety exceptions to discharge that are based on the type of debt itself. Credit card debt is not one of them.

When credit card debt is accepted from discharge it will usually be based on the provision in Section 523 (a)(2) which deals with fraudulently incurred obligations made by the debtor. This provision is used mostly by credit card companies to object to the dischargeability of their particular obligations in a bankruptcy case. The focus of Section 523 (a)(2) is on the conduct of the debtor in how the debt itself was incurred.

Section 523 (a)(2)(B) applies to the debtor that provides a creditor with a written false financial statement. Section 523 (a)(2)(A) applies if the creditor alleges “false pretenses, a false representation, or actual fraud, other than a statement representing the debtor’s or an insider’s financial condition.” This requires that the creditor prove both the debtor’s intent to deceive and the creditor’s reasonable reliance on the representation. For example if a debtor made false representation when applying for a credit card, this would be a basis for the creditor to object to the discharge of that debt.

Another typical example of conduct which could result in the nondischargeability of debt would be when a debtor charges large amounts on the credit card right before filing bankruptcy. Essentially the creditor would argue that the debtor was aware of their inability to repay the debt when incurring the debt and, therefore, the incursion of the debt was in itself fraud.

A debtor could also draw objections from a creditor if the credit card debt was incurred by using the card for gambling.

Section 523 (a)(2)(C) addresses luxury goods and services and cash advances. Specifically, with consumer debts owed to a single creditor in excess of $550 incurred within 90 days of the filing of the bankruptcy case are “presumed nondischargeable.” In the same provision, obligations to pay cash advances of $825 obtained within 70 days of the bankruptcy filing are also “presumed to be nondischargeable.” This presumption can be rebutted by the debtor.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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What is “Undue Hardship” in the Context of Student Loan Discharge?

Over the past several years, more and more people are taking out ever-increasing amounts of student debt. With rising tuition rates and a greater push for advanced degrees beyond bachelors and technical degrees, it is not uncommon for graduates (as well as those who never even complete their programs) to come out of school with six-figure student loan debt.
The conventional wisdom regarding student loans in the realm of bankruptcy is that they are effectively non-dischargeable. This information is nothing new. However, an argument could be made for “undue hardship” as the basis for discharging this debt. Practically speaking, the “undue hardship” is a very high standard that is seldom accepted by the court.
The first difficulty rests in the fact that challenging the dischargeability of student debt requires an adversary proceeding, which is very expensive litigation that many debtors simply cannot afford. Assuming the debtor is willing and able to go forward, he then faces the hurdle meeting the “undue hardship” standard. The majority of jurisdiction use the test laid out in the Second Circuit case In re Brunner (831 F.2d 395 (2d Cir. N. Y. 1987)). It should be noted that this jurisdiction does not follow the Brunner test. The Brunner test requires a three-part showing:
First, that the debtor could not maintain a minimal standard of living for himself and his depends if forced to repay the loan; second, that additional circumstances existed indicating that this state of affairs would persist for a significant portion of the repayment period; and third, that the debtor had made a good faith effort to repay the loans.
In Brunner, the appeals court concluded that the debtor was not entitled to a discharge of her student debt because no “additional circumstances” existed showing she would be unable to find a job for a significant portion of the repayment period. Additionally, the court considered the fact that the debtor was not disabled or elderly, and had no dependents.
The case In re Vermaas (302 B.R. 650 (Bankr. D. Neb. 2003)) utilized a “totality of the circumstances” test for determining “undue hardship.” The court considered (1) the debtor’s total incapacity now or in the future to pay his debts, (2) whether the debtor has made a good faith effort to negotiate a deferment or forbearance, (3) whether debtor’s hardship will be long-term, (4) whether debtor has made any payments on the student loan, (5) whether the debtor suffers from permanent or long-term disability, (6) the debtor’s ability to obtain gainful employment in his area of study, (7) whether debtor has made a good-faith attempt to maximize income and minimize expenses, (8) whether debtor’s dominant purpose in filing bankruptcy was to discharge student loans, and (9) the ratio of student loans to debtor’s total indebtedness.
The court went on to say that “the hardship must be more than mere unpleasantness. It must present a certainty of hopelessness and not a mere present inability to meet financial commitments due to a current, temporary state of unemployment.” In this particular case, the court denied discharge of the student debt because the debtor voluntarily took a lower-paying job than she was qualified for.
The 8th Circuit has rejected the Brunner test as too restrictive, and instead looks to the “totality of the circumstances” test when determining “undue hardship.” In In re Long (322 F.3d 549 (8th Cir. 2003)), the 8th Circuit held: “In evaluating the totality-of-the-circumstances, our bankruptcy reviewing courts should consider: (1) the debtor’s past, present, and reasonably reliable future financial resources; (2) a calculation of the debtor’s and her dependents’ reasonable necessary living expenses; and (3) any other relevant facts and circumstances surrounding each particular bankruptcy.”
The Long court allowed a discharge where the debtor was older, had serious heart problems, depended on expensive medications, and was making an effort to work.
In light of these tests and considerations, the dischargeability of student loans ultimately comes down to the facts in each case. A law school graduate in her late 50s with a spotty work history and who had failed the bar exam in multiple states on multiples occasions was granted a discharge because she unlikely to ever work in her field of study (In re Wallace).
Discharge was also allowed for a debtor who was disabled and living off of VA benefits (In re Cumberworth), for a debtor over the age of 60 suffering from physical and mental conditions (In re Halverson), and for a debtor who had a mental condition, was unemployable, and homeless (In re Korhonen). Conversely, debtors who are in their 20s and 30s and working typically are not granted a discharge, even if they are under-employed, have multiple dependents, and six-figure debt loads (In re Desmond, In re May, In re Jesperson, In re Franklin).
In light of this case law, a debtor has to essentially prove to the court that he is never going to be able to pay back his student loans due to extreme circumstances beyond his control. This will seldom be the case with the overwhelming majority of bankruptcy clients, and thus dischargeability of student loan debt on the basis of “undue hardship” should not be considered as a realistic option.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Things to consider when choosing an attorney

Choosing to file bankruptcy to resolve financial difficulties is clearly a big decision. An equally big decision is determining which attorney should represent you.
Bankruptcy is a complicated process. Bankruptcy laws arguably were designed to discourage individuals from filing bankruptcy. The Bankruptcy Code is riddled with pitfalls and snares consisting of deadlines, caveats and exceptions which can cause an inexperienced person to lose property or to be denied a discharge in their bankruptcy.
You need an experienced attorney to guide you through the bankruptcy process.
Some of the things which a person should consider when hiring a bankruptcy attorney are the following:
Experience: You want an attorney who has significant experience with bankruptcy. Bankruptcy law is intricate. An attorney must be aware of the ins and outs of the Bankruptcy Code and the surrounding body of law to properly advise you. An inexperienced attorney may not be aware of the ways specific hurtles must be surmounted in order to handle a case effectively.
An attorney who merely dabbles in this area of law will most likely have gaps in his or her understanding of this body of law and may not be up-to-date in recent developments. In 2005, the Bankruptcy Code was overhauled. The changes made in the law were significant. The fallout from these changes is still being experienced. Case law constantly is being updated to interpret how these changes will be applied. An attorney who is unfamiliar with bankruptcy may not be on top of these changes or be aware of the significance of the seemingly subtle adjustments.
The practice of law is similar to the practice of medicine. There are many specialties. A divorce attorney may struggle with handling a criminal prosecution in the same way a podiatrist would struggle with handling open heat surgery. Hiring an attorney who is competent in the area of law in which he will be representing you is very important. No reasonable person would hire a podiatrist to perform open heart surgery, and you should not hire an attorney unfamiliar with bankruptcy to represent you in a bankruptcy.
Location: Although bankruptcy law is federal law, bankruptcy law interacts with state law as well. In addition, there are local bankruptcy rules that determine much of the procedures which need to be followed when filing a case.
Level of comfort: Meeting with the person who is representing is important. You should at least have one face-to-face encounter with the attorney you are hiring before you hire that attorney. If you are never allowed to meet with the attorney, you can expect that you will not have access to him when proceeding with your case, and you will not have access to him if there are problems or complications with your case. When you meet with an attorney you should ask yourself the following questions:
– Did he or she answer all of your questions?
– Did he or she discuss what you can expect to happen?
– Did he or she give you a roadmap of the normal course of events?
– Did he or she explain what will be expected of you?
– Did you walk away knowing what will happen next?
If you answer “no” to most of these questions, you should think long and hard before entrusting this attorney to handle your financial future.
Price: Price should not be the determining factor when choosing your attorney. Filing a bankruptcy is expensive and hiring competent counsel will cost you, but hiring incompetent counsel will cost you even more. Having a good attorney on your side is important when pursuing a bankruptcy. Filing bankruptcy is a life altering process. If you commit to pursuing it, you need to make sure that you have someone who will guide you through the process. You need someone who will make sure that your case is not dismissed on a technicality and someone who will help you minimize your losses.
Hiring a cut-rate attorney will get you cut-rate services. Simply put, you will get what you pay for.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Bankruptcy interplay with a personal injury claim can be complicated

When a debtor files for bankruptcy and is involved in a personal injury claim, either as the plaintiff or as the defendant, there are several factors to address and consider.
In a bankruptcy, federal and state laws allow for certain types and amounts of property to be exempt from claims by the trustee and creditors. In the case of a personal injury claim, a debtor does not have to already have received a judgment in the lawsuit for the award to be considered property of the bankruptcy estate. At the time of filing, there must only be a cause of action on which the statute of limitations has not yet run. That claim must be listed on the bankruptcy petition as personal property, regardless of whether or not the debtor has any intention of pursuing it. Once the debtor has filed for bankruptcy, the debtor no longer owns that cause of action: the claim has become property of the bankruptcy estate [11 U.S.C. §541(a)].
The trustee in effect steps into the shoes of the debtor and will hire an attorney to handle claim. The relationship that the trustee has with the personal injury attorney is a standard attorney-client relationship, including the customary contingency fee arrangement in a personal injury case.
Once damages have been awarded, they get apportioned in the following order: the personal injury attorney subtracts his fees, the exempted amount goes to the debtor, the trustee takes his percentage of the award, and the creditors who have submitted proofs of claims get their portion. Any remaining money goes back to the debtor. A trustee may choose to abandon the claim if there is not likely to be enough left over to pay himself or the creditors. In such an instance, the trustee will allow the debtor to keep ownership of the claim and the debtor can therefore pursue the claim as he would have done had there not been a bankruptcy.
There are different types of damages that may be awarded in a personal injury settlement and they are not treated the same. Damages in a personal injury cases can fall into one of two categories: General or Special. General damages are non-pecuniary and include pain and suffering, disability, mental anguish. Special damages are pecuniary in nature and include financial losses suffered by the defendant as a result of the injury, such as medical expenses, property damage, and lost wages.
The amount of money from the settlement of a claim that a debtor is able to keep is related to which exemption scheme the debtor uses: federal or state. The debtor’s attorney will have to evaluate which scheme is most beneficial to use for his client, taking into consideration not only the potential personal injury settlement, but also the rest of the debtor’s property.
Using the federal exemption guidelines, there are a few different ways to exempt damages. Under 11 U.S.C. §522(d)(11), permanent bodily injury and future special damages are exempt. Permanent bodily injury is exempt up to the amount of $20,200 [11 U.S.C. §522(d)(11)(D] ¸ while future special damages are exempt up “to the extent reasonably necessary for the support of the debtor and any dependent of the debtor” [11 U.S.C. §522(d)(11)(E)]. Similarly, where there is a “wrongful death of an individual of whom the debtor was a dependent” damages are exempt “to the extent reasonably necessary for the support of the debtor and any dependant of the debtor” [11 U.S.C. §522(d)(11)(B)].
Any damages that are not encompassed in the preceding exemptions, such as pain and suffering or past special damages, may fall into the catchall 11 U.S.C. §522(d)(5) exemption which provides for $1,075 plus the unused portion of the homestead exemption up to $10,125. This (d)(5) exemption is used for all of the debtor’s property which exceeds or is not included in a specific exemption.
Under the State of Minnesota’s exemption guidelines, “rights of action for injuries to the person of the debtor or of a relative whether or not resulting in death” are exempt [Minn. Stat. 550.37(22)]. In other words, all general damages, including pain and suffering, are exempt. There is no monetary cap. There is no comparable catchall exemption in Minnesota’s exemption scheme to exempt the residual damages.
Also important to keep in mind is that if there are effects on a debtor whose personal property includes a personal injury claim, there must also be consequences for a debtor whose debts include a personal injury judgment against him. When a debtor is a defendant in a personal injury case, he has a creditor in the person who has obtained the judgment. Not every such creditor’s claim may be discharged. For example, where the debts arose because of “willful and malicious injury by the debtor to another entity or to the property of another entity” it will not be discharged [11 U.S.C. § 523(a)(6)]. The plaintiff in the case is the creditor and must prove by clear and convincing evidence that the injury was a result of willful or malicious action on the part of the defendant debtor [In re Gargac, 93 B.R. 594, 18 Bankr.Ct.Dec. 924; Chrysler Credit Corp. v. Rebhan, 842 F.2d 1257, 1262 (11th Cir.1988); ].
A debtor should also be aware that a judgment against the debtor is not dischargeable where the debtor caused death or personal injury by “the debtor’s operation of a motor vehicle, vessel, or aircraft, if such operation was unlawful because the debtor was intoxicated from using alcohol, a drug, or another substance” [11 U.S.C. §523(a)(9)].

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Foreclosure laws in Minnesota

Many individuals facing foreclosure are unaware of a Minnesota law which may offer them some relief. A Minnesota law is in place which extends the time a debtor has to bring a mortgage current in an attempt to keep their home.

The foreclosure process in Minnesota typically follows this procedure. (Please note that there can be variations in this timeline depending on what type of mortgage an individual has.) A person falls behind on their mortgage, and then the mortgage company sends out a default letter. Typically once the default letter has gone out the mortgage company will not accept payments on the mortgage unless the payment will bring the mortgage current. In other words, if an individual sends in one payment and that person is three payments behind, the mortgage company will typically send back the single payment and would only accept a payment that would cover all three months that the debtor is behind. The mortgage company then hires an attorney to foreclose on the property. At this point the mortgage company will typically stop communicating with the debtor and the debtor must then deal only with the attorney hired by the mortgage company. The attorney begins the foreclosure process. The debtor then receives notice that a sheriff’s sale will be held on the property. The debtor typically gets six weeks notice of the impending sale. The debtor then has up until the sheriff’s sale to bring the mortgage current. Bringing the mortgage current will now include all the past due payments and late fees as well as the attorney’s fees incurred by the mortgage company in pursuing the foreclosure. If this is not done and the sheriff’s sale is held, the only way for a debtor to keep the home would be to pay off the mortgage in its entirety. When the housing market was stronger it was not uncommon for a person to refinance the mortgage after the sheriff’s sale and keep the home. This is now a rare occurrence.  After the sheriff’s sale, a debtor has six months (depending on the type of mortgage) to redeem the property. This six month period is called the redemption period. During this period the debtor is allowed to stay in the property and can reclaim the property if the debtor can pay off the entire mortgage.

This law allows a procedure for debtors who are behind on their mortgage to get extra time to bring the mortgage current. In order to qualify to use this procedure the property in question must be the debtor’s homestead. The debtor must submit a sworn affidavit stating the legal description of the property, the fact that the property is homesteaded, the purpose of the submitted affidavit, and the statute citation. The sworn affidavit must be recorded in each county recorder and register of title where the mortgage is recorded. A copy of the recorded affidavit must then be filed with the sheriff conducting the sale and a copy must be delivered to the attorney foreclosing on the mortgage. These actions must be completed 15 days prior to the scheduled sale date, and may be started only after notice of the sheriff sale has been given. There are two effects of recording, serving, and delivering the affidavit: the foreclosure sale is automatically postponed to the first date that is not a Saturday, Sunday or legal holiday and is five months after the originally scheduled date of the sale and the mortgagor’s redemption period is automatically reduced to five weeks. This process can only be done once. Essentially this allows a person more time to bring the mortgage current. In exchange for a shortened redemption period, the debtor essentially gets an extra five month to bring the mortgage current.

If a person is unable to bring their mortgage current during this period, another option is to file a Chapter 13 bankruptcy. A Chapter 13 is essentially a repayment plan that your creditors are required to participate in. This type of bankruptcy will halt a sheriff’s sale and allow the debtor (in some circumstances) up to five years to repay the mortgage arrears. If a person is able to make their regular mortgage payment and has some disposable income after meeting their necessary living expenses, that person may qualify to do a Chapter 13. The Chapter 13 will allow a debtor to pay back mortgage arrears and to pay back unsecured creditors in one payment. A person in most cases is not required to pay back unsecured creditors in full. This will often allow an individual in financial distress relief from collections actions while they bring their mortgage current. It should be noted that once a sheriff’s sale has occurred a debtor is no longer able to file a Chapter 13 bankruptcy in which they will be able to keep the home.

This article  is for informational purposes only. The information on this website should not be interpreted as legal advice.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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Welcome to the Hoglund, Chwialkowski & Mrozik, PLLC Blog

Welcome to hoglundlaw.com. We will soon have useful information available regarding Bankruptcy, Social Security, Debtor Education, and Mass Torts. In the meantime,  feel free to browse our website to learn about our areas of practice. To learn how Hoglund, Chwialkowski & Mrozik PLLC can best assist you, give us a call at 1-800-850-7867.

Written by Hoglund Law

The attorneys of Hoglund law are licensed in Minnesota, Wisconsin and Ohio. Hoglund, Chwialkowski & Mrozik, PLLC is based in Roseville, Minnesota. In addition to handling cases involving bankruptcy & social security, Hoglund, Chwialkowski & Mrozik, PLLC handles faulty drugs and toxic exposure.

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