Bankruptcy

Chapter 7 Bankruptcy in Minnesota: The Complete Guide to a Fresh Start

If you’re struggling with overwhelming debt, Chapter 7 bankruptcy in Minnesota may be the lifeline you need. It can stop wage garnishments and bank levies in Minnesota, end collection harassment, and erase credit card and medical debt, giving you a genuine chance at a fresh start. In this guide, we’ll cover everything you need to know about Chapter 7 bankruptcy in Minnesota, from who qualifies, to what property you can keep, to life after discharge.

What Is Chapter 7 Bankruptcy in Minnesota?

Chapter 7, sometimes called the “fresh start” bankruptcy, eliminates unsecured debts like credit cards, medical bills, payday loans, and certain judgments. The moment your case is filed, an automatic stay takes effect, halting lawsuits, garnishments, and collection activity.

Who Qualifies for Chapter 7 Bankruptcy?

  • Means Test: Your household income is compared to Minnesota’s median income. If you’re below, you qualify; if above, detailed calculations apply.

  • Prior Bankruptcies: You must wait 8 years between Chapter 7 discharges.

  • Full Disclosure: You must be honest and list all assets, debts, and income.

If you don’t qualify for Chapter 7, other tools like Chapter 13 or defending against collection lawsuits in Minnesota may still provide relief.

What Property Can You Keep? (Minnesota Bankruptcy Exemptions)

Minnesota law protects most property through exemptions. Common protections include:

  • Home equity (up to $510,000 as of 2025)

  • Vehicle equity (up to $10,000 as of 2025)

  • Retirement accounts (401k, IRA, pensions)

  • Household goods and clothing

  • Wages you’ve already earned

Most Minnesotans who file Chapter 7 keep their home, car, and everyday belongings.

The Chapter 7 Process in Minnesota: Step by Step

  1. Preparation: Gather pay stubs, bank statements, tax returns, ID, and complete a short online credit counseling course.

  2. Filing: Your lawyer files your case in Minnesota’s federal bankruptcy court. The automatic stay takes effect immediately.

  3. Trustee Review: A trustee is assigned to review your paperwork.

  4. 341 Meeting of Creditors:About 30 days later, you attend a short meeting with the trustee and your bankruptcy lawyer. Creditors rarely attend.

  5. Financial Management Course: A second short online course must be completed.

  6. Discharge: Typically 60–90 days later, the court issues an order wiping out your eligible debts.

What Debts Are Erased—and What Aren’t

Discharged: Credit cards, medical bills, payday loans, personal loans, certain judgments.
Not Discharged: Child support, alimony, student loans (except rare cases), most recent taxes, government fines, or fraud-related debts.

The Benefits of Chapter 7 Bankruptcy

  • Stops garnishments, repossessions, lawsuits, and collections

  • Eliminates tens of thousands in unsecured debt

  • Quick process (usually 3–4 months)

  • Sets the stage for rebuilding credit

  • Provides peace of mind and a true fresh start

Life After Chapter 7: Rebuilding in Minnesota

Bankruptcy wipes the slate clean, but how quickly you bounce back depends on your next steps:

  • Stick to a budget

  • Use credit wisely (secured cards, small installment loans)

  • Monitor your credit report regularly and address fixing credit report errors after bankruptcy

Many Minnesotans see credit scores improve within 12–24 months after filing.

Myths About Chapter 7 Bankruptcy

  • “I’ll lose my house and car.” False. Exemptions protect most property.

  • “Everyone will know I filed.” False. Unless you’re a public figure, it’s unlikely.

  • “I’ll never get credit again.” False. Many receive credit offers within months.

Local Process: Chapter 7 in Minnesota Courts

Bankruptcy cases are filed in Minnesota’s federal bankruptcy courts, located in Minneapolis, St. Paul, Duluth, and Fergus Falls. Trustees and local practices vary, so working with a Minnesota bankruptcy lawyer familiar with them is key.

Beyond Bankruptcy: Protecting Your Rights After Filing

Filing Chapter 7 is just the beginning. Creditors sometimes break the law even after your case:

  • FDCPA: If a collector contacts you about a discharged debt, it may be debt collector harassment.

  • FCRA: If your credit report shows discharged debt as still owed, that’s a violation.

  • EFTA: If a creditor keeps auto-debiting after filing, that may be illegal.

Your fresh start deserves protection, and Minnesota law gives you tools to enforce it.

FAQs About Chapter 7 Bankruptcy in Minnesota

How long does Chapter 7 take? About 3–4 months.
Will I lose my house or car? Most people keep both, if equity is protected.
Does Chapter 7 stop garnishment? Yes, immediately.
What debts are erased? Credit cards, medical bills, payday loans, personal loans, certain judgments.
Will everyone know I filed? Unless you tell them, almost nobody will.

Conclusion: A Fresh Start Is Possible

If you’re ready to stop garnishments, end collections, and finally move forward, Chapter 7 bankruptcy in Minnesota may be the solution. Bankruptcy isn’t about failure — it’s about taking control and protecting your future.

In Minnesota and ready to talk to a lawyer about bankruptcy?
Schedule a free consult with bankruptcy lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans get out of debt. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

Chapter 13 Bankruptcy Minnesota: Your Repayment Plan to a Fresh Start

Why Chapter 13 Might Be Right for You

If you’re behind on your mortgage, worried about losing your car, or struggling to keep up with multiple debts, you’re not alone. Many Minnesotans who have a steady income but can’t dig out of arrears turn to Chapter 13 bankruptcy in Minnesota.

Unlike Chapter 7, which wipes out most debts in just a few months, Chapter 13 gives you time and structure: a 3–5-year repayment plan that lets you catch up on past-due payments, protect your property, and move forward without the constant fear of foreclosure or repossession.

This guide walks you step by step through everything you need to know about Chapter 13: who qualifies, how it works, what the benefits and drawbacks are, and how we protect your rights before, during, and after the process.

What Is Chapter 13 Bankruptcy?

Chapter 13 is often called a “reorganization bankruptcy.” Instead of wiping out debt all at once, it creates a court-approved repayment plan tailored to your income and debts.

Key features:

  • You keep your home and car if you stay current under the plan.

  • You pay back certain debts (like mortgage arrears, car loans, or taxes) over time.

  • Unsecured debts (like credit cards and medical bills) may be reduced or eliminated at the end of the plan.

  • The repayment plan lasts 3–5 years, depending on your household income.

Chapter 13 is a powerful tool for people who want to save their home, restructure debt, and get on stable footing.

Who Benefits from Chapter 13 in Minnesota?

Chapter 13 is best suited for Minnesotans who:

  • Have steady income (W-2, self-employed, Social Security, pension) and can make monthly payments.

  • Are behind on their mortgage or car loan but want to keep the property.

  • Don’t qualify for Chapter 7 because of higher income or valuable non-exempt assets.

  • Have debts that Chapter 7 won’t erase, like certain taxes or divorce-related obligations, but need a structured way to pay them.

  • Need to protect co-signers from collection activity.

If your goal is to catch up rather than simply wipe out debt, Chapter 13 may be the right fit.

Eligibility Requirements in Minnesota

To qualify for Chapter 13, you must meet certain criteria:

  • Debt limits: As of 2025, your secured debts must be under about $1.5 million and unsecured debts under about $525,000 (adjusted periodically).

  • Regular income: You need enough predictable income to make plan payments.

  • Prior bankruptcies: You can’t file Chapter 13 if you had a Chapter 7 discharge within the last 4 years, or a Chapter 13 discharge within the last 2 years.

  • Credit counseling: Like Chapter 7, you must complete a credit counseling course before filing.

Step-by-Step: How Chapter 13 Works in Minnesota

Step 1: Preparation

You’ll gather pay stubs, tax returns, mortgage/car loan statements, and other financial records. You’ll also complete a credit counseling course online.

Step 2: Filing the Petition

Once we file your case in Minnesota’s federal bankruptcy court, an automatic stay takes effect. This immediately stops foreclosure, garnishments, repossessions, and creditor lawsuits.

Step 3: Creating Your Repayment Plan

We propose a plan based on your income, expenses, and debts. The plan prioritizes:

  • Secured debts (mortgage arrears, car loans)

  • Priority debts (child support, alimony, certain taxes)

  • Remaining disposable income goes to unsecured creditors (credit cards, medical bills, personal loans, etc.).

Step 4: 341 Meeting of Creditors

About a month after filing, you’ll attend a brief meeting with the trustee. Creditors rarely appear. The trustee asks simple questions about your plan and finances.

Step 5: Plan Confirmation

The bankruptcy judge reviews and approves your repayment plan, usually within 2–3 months.

Step 6: Making Payments

You’ll make monthly payments to the Chapter 13 trustee, who distributes them to creditors. Plans typically last 5 years, although they can be shorter in some cases.

Step 7: Discharge

At the end of the plan, remaining eligible unsecured debts are discharged, or wiped out permanently.

What Payments Look Like

Chapter 13 plans start with your disposable income, that is, what’s left after reasonable living expenses. In addition, you must repay any mortgage or auto loan arrears, as well as child support, alimony, and most tax debts.

Advantages of Chapter 13 Bankruptcy

  • Keep your home – Stop foreclosure and catch up on missed mortgage payments.

  • Save your car – Spread out car loan payments or catch up on arrears.

  • Restructure debts – Combine multiple payments into one manageable plan.

  • Protect co-signers – In some cases, Chapter 13 shields them from collection.

  • Expanded discharge – Some debts dischargeable in Chapter 13 are not in Chapter 7.

  • Peace of mind – Creditors can’t harass you while you’re in the plan.

Drawbacks and Challenges

  • Length – 5 years requires discipline.

  • Strict budget – Missing payments can risk dismissal of the case.

  • Cost – Trustee fees and legal fees are higher than in Chapter 7.

  • Not instant relief – Unlike Chapter 7, you won’t be debt-free in a few months.

Chapter 13 vs. Chapter 7 in Minnesota

  • Chapter 7: Quick (3–4 months), discharges unsecured debts, but you must be below certain income levels and you can’t catch up on mortgage arrears over time.

  • Chapter 13: Longer (3–5 years), repayment-based, protects your home/car if you’re behind, requires regular income.

Many clients who start thinking they need Chapter 7 discover Chapter 13 is a better fit because it allows them to save non-exempt property and restructure debt.

Local Process: Minnesota Bankruptcy Courts

Chapter 13 cases in Minnesota are filed in one of the U.S. Bankruptcy Court – District of Minnesota divisions: Minneapolis, St. Paul, Duluth, or Fergus Falls. Trustees vary by district. Having a lawyer who knows the local trustees and procedures makes the process much smoother.

Common Myths About Chapter 13 Bankruptcy

  • “I’ll be stuck in this forever.” – No, the maximum plan length is 5 years.

  • “I’ll lose my house anyway.” – Not if you keep up with your repayment plan.

  • “I’ll never get credit again.” – False. Many people receive credit offers within a year or two of discharge.

  • “I can’t ever pay off my debts.” – Chapter 13 consolidates and reduces payments, often leaving unsecured creditors with pennies on the dollar.

Protecting Your Rights During and After Chapter 13

Even after you file Chapter 13, creditors sometimes break the law. That’s where other consumer protections come in:

  • FDCPA (Fair Debt Collection Practices Act) – If a collector contacts you during your case, it may be illegal harassment.

  • FCRA (Fair Credit Reporting Act) – If a creditor reports you as “late” on debts that are included in your plan, that may be a violation.

  • EFTA (Electronic Fund Transfer Act) – If creditors keep auto-debiting after you file, they may be breaking federal law.

At Friedman Murray Law, we don’t just file your case. We defend your rights every step of the way.

FAQs About Chapter 13 Bankruptcy in Minnesota

Q: How long does Chapter 13 take in Minnesota?
A: Most plans are 5 years, though they can be 3 years in some cases.

Q: Can I stop foreclosure with Chapter 13?
A: Yes. Filing immediately stops foreclosure and lets you catch up on arrears through the plan.

Q: What happens if I miss a payment?
A: Missing payments can lead to dismissal, but sometimes plans can be modified if your circumstances change.

Q: Does Chapter 13 cover tax debt?
A: Certain tax debts must be repaid in full, but penalties and interest may stop accruing.

Q: Can I convert my Chapter 13 to a Chapter 7?
A: Yes, if you later qualify, conversion is possible.

In Minnesota and ready to talk to a lawyer about bankruptcy?
Schedule a free consult with bankruptcy lawyer Todd Murray.

Since 2009, Todd has helped hundreds of Minnesotans get out of debt. His work has saved his clients millions of dollars (and many sleepless nights) in the process. Todd’s clients have described him as “very professional and easy to work with.” He lives in Minneapolis with his wife and four children.

The Minnesota Guide to Chapter 13 Bankruptcy: Part 4—The Process

Part 1—Chapter 13 Basics
Part 2—Benefits of Chapter 13
Part 3—How Your Plan Payment is Calculated

HOW DO I GET STARTED?

The Chapter 13 process starts when you hire a lawyer. We offer consultations by phone or video for your convenience. Once you decide it’s time to move forward, we’ll send you a services agreement to review and sign electronically. We also accept electronic payments. Our online questionnaire is easy to use and can be completed at your convenience.

What Does Chapter 13 cost?

In Chapter 13, you pay a flat fee out-of-pocket. When you're in financial trouble, you want predictability. You don't want your lawyer to run up the bill on you. That's why we quote you a flat fee at the beginning of the process, and that's what you pay. We agree on it at the start so you can plan for the expense.

Unlike Chapter 7, you don't need to pay your whole fee upfront in Chapter 13. In fact, in many cases Chapter 13 costs less up front than Chapter 7. We generally require a minimum of $1,000 before filing in a Chapter 13, but this can depend on your case.

What happens after you file your case?

As soon as the case is filed with the court, your bankruptcy protection begins. No creditors can call, write, or sue you, and any pending foreclosures, repossessions, or garnishments must stop immediately. After that, you’ll get a date for your bankruptcy meeting of creditors.

What is the meeting of creditors?

A meeting of creditors is a short interview that happens in person, or by phone/video. The bankruptcy trustee will go over your assets, debts, income, and expenses with you, and make sure you’re paying an appropriate amount to your creditors. Once we get the trustee and your creditors to agree to the plan, your case will be on track to get confirmed.

What happens after the plan is confirmed?

Once your case is confirmed, there’s not usually much to do in your case other than make your plan payments. We’ll generally check in every year around tax time, and you’ll have to let your lawyer know if you are having trouble making your payments so you can get some help. Because of your bankruptcy protection, your creditors will be breaking the law if they contact you after you file Chapter 13, so you should let your bankruptcy lawyer know right away if a collector is calling. We can put a stop to the calls and may even be able to get them to pay you for breaking the law.

Part 1—Chapter 13 Basics
Part 2—Benefits of Chapter 13
Part 3—How Your Plan Payment is Calculated

The Minnesota Guide to Chapter 13 Bankruptcy: Part 3—How Your Plan Payment is Calculated

Part 1—Chapter 13 Basics
Part 2—Benefits of Chapter 13
Part 4—The Chapter 13 Process

Chapter 13 involves paying your disposable income to creditors over a three or five-year period. Whatever isn't paid during that period is wiped out. But to figure out whether Chapter 13 is a good option, you need to know exactly how much your monthly payment will be. Here’s how we figure that out.

First, We predict your future income

To figure out your Chapter 13 payment, we need to predict your future income. We start by averaging out your income over the past six months. This amount can then be adjusted to account for changing circumstances, for example if you have just taken a pay cut or you know you won't be receiving the same amount of overtime.

Next, we predict your future expenses

Next, we figure out your expenses. We look at all the expenses that are necessary to take care of your family's needs: food, rent/mortgage, car payment, utilities, etc. We also look at things that you know you’ll be spending, like car repairs, home maintenance or dental work. Then we look at things you should be spending on, but haven't because you've been in financial trouble. This can include health insurance and other medical expenses, sometimes a 401(k) or life insurance, etc. If there's something that's not on our list of ordinary expenses, that doesn't mean we can't deduct it, as long as we can explain why it’s reasonable and necessary.

Once we count all these expenses, we subtract them from income and we get an idea of your disposable income.

Your attorney will help maximize your expenses

As your attorney, it’s our job is to protect the money that’s necessary for you to take care of yourself and your family. So we ask for two things: 1) verification of your expenses, so we can prove that you actually need to spend that money; and 2) information on why your expenses are reasonable and necessary.

For example, one client had an $800 monthly bill for auto fuel. This may seem unreasonably high, until we realized that the client lives 60 miles from where he works. If we can explain to the court why an expense is reasonable, there is a better chance it will be allowed.

THe payment has to be enough to cover required debts

Chapter 13 payments must be large enough to pay certain required debts. For example, if you are trying to get current on a mortgage, your total plan payments must cover the amount of your mortgage arrears. Plan payments also must cover any secured debt (car loans) that end within the plan period. Also, plan payments must cover any priority debt, such as some tax debt or government penalties within the plan period. If the total plan payments are enough to pay all of these required debts over the plan period, then your plan can be approved.

The payment has to treat your creditors fairly

If you have non-exempt property that you’re looking to protect in a Chapter 13, your Chapter 13 payments must be at least the value of your nonexempt property. In other words, in Chapter 13 your unsecured creditors can't receive any less in the plan than they would have received in Chapter 7 if your nonexempt property was liquidated.

Part 1—Chapter 13 Basics
Part 2—Benefits of Chapter 13
Part 4—The Chapter 13 Process

 

The Minnesota Guide to Chapter 13 Bankruptcy: Part 2—Benefits of Chapter 13

Part 1—Chapter 13 Basics
Part 3—How Your Plan Payment is Calculated
Part 4—The Chapter 13 Process

There are many benefits of Chapter 13 bankruptcy versus a Chapter 7. A few of them are obvious, but some are a little more hidden. Here are a few:

You get to keep your stuff

In Chapter 13, you don’t have to worry about losing your car to pay your creditors. Instead of giving up your stuff, Chapter 13 allows you to keep everything as long as you’re paying enough to your creditors.

You can stop foreclosure permanently

Both Chapter 7 and 13 bankruptcy allow you to pause the foreclosure process. In Chapter 7, however, once the bankruptcy is done the mortgage company can go right back to foreclosing. In Chapter 13, you can take mortgage arrears and spread them out over a three to five year period. As long as you can pay your mortgage arrears back over this time, you can stop the foreclosure permanently.

You can deal with tax debt, mortgage debt, and domestic support in flexible ways

Chapter 13 helps people deal with delinquent tax debt, mortgage debt, and past-due child support or alimony by allowing the filer to pay the debt over a longer period of time and get out of default immediately. Once the Chapter 13 is over, those debts will be paid in full.

It hurts your credit score less

Chapter 13 bankruptcy stays on your credit report for seven years, rather than the ten years a Chapter 7 stays on your record. Also, Chapter 13 has less negative impact while it’s on your credit report, because you’re paying part of your debt back instead of wiping it all out.

Attorney fees are more flexible

In Chapter 7, you’ll need to pay the entire attorney fee up front before filing. In Chapter 13, the majority of your attorney fee is taken out of your monthly payment. This means in a lot of cases, you pay very little before filing and the rest of your attorney fees is come out of your creditors’ pockets.

Part 1—Chapter 13 Basics
Part 3—Stopping foreclosure in Chapter 13
Part 4—The Chapter 13 Process

 
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Bankruptcy discharge: private student loans can be wiped out in some cases

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Many people are under the incorrect belief that student loans can’t be wiped out in bankruptcy. However, there are at least two ways to get rid of student loans in a bankruptcy case.

The first is to show the court that the loan would cause “undue hardship” and so based on that borrower’s specific situation, the loan should be wiped out. We discuss that in another article. The second is to prove that a particular loan does not meet the legal definition of “educational loan” under the Bankruptcy Code and therefore is just an ordinary loan that can be wiped out in bankruptcy.

There are two “exceptions to discharge” that may prevent student loans from being wiped out in bankruptcy.

  1. An educational loan made, insured, or guaranteed by a governmental unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution; or

  2. Any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor who is an individual

Governmental unit or nonprofit institution

This exception covers federal and state loans. It also covers loans “made under any program funded in whole or in part by a nonprofit institution.” This sentence in the bankruptcy law caused a whole bunch of student lenders to use nonprofits just for the purpose of funding/guaranteeing their loans. In the paperwork, you may see the name of a nonprofit like The Education Resources Institute (TERI). We believe that many of these loans were not meaningfully funded by nonprofits, but instead the lender “rented” the nonprofit’s name just to avoid the loans being dischargeable in bankruptcy. This is one factor we’ll look at if we represent you in your student loan bankruptcy case.

Qualified education loan

A qualified education loan is a very complex definition that requires looking at a handful of different federal laws, but basically the loan had to be made to an eligible student (half-time or more), at an accredited school, and the loan may not have been for more than the cost of attendance at the school, and solely for educational expenses.

How to make your case

Although the two definitions above make the majority of student loans non-dischargeable in bankruptcy, we believe that a lot of loans don’t meet either definition. You can make your case either by filing an “adversary proceeding” in your bankruptcy case, or by using these arguments as a defense to a student loan collection lawsuit after you have filed bankruptcy. We are one of the only law firms in Minnesota that handles student loan discharge cases, and our prices begin at $5,000. Get in touch if you have questions.

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Bankruptcy discharge: student loans can be wiped out if there is "undue hardship"

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Many people are under the incorrect belief that student loans can’t be wiped out in bankruptcy. However, there are at least two ways to get rid of student loans in a bankruptcy case.

The first is to show the court that a particular loan does not meet the legal definition of “educational loan” under the Bankruptcy Code. We discuss that in another article. The second one is to show that the loan would cause “undue hardship” and so based on that borrower’s specific situation, the loan should be wiped out.

In Minnesota, courts look at three factors to figure out whether a loan causes undue hardship.

  1. The borrower’s past, present and reasonably reliable income and assets;

  2. A calculation of the borrower’s reasonable necessary living expenses for their family; and

  3. Any other relevant facts and circumstances.

This test is applied case-by-case and really depends on how well a borrower can paint the financial picture both that they can’t afford to pay their loans now, and also convince the court they will not be able to pay in the future. It’s helpful to be able to prove some kind of disability or condition that makes it harder to work or makes the stress of student loans too much to bear.

It’s much easier to wipe out private loans than federal loans using the bankruptcy process. Discharging student loans requires that you file bankruptcy first, and then file a separate case, called an adversary proceeding, against the student lender. Typical fees in a student loan discharge case are between $7,500 and $15,000, but they vary case-by-case.

We’re one of the only law firms in Minnesota who handle student loan discharge cases. Get in touch for a free consultation to figure out whether you’ll qualify.

Can I wipe out tax debt in bankruptcy?

This post describes how to deal with tax debt in bankruptcy.  Tax debt is one of the hardest kinds of debt to shake. First of all, the IRS knows where you are. Also, they have special enforcement powers to collect their debt. They can put a lien on your house or your property without suing you. They can take money in your bank account without a judgment. They can seize tax refunds. They can take you social security. And they can also garnish your wages, often for a lot of money. But contrary to popular belief, tax debt can be wiped out in bankruptcy , especially if it's old. Here's how it works.

1. The rules: For income tax debt to be wiped out in bankruptcy, the following three rules must apply:

Rule 1: The income tax return must have been due more than three years ago. The first question we ask to figure out income tax dischargeability is whether the tax return was due more than three years before the date of bankruptcy filing. 2008 income taxes were due on April 15, 2009. Today is February 8, 2012. These taxes are not dischargeable today, but they pass this test if we wait until April 16 to file. But there's one wrinkle. If you filed for a six-month extension that year, your tax return wasn't due until October 15, 2009. So if you're looking to discharge income taxes, we can't file your bankruptcy case until October 16, 2012.

Rule 2: The income tax return must have been filed more than two years ago. This one seems easy. If the return was filed more than two years before today, this test is satisfied. In some cases, the taxpayer never actually files a return, and so the tax agency files one for them (sometimes called a "substitute return."). When that happens, the two-year clock never starts running, and until the taxpayer actually files his/her own return, this test can never be met.

Rule 3: The tax must have been assessed more than 240 days ago. This means that the tax agency's determination that you owe a debt must have been made more than 240 days ago. The "determination" can be a few different things--wither you filed your return and acknowledged you owe a balance. That's an assessment. Or the IRS changed your return to say that you owed a balance. That's an assessment too. Finally, if you were audited, and the IRS added a balance based on the results of the audit, that's an assessment too. This part of the test is the most confusing, and you might want to see a tax professional (tax accountant or attorney) to figure out the assessment date.

2. Other factors add time to the clock. If you've filed bankruptcy before, the amount of time your case was open, plus six months, are added to all the time limits above. Also, filing an Offer in Compromise with the tax agency can stop the clock.

3. Some kinds of taxes are never dischargeable. Income taxes can be discharged if they meet all the above tests. There are other kinds of debts, such as sales taxes or payroll taxes collected on behalf of an employee, that will never be dischargeable. See a tax attorney if you're facing these types of debts.

4. If a tax debt can't be discharged, you still may be able to stop collection by filing Chapter 13. Chapter 13 bankruptcy stops all collection efforts by a tax agency, and allows you to spread the tax debt over a three to five-year period. This can be a big relief when the tax agency is looking to put liens on your property or garnish your wages, sometimes up to 90 percent of your income.

How does Chapter 13 work?

How does Chapter 13 work? Clients are asking us about Chapter 13 Bankruptcy, and while it has some similarities to Chapter 7, it's also way different. Chapter 7 fits best where you can't pay your debts and don't have many valuable possessions, but Chapter 13 makes sense if you have substantially more income (you can pay a portion of what you owe over time) and/or you own property that is not covered by the bankruptcy exemptions.

Chapter 13 can stop foreclosure

We often use Chapter 13 to stop foreclosure. Chapter 13 can allow a homeowner to catch up on missed mortgage payments, pay tax debts over time, or to wipe out an underwater second mortgage.

How Chapter 13 works

We figure out your disposable income, which basically means your take-home pay minus your actual living expenses.

How much do I have to pay to creditors? Once we know your disposable income, that may be close to what your "plan payment" will be. Your plan payment is the amount of money you will pay to your creditors over a three-to-five-year period. In general, your plan payment goes to pay off your secured debt (like a car loan) in full, as well as your priority debt (overdue taxes, government penalties, etc.) A portion of your general unsecured debt (credit cards, medical bills, legal judgments) is paid out of the rest of your plan payment, but that doesn't have to be paid in full, and lots of times, can be paid at pennies on the dollar..

How do I make my plan payments? You make plan payments directly to the Bankruptcy Trustee, who tacks on an additional fee (in Minnesota, the fee is about 7 percent of your payment) and spreads each payment out to your creditors. You need to have steady enough income to stick to payments, because if you miss them your case will almost certainly be dismissed.

How much does Chapter 13 cost? The filing fee is currently $310, which is 25 bucks less than the Chapter 7 filing fee. The total attorney's fee for Chapter 13 is usually more than Chapter 7, but most times you end up paying the same or even less, since we have the ability to take some of our fees from the plan payments, meaning that it comes out of your creditors' pockets, not yours.

How do we know which chapter you should file? There are a few common scenarios where you might choose a Chapter 13 bankruptcy.

How do I stop foreclosure?

The most common problem people come to see about is foreclosure. Knowing you might lose your home in foreclosure is scary, but there are a lot of ways we can help you get back into good standing on your mortgage so we can keep you in your house. In this post I run down some of the options out there:

1. Try for a loan modification. In our opinion, most of the loan mod programs out there are nearly worthless. HAMP can be a good fix for a homeowner behind on payments, since it reduces monthly payments AND puts your loan back into good standing. But since there's no way to force lenders to comply with HAMP, most people are left out in the cold (and pushed into foreclosure). It's been very rare to see a homeowner get a HAMP modification, but that doesn't mean you shouldn't try it, hoping to catch the right person on the right day and catch a lucky break.

As for the lenders' "internal" modification programs, your guess is as good as ours whether you'll qualify.  Since the criteria and terms of these mod programs are usually secret, you're at the lender's mercy. So if you go this route, negotiate and negotiate hard. Even though the customer service rep on the phone might not realize it, the bank is probably going to lose a lot of money if they foreclose on you. Show them why. It might be helpful to order an appraisal--if the lender knew your house was $100,000 underwater, they might not think it's such a good idea to kick you out of it.

2. Don't hire loan modification sleazeballs. If foreclosure is the number one problem we see in our office, 1A is people who have paid sleazy loan modification outfits to help them stay out of foreclosure. These programs are expensive, and most of the time they just don't work. In particular, stay away from: 1) out-of-state companies (it's harder to get your money back), 2) companies that tell you to stop making your mortgage payments; and 3) for-profits that ask for a large up-front fee without telling you what they can do for you or how they can do it. So many people get caught up in these scams, and it only creates a bigger mess to clean up once the scammer runs away with the money and leaves you right where you started or worse.

3. Consider Chapter 13 reorganization. Chapter 13 is a way to force a lender to accept repayment of your arrears over time. It's ideal for the person who missed a bunch of payments, but now has the income not only to make the payments, but also to catch up and stop foreclosure. Chapter 13 allows you to pay your mortgage arrears in equal installments over a three- to five-year period. It can be surprising when a lender refuses to let you catch up on your mortgage, even when it knows you have the income for it. This way you can call the shots and force them to accept your money.

4. Strip off your second mortgage. If you didn't have to pay your second mortgage, could you afford to catch up on your mortgage? As of earlier this year, in a Chapter 13 reorganization we can strip second mortgages (and third mortgages, and fourth...) where the value of the house is less than the balance of the first mortgage. It's called lien stripping. To do this, we need an appraisal to prove the value of your home. Once we can prove that your second mortgage is fully unsecured, we can strip the lien in Chapter 13.

5. More people have just been moving on. If you can't afford your mortgage payment, can't qualify for a modification, and bankruptcy won't help your situation, it's time to make some hard choices. If you have an underwater house, meaning you have no equity, what do you really own? And if you have to pay $10,000 just to get back into good standing, is it really worth it? If you decide to abandon a home to foreclosure, you can usually live in the house mortgage-free for at least six months while the foreclosure runs its course. For many of our clients, this is just enough time to save up some money to make the transition to a new place to live comfortably. And if you have a second mortgage that won't go away in the bankruptcy, well we can usually wipe that out in Chapter 7.

How taxes can be wiped out in Chapter 13

Many of our Chapter 13 clients are struggling with tax debt. Tax debt can be tricky in Chapter 13 bankruptcy, but here are a few advantages and disadvantages you'll want to know about if you have significant tax debt.

  • Get your tax transcripts. To diagnose and fix your tax problems, you'll need to get account transcripts from the IRS for each year you owe a balance. These documents are a history of when your tax was due, when the return was filed, and when each charge was added to your account. You'll can get account transcripts on the IRS web site. If you have trouble getting these before you make your appointment, we can get transcripts for you if you give us power of attorney and pay a transcript fee.

  • Priority claims must be paid in full. A priority tax claim is an income tax debt that is recent (generally speaking, less than three years old, but the actual calculation is complex and you should speak to an attorney). For the most part, these are the same tax debts that can't be discharged in bankruptcy (with some exceptions), and so you'll want them to be paid off by your bankruptcy. In Chapter 13, a priority tax debt must be paid in full over the life of your Chapter 13 plan (three to five years). So if you owe $10,000 in priority tax debt, you can generally pay that debt in Chapter 13 in roughly $200 a month payments.

  • The benefit of priority tax claims in bankruptcy is that they must be paid before non-priority debt, like credit cards or medical bills. So if your disposable income is $250 a month and you owe $10,000 in priority tax debt, the first $200 of each payment will go to taxes, which need to be paid anyway, and only $50 will go to credit cards. The higher your priority debt, the less you'll pay in non-priority debt and the more you can discharge at the end of your bankruptcy case. One thing to remember is that even if you pay priority tax debt in your Chapter 13, you may have to pay some accrued interest (currently four percent) after your plan is over.

  • Tax liens must be paid off, but can be modified. If you have a tax lien filed against you, this can present some new problems. Tax debts with liens on them are classified as "secured debts" in bankruptcy. This means that, like priority debts, they need to be paid in full over the life of your plan. What makes secured debts tricky is that the IRS can classify a tax debt as secured even when that debt would otherwise be dischargeable in bankruptcy. This means that by getting a lien, the IRS is preventing you from discharging certain debts in a Chapter 13 case. The good news about tax liens is that they can be "crammed down" in bankruptcy. To determine the secured claim created by a tax lien, you count up all the assets you have. Your secured claim is the lesser of the dollar amount of the lien, or the value of all your property put together. Contact a bankruptcy attorney if you have tax liens, because there are sometimes other creative things we can do to save you money.

  • Some tax debts are neither priority nor secured, and these can be discharged in Chapter 13. Some older tax debts can be discharged in Chapter 13. This means that sometimes, when you come to see an attorney about your tax debts, we may advise that you wait to file, in order to age out certain debts and make them dischargeable. If they're dischargeable, this means they get thrown into the pot with all your credit cards, medical debts and personal loans, and they're paid out of your disposable income. Whatever can't be paid out of disposable income after all the other higher-priority debts are paid, are wiped out at the end of a successful Chapter 13.


The Bankruptcy Means Test: Is it going to stop me from filing Chapter 7?

The means test is one of the bankruptcy mysteries our clients ask about most often. The means test was created by the 2005 bankruptcy amendments, and was meant to make it harder for high-income folks to file bankruptcy.

To decide whether clients qualify to discharge their debts in Chapter 7, the courts are concerned with two major questions: 1) Does a consumer have enough assets to pay off their debt? and 2) Does a consumer have enough income to pay off their debt? The means test helps the court answer the second question.

Your attorney will compile the last six months of all income your household has received, and compare it against the median household income of a family your size in your state—for example, as of this post, the median household size for a family of two in Minnesota was $72,734. This information is available on some handy tables on the U.S. Trustee's web site. If your household income is less than the median, congratulations—you've finished the form and you can file Chapter 7!

If your household income is more than the median, you may still be able to file Chapter 7, but there are a whole set of other calculations that your attorney will need to go through involving your monthly expenses to find out. These include some standard expenses that can be found on the U.S. Trustee's web site, as well as some actual monthly expenses. Once you deduct these expenses from monthly income, the goal is generally to have a very low number for your leftover—or disposable—income.

But filling out the means test form requires a whole lot more than just looking up some numbers and plugging them into a chart. First of all, some of the deductions are backward-looking over the past six months. Some are forward-looking. And some are hypothetical (an expense is allowed if you should be spending on it). Also, many of the expenses have rules--you can't take the expense unless certain criteria are met. These rules are based on the Bankruptcy Code and court cases interpreting the bankruptcy law. This is why you'll need a good attorney who knows the ins and outs of bankruptcy, not just someone who will fill out your bankruptcy forms without much legal analysis.

Some cases are exempt from the Means Test, for example, cases where most of the debt is business debt rather than consumer debt, or where the debtor is a disabled veteran or military reservist/guardsman.

These are just the basics. In other articles, we've gone more in-depth so you can understand more about the means test and how you can qualify for Chapter 7 bankruptcy.

What happens to my car loan when I file bankruptcy?

In this post we discuss what happens to a car loan when a borrower files bankruptcy.

Options in Chapter 7 bankruptcy

In Chapter 7, you have three options for dealing with a car loan. These options are to surrender the car, reaffirm the loan, or "retain and pay."

  • Surrender: If you file Chapter 7 and you wish to get rid of your car with a loan, you have the option of surrendering the car to the bank. The upside to this is that you can walk away from the loan, without having to pay any deficiency (i.e. the difference between the amount of the loan and the value of the car that you would generally owe if you walk away form a car loan.) The deficiency is wiped out in a Chapter 7 case.

  • Retain-and-pay: This is the most common option for car loans in Chapter 7. You get to "discharge" your car loan, which means they can never come after you personally for any unpaid amount on the loan. However, instead of surrendering the car, you keep the car, and continue making the payments for as long as you want. Both the borrower and lender act as if the bankruptcy had never been filed. Once the loan is paid off, you can get the lien released, and own the car free and clear, just as if you hadn't filed bankruptcy. Some lenders won't go for this, typically credit unions and some banks, and instead they'll demand a "reaffirmation agreement."

  • Reaffirmation: Some lenders don't want to let you discharge your personal obligation on the loan, and instead demand a reaffirmation, which is a legal process where you renew your promise to pay the loan, and unfortunately you keep your personal liability. Typically, it's credit unions that tend to demand reaffirmation agreements, and a few banks out there. Ask your attorney if your lender will accept retain-and-pay or demand a reaffirmation. If you choose reaffirmation, you will likely have to go to bankruptcy court so that the judge can explain the consequences to you and make sure you understand.

Chapter 13 tools for car loans

In a Chapter 13 case, you can reduce the principal of the car loan, reduce the interest and catch up on arrears.

  • Reduce principal: In Chapter 13 you can "cram down" a car loan, but only if you took the loan out more than two and a half years ago. To do this, we find the current value of the car. Then we can reduce the principal of the car loan from the current balance, to just the value of the car. So if you owe $9,000, and the car is worth $5,000, cram down reduces the balance of your loan from $9,000 to $5,000.

  • Reduce interest: For many car loans in Chapter 13, you can reduce the interest rate on the car loan from an exorbitant rate to something more reasonable. In past cases we have reduced interest rates to somewhere between 4 and 6 percent, typically. This can be a big help for subprime car loans.

  • Catch up on arrears: In Chapter 13, if you're behind on a car loan, you can use bankruptcy to force the lender to accept catch-up payments. So if you're $1,000 behind on the car, you can take those arrears and stretch them over a three-to-five year period, pay a small monthly payment to catch up (say, $20-35 a month in this scenario), and then resume making your regular monthly payments. This is a good option if you're facing repossession.

If you're struggling with a car loan or facing repossession, and don't know what to do, you have plenty of options inside or outside bankruptcy. Get in touch with a lawyer to learn more about the tools available.

Emergency bankruptcy in Minnesota

What is emergency bankruptcy? 

An emergency bankruptcy filing is a way to stop impending collection action, like a garnishment, foreclosure sale, lawsuit or tax lien. Once the emergency case is filed, no collectors can take any action against you. And if they do anyway, we can sue them, or undo the action (at the very least). To file an emergency bankruptcy, we don't need to file as much information as we would in a full bankruptcy. The emergency filing gives us14 days to file all the remaining bankruptcy documents.

How long does emergency bankruptcy take? 

We can file an emergency case in a day or two, if it's necessary. We've even filed them the same day as the initial client meeting. But keep in mind that the closer we are to the emergency, the better chance we wouldn't be able to file it in time. Also, rush bankruptcy cases cost more than standard cases.

How to get ready

Document collection might be the hardest part of bankruptcy. The one thing that you need before filing an emergency case is a list of your creditors. As far as the full bankruptcy goes, there are a couple of things here that might be tricky. For example, you'll need to have filed your most recent taxes before filing bankruptcy (your last four years of tax returns need to be filed for a Chapter 13). Self-employed bankruptcy filers need to provide a profit & loss. The more complicated the case, the harder you'll have to work to make sure everything is filed in time. You should make sure to have these things before filing bankruptcy.

Also, you'll have to do your online credit counseling before an emergency filing. There's no room for mistakes on this one. If your online credit counseling is not completed before a bankruptcy, the case will be dismissed. Talk to your attorney about how to get the case completed on a rush basis.

The 14 day deadline

If you can't complete the full bankruptcy within 14 days of filing an emergency case, the case will be dismissed automatically by the court. On the one hand, this still achieved the desired effect—the bankruptcy still stopped the collection temporarily, which would have bought you some time. But on the other hand, it also could make it harder to re-file (the court can be a bit stricter with people who file multiple times).

If you need an emergency bankruptcy, get in touch with an attorney right away. But make sure to leave plenty of time!

Bankruptcy trustees are "clawing back" tuition paid for debtors' kids

According to an article in the Wall Street Journal, Bankruptcy Trustees are using a legal argument called "fraudulent transfer" to take back tuition payments clients have made to their children's colleges. This can be a shock to people, but trustees do things like this all the time. Here's how it works:

Under bankruptcy law, all the property you have at the time of your bankruptcy filing is part of the bankruptcy estate. If you have property above certain exemption amounts, the trustee can demand turnover of that property. This would seem to incentivize people to get rid of assets before filing bankruptcy. You can understand the temptation for someone to sell their boat to their brother for $1.00.

Bankruptcy law has a way of dealing with this problem, called fraudulent transfer law. A fraudulent transfer in Minnesota can occur when someone gives away property for less than "equivalent value." This allows the trustee to "claw back" the property and distribute it equitably to all the creditors.

But is college tuition a fraudulent transfer? The trustee's theory is that if you were paying for college tuition for yourself, it wouldn't be a fraudulent transfer because you received equivalent value for the transfer. But when you pay tuition for your adult children, (which you're not legally obligated to do) you don't receive anything in return (other than children who are less likely to need your support in the future). In that way, it's like a gift, and can be pursued as a fraudulent transfer.

So if the trustee claws back the tuition, kids have a problem. The school will want its tuition, and may hold back transcripts or diplomas, or prevent registration for the next semester, until they're paid up. So this is a scenario bankruptcy filers really want to avoid.

There might be some defenses. For example, if the property would have been exempt anyway, it might not be a fraudulent transfer. But this issue hasn't been directly addressed by binding caselaw in Minnesota, and so it's no sure thing. To brainstorm other solutions to this problem, get in touch.

5 Tips for Streamlining Your Bankruptcy

The number one thing that slows down a bankruptcy case is the speed with which clients can assemble the necessary documents. By following these five tips, you can ensure that your bankruptcy moves quickly, and that you're prepared for any issues that could arise during the process.

Go Paperless

It’s time to get rid of that mountain of paperwork and bills. Sign up to receive digital statements from your bank and financial accounts, and request to receive your pays stubs digitally. It also pays to switch your utilities, mortgage, car payments and regular payments to e-bills. This allows you to stay up to date on your assets and liabilities, and makes submitting your documents to your attorney as easy as sending an email.

Track your spending

Whether or not you are planning on filing bankruptcy, it’s good practice to keep track of where your money goes each month. How much do you spend on groceries? Entertainment? How about your pets? Often, its more than our clients realize. We recommend apps like ‘Mint’ or ‘You Need a Budget’ to keep track of your expenses. This info can go straight into your bankruptcy petition and will ensure a high level of accuracy.

Separate your business and personal accounts

Many of our clients are business owners. Whether you manage your own company or sell crafts on weekends, you need to track your company’s profit and loss. It’s not only bad business to conflate your personal and professional expenses and funds – it can also get lead to you getting audited by the court after you file your bankruptcy.

Organize Your Important Documents …

Designate one spot for your important documents. It can be anything from a drawer to a folder to a safe. Whatever it is, only put important documents in it. Car titles, your social security card, birth certificates, your insurance policies and court documents are all great things to keep together. Keep things like bills, statements, and mail separate from this.

…and Shred the Unimportant Ones.

People are often afraid to throw away anything that looks ‘official’. People end up with piles of bills, collection letters, and spam mail, along with a whole lot of anxiety. Shred anything that is outdated, useless, or irrelevant. There is no reason to hold on to more than one copy of the same bill. Only keep the most recently dated one. By getting rid of excess, a seemingly enormous pile can be quickly whittled down to only the necessary things. Also, if you have already switched to paperless statements, your past statements will be readily accessible, so there is doubly a reason to hold onto them.

Divorce debts in Chapter 13 bankruptcy

In another post, we wrote about how to deal with divorce debts in Chapter 7 Bankruptcy. Chapter 13 has different rules and different ways to deal with family court debts.

Some Family Court debts can be wiped out in Chapter 13

Chapter 13 can't discharge “domestic support obligations”. Domestic support obligations (child support/maintenance) can't be wiped out in any form of bankruptcy, Chapter 7 or 13. In Chapter 13, to get a discharge the debtor must pay all child support/maintenance arrears, as well as all payments due during the three to five years of the Chapter 13 plan.

But Chapter 13 can wipe out other debts created by a divorce decree. Debts created by a divorce decree that don't count as domestic support obligations (e.g. property settlements, equalizers, or promises to pay joint marital debts) can be wiped out in Chapter 13 bankruptcy. These debts aren't always wiped out in a Chapter 7, so for people with large debts like this, Chapter 13 can be a much better choice.

Spreading family court debt out over time

Child support and maintenance arrears can be spread out over five years in Chapter 13. If you're behind on child support and maintenance, Chapter 13 gives you the ability to put those arrears into a Chapter 13 payment plan. This wouldn't relieve you from your obligation to pay child support or maintenance payments that come due after the bankruptcy is filed, but if you're facing garnishment or other collection, it can buy you breathing room to pay arrears over time. This may also reduce the amount you're required to pay your other, unsecured creditors.

As discussed above, Chapter 13 has many advantages over Chapter 7 when it comes to dealing with divorce debts. If you have questions about how to deal with your family law debts in bankruptcy, get in touch.

Divorce debts in Chapter 7 bankruptcy

Divorce is one of the leading causes of bankruptcy. People often have questions about how to deal with debts from their divorce. Depending on how a debt is categorized in the divorce decree, you might be able to wipe it out in bankruptcy, or it might stick around.

1. Child support and maintenance cannot be discharged in Chapter 7 bankruptcy. Certain debts in bankruptcy are called "domestic support obligations," including child support and spousal maintenance/alimony. These debts can never be discharged in bankruptcy, and are also "priority" debts, meaning that if the trustee gets any money from you, those debts are paid off first.

2. Debts incurred in a divorce cannot be discharged in Chapter 7 bankruptcy (although they can be in Chapter 13). Any other debt created by a divorce cannot be discharged in Chapter 7. This includes property settlements or "equalizers." Also, certain obligations by one spouse to pay marital debts can be considered non-dischargeable. To figure this out, you'll want to look for "hold harmless" language in your decree, which describes what obligations won't be discharged.

3. Some divorce lawyer fees are dischargeable in Chapter 7, some are not. If you owe fees to your divorce lawyer when you file bankruptcy, that debt is wiped out in bankruptcy. You may be ordered to pay your ex-spouse's attorney's fees by the court, and that debt might be non-dischargeable in bankruptcy because you're paying attorney's fees to "support" the ex-spouse.

4. Family lawyers should pay attention to the wording they use in divorce decrees. As described above, words matter in a divorce decree. Depending on how a debt is described, it might be dischargeable or non-dischargeable in bankruptcy. Make sure your lawyer is thinking about these issues when going through a divorce with a significant amount of debt.

I forgot to add a creditor to my bankruptcy

As hard as we try to find all of your creditors before a bankruptcy, every once in a while one slips through the cracks. What happens when a creditor gets left out?

1. First of all, don't get any ideas. All creditors are "included" in bankruptcy. You can't leave one out, purposely or accidentally. So there's no point in "forgetting" to list a creditor, for example, in hopes that you can keep a credit card open. And remember, you sign your bankruptcy under penalty of perjury, so it's illegal to leave any information out of your bankruptcy papers. And as your attorney, I know better and won't let it happen. So don't try.

2. In a no-asset Chapter 7 case, all debts are discharged whether listed or not. If a debt is dischargeable, then it's wiped out in a typical Chapter 7 bankruptcy whether it's listed or not (as long as it wasn't left out intentionally.) Typically when a creditor has come out of the woodwork after a Chapter 7, we just send them a letter notifying the of the bankruptcy, and that's enough to protect you. After that, any attempts to collect the debt would be illegal.

3. In a Chapter 7 cases with assets, debts may not be discharged unless listed. Unlike a no-asset case, in which a creditor generally has nothing to gain from being listed in the bankruptcy, in a case where assets are going to be distributed to creditors, it does harm the creditor to be unlisted. Section 523(a)(3) of the Bankruptcy Code makes a debt like this non-dischargeable if it wasn't listed in the bankruptcy.

4. In a Chapter 13 case, a creditor must at least be added before the case is finished. In a Chapter 13 case, a creditor must have been listed in the plan to be discharged.  So if you've forgotten to add a creditor, and you're already in your Chapter 13 plan, it's probably wise to go back and add the creditor. This is probably fixable, since Section 523(a)(3) doesn't apply to Chapter 13.

Same-sex married couples can file bankruptcy together

We wrote about the evolving status of same-sex couples in bankruptcy here and here. Now that the Supreme Court has struck down the Defense of Marriage Act, the federal government must recognize same-sex marriages valid in the state in which they were performed. Although this specific issue hasn't come to bankruptcy court, it's clear that the bankruptcy system will have to follow the Supreme Court's ruling and allow same-sex married couples to file joint bankruptcy cases.

1. Anyone legally married in Minnesota can file bankruptcy together in Minnesota. Any married couple can file a joint bankruptcy case if their bankruptcy was legally performed in Minnesota. This includes same-sex couples whose weddings were performed on or after August 1, 2013.

2. Anyone legally married in another state can file bankruptcy together in Minnesota. Any couple married in Iowa, New York, or any of the other 11 states allowing same-sex marriage can file a joint bankruptcy. It's not clear how a Canadian marriage, for example, would shake out in U.S. bankruptcy court, but I'm sure this is something we'll learn soon.

3. Anyone who's legally married in any of these states can file bankruptcy together anywhere in the U.S. The full faith and credit clause of the Constitution basically says that a public act (such as marriage) valid in one state is also valid in any other state. This means that any same-sex couple married in any of the 13 states allowing same-sex marriage can file a joint bankruptcy anywhere in the U.S.

4. Filing a joint bankruptcy has benefits. Most attorneys will price a joint case lower than two individual cases. Instead of paying two attorney's fees, a same-sex married couple can now pay one. The same thing goes with for the court's filing fee. Plus it's much easier to provide an attorney one set of information, rather than having to handle each case separately. This is a BIG deal.