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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16177
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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Hello, Im a resident of Minnesota. Married, but we are

Resolved Question:

Hello,

I'm a resident of Minnesota. Married, but we are divorcing. we have 1 child 11 years old and buried in debt. We have about $100k in credit card debt, owe about $20k in back taxes for the last 3 years, and owe more than our house is worth (home value @ $330k, 221k on mortgage, 150k HELOC. We own 2 cars with no payments, each 12 to 13 years old. My wife is seeking work and makes maybe 8k/yr sewing, i had a back surgery 3 years ago and my income as a salesman has declined over that time to about 40k. What can you suggest?

Thanks,

Loren
Submitted: 2 years ago.
Category: Bankruptcy Law
Expert:  WALLSTREETESQ replied 2 years ago.

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.

WALLSTREETESQ :

If you do not want to keep the home, a chapter 7 would be a good idea,

WALLSTREETESQ :

by filing the chapter 7, you would wipe out the credit card debts, and the mortgages,

WALLSTREETESQ :

If you want to stay in the home, you can keep on paying the mortgage, however, if you do stop making payments, then you would be able to remain in the home.

WALLSTREETESQ :

Motor vehicle to $4,600 (up to $46,000 if vehicle has been modified for disability)
Minn. Stat. Ann. § 550.37 subd. 12(a)

Customer:

In the last line did you mean we would NOT be able to stay in the home?

WALLSTREETESQ :

In terms of the Car their is a $4600 exemption, so you could save one of the cars if not both if they are worth less.

Customer:

Should we divorce first, or file first?

WALLSTREETESQ :

You can stay in your home, if you make the mortgage payments,

WALLSTREETESQ :

It may be best to file prior to the divorce, as then the divorce would not have to deal with the property and debt issues.

WALLSTREETESQ :

Also, tax debt could be discharged,

WALLSTREETESQ :

In terms of the tax debt it is possible you can discharge them as well

Customer:

I have a friend from California who said that she filed both 7 and 13 or 11 or something. Would that be possible or advantages to us? whats the benefit of that?

WALLSTREETESQ :


If the income tax debt meets all five of these rules, then the tax debt is dischargeable in Chapter 7 and Chapter 13 bankruptcy petitions.



  1. The due date for filing a tax return is at least three years ago.

  2. The tax return was filed at least two years ago.

  3. The tax assessment is at least 240 days old.

  4. The tax return was not fraudulent.

  5. The taxpayer is not guilty of tax evasion.


 


Return Due At Least Three Years Ago


The tax debt must be related to a tax return that was due at least three years before the taxpayer files for bankruptcy. The due date includes any extensions.


 


Return Filed At Least Two Years Ago


The tax debt must be related to a tax return that was filed at least two years before the taxpayer files for bankruptcy. The time is measured from the date the taxpayer actually filed the return.


 


Tax Assessment At Least 240 Days Old


The IRS must assess the tax at least 240 days before the taxpayer files for bankruptcy. The IRS assessment may arise from a self-reported balance due, an IRS final determination in an audit, or an IRS proposed assessment which has become final.


 


Tax Return was Not Fraudulent


The tax return cannot be fraudulent or frivolous.


 


Taxpayer Not Guilty of Tax Evasion


The taxpayer cannot be guilty of any intentional act of evading the tax laws.


 

WALLSTREETESQ :

A chapter 7 wipes out all or most of your debts,

WALLSTREETESQ :

A chapter 13 is a payment plan for your debts, if you make enough money to pay the debts, a chapter 13 would create a 60 month payment plan for your debts, and reduce the balances as well.

WALLSTREETESQ :

A chapter 7 is best since your income is limited,

WALLSTREETESQ :

A chapter 13 would be good if you have not paid your mortgage for several months, and want to catch up to the payments, the chapter 13 would put the arrears of the mortgage in the 60 month plan.

Customer:

none of my tax debt meets the criteria, can i file a 13 after the 7 to make a plan to pay the debts that aren't dischargeable and if i fall behind on the mortgage in the interim?

WALLSTREETESQ :

You can file a chapter 13 after the 7 only if you will make 100% payments on your debts such as the taxes and mortgage.

WALLSTREETESQ :

The chapter 7 would get rid of your credit card debts, but not IRS.

WALLSTREETESQ :

So the chapter 13 can help with the IRS and mortgage arrears, and it will let you stay in your home as well.

WALLSTREETESQ :

Or you can just file a chapter 13 for everything

WALLSTREETESQ :

the credit card balances could be reduced by 90% or more and you would pay the others through the plan.

Customer:

ohh, so the 13 would also eliminate not just restructure debt?

Customer:

Can you give me your opinion as to the most cost effective way to proceed with this?

WALLSTREETESQ :

A chapter 13 would be better, if you have joint income and want to keep the home, it would be best,

WALLSTREETESQ :

it would wipe out much of the credit card debt,

WALLSTREETESQ :

and you can pay the arrears of the taxes and mortgage over 60 months,

WALLSTREETESQ :

but you will still have to pay the monthly mortgage, with the plan payments every month.

WALLSTREETESQ :

If you do not want to keep the home, a chapter 7 may be best,

WALLSTREETESQ :

as you wipe out all debts except the IRS.

Customer:

Does the 13 alter the amount owed on teh mortgage or HELOC?

Customer:

could we file ch 7 and still keep the home if we made payments on it?

WALLSTREETESQ :

The chapter 13 would not lower the balance on the mortgages, only the unsecured credit cards.

WALLSTREETESQ :

You can file a chapter 7, discharge the mortgages,

WALLSTREETESQ :

and live in the home if you are current, and make the monthly payments.

WALLSTREETESQ :

If the home value was less then the First loan,

WALLSTREETESQ :

you could lien strip the second in a chapter 13, but that is not the case.

Customer:

ok, thanks.

WALLSTREETESQ :

Good luck, and discuss this matter with your spouse, especially in regards XXXXX XXXXX property.

WALLSTREETESQ :

If you have any further questions please do not hesitate to ask.

WALLSTREETESQ :

If satisfied please provide us with positive feedback.

Customer:

Ok, thanks i will!

WALLSTREETESQ :

Good luck

WALLSTREETESQ :

If satisfied please provide us with positive feedback.

Expert:  WALLSTREETESQ replied 2 years ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Customer: replied 2 years ago.
,Sorry, but i forgot to ask... My wife's egagement ring is a diamond valued at about $8000. is that exempt or is it subject to liquidation? Do you also have an exemption list or any info regarding what items/values are exempt of if everything is sold off?


Thanks again,

Loren
Expert:  WALLSTREETESQ replied 2 years ago.
http://www.legalconsumer.com/bankruptcy/bankruptcy-law.php?ST=MN

The ring would not be protected.



Minnesota Exemptions
MN Exemptions
Manufactured home to an unlimited value
Minn. Stat. Ann. § 550.37 subd. 12
Only reasonable amount may be exempted.
In re Tveten, 402 N.W.2d 551 (Minn 1987)
In re Medill, 119 B.R. 685 (D.Minn 1990)
Home and land on which it is situated to $390,000; if homestead is used for agricultural purposes, $975,000; cannot exceed 1/2 acre in city, 160 acres elsewhere (husband & wife may not double)
Minn. Stat. Ann. § 510.01
Minn. Stat. Ann. § 510.02
^ Top
Insurance exemptions
Virtually all states protect life insurance proceeds in some manner or another. Some restrict it to proceeds paid to a dependent. Many states also protect the cash-value or loan-value of insurance policies.
If a substantial amount of your assets are in life insurance, you may want to consult a professional to determine the extent to which those policies are exempt. The website AssetProtectionBook.com does particularly thorough job of covering Minnesota insurance exemptions.
Federal Exemptions
Life insurance payments from policy for person you depended on, needed for support
11 U.S.C. § 522 (d)(11)(C)
Unamtured life insurance contract, except credit insurance policy
11 U.S.C. § 522 (d)(7)
Disability, illness, or unemployment benefits
11 U.S.C. § 522 (d)(10)(C)
Life insurance policy loan value, in accured dividends or interest, to $11,525
11 U.S.C. § 522 (d)(8)
Minnesota Exemptions
Accident or disability proceeds
Minn. Stat. Ann. § 550.39
Fraternal benefit society benefits
Minn. Stat. Ann. § 64B.18
Police, fire, or beneficiary association benefits
Minn. Stat. Ann. § 550.37 subd. 11
Life insurance proceeds to $46,000, if beneficiary is spouse or child of insured, plus $11,500 per dependent
Minn. Stat. Ann. § 550.37 subd. 10
Unmatured life insurance contract dividends, interest, or loan value to $8,800 if insured is debtor or person debtor depends on
Minn. Stat. Ann. § 550.37 subd. 23
^ Top
Miscellaneous other exemptions
This category covers items like partnership property, alimony & support payments.
Federal Exemptions
Alimony, child support needed for support
11 U.S.C. § 522 (d)(10)(D)
Minnesota Exemptions
Earnings of minor child
Minn. Stat. Ann. § 550.37 subd. 15
^ Top
Pensions & retirement savings
The new federal bankruptcy law now automatically exempts a virtually all tax-exempt pensions and retirement savings accounts from bankruptcy, even if you are using state law exemptions. 11 U.S.C. Section 522(a)(3)(C). (See Help Topic: Special Rules For Retirement Accounts.)
The law protects any pension or retirement fund that qualifies for special tax treatment under Internal Revenue Code sections 401, 402, 403, 408, 408A.
Federal Exemptions
All types of retirement funds and accounts that tax-exempt under IRC section 401, 403, 408, 408A, 414, 457, or 501(a) ; IRAs & Roth IRAs limited to $1,171,650 (excluding rollover contributions); limitation can be overidden by judge.
11 U.S.C. § 522 (d)(12)
11 U.S.C. § 522 (n)
Minnesota Exemptions
Public employees
Minn. Stat. Ann. § 353.15
Minn. Stat. Ann. § 356.401
State employees
Minn. Stat. Ann. § 352.96 subd. 6
Minn. Stat. Ann. § 356.401
State troopers
Minn. Stat. Ann. § 352B.071
Minn. Stat. Ann. § 356.401
ERISA-qualified benefits or needed for support, up to $66,000 in present value
Minn. Stat. Ann. § 550.37 subd. 24
IRAs needed for support, up to $69,000 in present value
Minn. Stat. Ann. § 550.37 subd. 24
^ Top
Personal property exemptions
Auto Valuation Tools:
Kelley Blue Book
Edmunds
Both of these websites offer interactive tools to determine the current value of your used car.
This category covers your car, your non-retirement bank accounts, and most of your other personal possessions, other than your house.
States vary widely on how generous they are in this area. Some exemptions may be for any combination of property up to an aggregate amount. Other exemptions apply only to specific items, such as jewelry.
Remember that an exemption will not protect your car from being repossessed by the holder of the car loan you used to purchase the vehicle if you pledged the vehicle as security for the loan. To keep the car, you will have to pursue other options such as 'redemption' or 'reaffirmation.' See the help topics and How to File for Chapter 7 Bankruptcy for more on this.
Federal Exemptions
Health aids
11 U.S.C. § 522 (d)(9)
Lost earnings payments
11 U.S.C. § 522 (d)(11)(E)
Wrongful death recoveries for person you depended on
11 U.S.C. § 522 (d)(11)(B)
Animals, crops, clothing, appliances, books, furnishings, household goods, musical instruments to $550 per item, $11,525 total
11 U.S.C. § 522 (d)(3)
Jewelry to $1,450
11 U.S.C. § 522 (d)(4)
Motor vehicle to $3,450
11 U.S.C. § 522 (d)(2)
Personal injury recoveries to $21,625 (not to include pain & suffering or pecuniary loss)
11 U.S.C. § 522 (d)(11)(D)
Minnesota Exemptions
Bible and books
Minn. Stat. Ann. § 550.37 subd. 2
Burial plot; church pew or seat
Minn. Stat. Ann. § 550.37 subd. 3
Clothing, one watch, food, & utensils for family
Minn. Stat. Ann. § 550.37 subd. 4(a)
Personal injury recoveries
Minn. Stat. Ann. § 550.37 subd. 22
Proceeds for damaged exempt property
Minn. Stat. Ann. § 550.37 subds. 9, 16
Wrongful death recoveries
Minn. Stat. Ann. § 550.37 subd. 22
Appliances, furniture, jewelry, radio, phonographs, & TV to $10,350 total
Minn. Stat. Ann. § 550.37 subd. 4(b)
Motor vehicle to $4,600 (up to $46,000 if vehicle has been modified for disability)
Minn. Stat. Ann. § 550.37 subd. 12(a)
Wedding rings or symbols to $2,817.50
Minn. Stat. Ann. § 550.37 subd. 4(c)
^ Top
Public benefits exemption
Most states exempt public benefits, consistent with the notion that such benefits are intended as a safety net for the recipient.
Federal Exemptions
Public assistance
11 U.S.C. § 522 (d)(10)(A)
Social Security
11 U.S.C. § 522 (d)(10)(A)
Unemployment compensation
11 U.S.C. § 522 (d)(10)(A)
Veteran's benefits
11 U.S.C. § 522 (d)(10)(A)
Crime victims' compensation
11 U.S.C. § 522 (d)(11)(A)
Minnesota Exemptions
Crime victims' compensation
Minn. Stat. Ann. § 611A.60
Public benefits
Minn. Stat. Ann. § 550.37 subd. 14
Unemployment compensation
Minn. Stat. Ann. § 268.192 subd. 2
Veterans' benefits
Minn. Stat. Ann. § 550.38
Workers' compensation
Minn. Stat. Ann. § 176.175
^ Top
Tools of trade exemptions
These are the things you use to make a living. An automobile or truck can be a tool of trade if you use it as such. Commuting to work doesn't count, but if driving is a necessary component of transacting your business, you can claim your vehicle is a tool of trade.
Federal Exemptions
Implements, books, & tools of trade to $2,175
11 U.S.C. § 522 (d)(6)
Minnesota Exemptions
Farm machines, implements, livestock, produce, & crops to $13,000 total
Minn. Stat. Ann. § 550.37 subd. 5
Teaching materials of college, university, public school, or public institution teacher
Minn. Stat. Ann. § 550.37 subd. 8
Tools, machines, instruments, stock in trade, furniture, & library to $11,500 total
Minn. Stat. Ann. § 550.37 subd. 6
Total value of Tools of Trade and Farm Machines combined cannot exceed $13,000
Minn. Stat. Ann. § 550.37 Subd.7
^ Top
Wage garnishment exemption
Federal non-bankruptcy law limits how much of your pay can be taken for collection purposes. Most state laws also cover this and may offer more protection. Most states have special limits for collection of spousal or child support.
Federal Exemptions
None
11 U.S.C. § 522 (d)
Minnesota Exemptions
Minimum 75% of weekly disposable earnings or 40 times federal minimum hourly wage, whichever is greater
Minn. Stat. Ann. § 571.922
Wages deposited into bank accounts for 20 days after depositing
Minn. Stat. Ann. § 550.37 subd. 13
Wages, paid within 6 mos. of returning to work, after receiving welfare or after incarceration; includes earnings deposited in a financial institution in the last 60 days 550.37 subd. 14
Minn. Stat. Ann. § 550.37 subd. 14
^ Top
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 16177
Experience: 14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
WALLSTREETESQ and 3 other Bankruptcy Law Specialists are ready to help you

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WALLSTREETESQ
WALLSTREETESQ
Bankruptcy Lawyer
16177 Satisfied Customers
14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS