Legal Question in Credit and Debt Law in Minnesota

Re: small claims court

This e-mail contains general legal information. It is not legal advice, and does not create a attorney client relationship. That relationship is created only by a written retainer agreement.

ANSWER: When someone files bankruptcy it generally removes all obligation they have to pay you. It does not matter when you take them to small claims court. If you take them to court and win a judgment, they can wipe out the liability in bankruptcy. If they file bankruptcy before you take them to court they owe you nothing and you have no basis on which to sue them.

There are exceptions. Some debts cannot be wiped out in bankruptcy. One example is child support. Another example is whether any fraud was involved by the debtor. If fraud was involved you may have an argument that the debt should not be wiped out in case the person files bankruptcy. It sounds like this debt was a loan, so unless some false pretenses or misrepresentation was used to get you to lend the money the debt is probably going to be wiped out if the person files bankruptcy.

In Minnesota the statute of limitations on contracts (it sounds like you have a contract with the other party) is generally 6 years.

If you are uncertain if the other party is going to file bankruptcy you probably have nothing to lose by suing. But once you sue, and hopefully win the judgment, then comes the fun part - collecting the judgment. Many times that is harder then getting the original judgment.

I hope this has been helpful. If you have any follow up questions please do not hesitate to contact me at 651-210-3105. Thank you for your e-mail.