Legal Question in Bankruptcy in Minnesota

Re: Chapter 7 - Retaining Assets

Sounds as if you used a home equity loan to buy your vehicles. I keep telling people not to do that. It may be good for a tax deduction, but you invade your equity in your homestead - and that equity is one of the few things held sacred in Minnesota law.

It's a little hard to know for sure exactly what your situation is from the wording of your question, but assuming that you have your vehicles and home tied up with some sort of combination mortgage and home equity loan, a chapter 7 will not necessarily make it all go away. The Chapter 7 makes the debts disappear, but the lender still owns the security. Therefore if you want to keep the house and cars, you have to play ball one way or another with that lender.

It sounds as if you may be backwards on which debts you should be keeping up with, assuming that some have to be let go. The mortgage and home equity loans should be paid first, along with taxes; everything else should be considered secondary. If you have to get behind in something, let it be your credit cards.

A chapter 7 bankruptcy can get rid of the credit card debt, and it can temporarily suspend the lender's ability to foreclose on your home. It might give you some time to get organized - and you may be able to negotiate a reaffirmation of your mortgage which would tack the past due payments on to the end of the loan.

You may also want to consider a Chapter 13 payment plan. The first thing to do, however, is find a competant lawyer and sit down in front of that person as soon as possible.

Disclaimer: This response is not intended to create an attorney-client relationship. You are advised to consult the lawyer of your choice concerning the details of your case.