Walker & Walker | Life Is Better Without Debt | Bankruptcy Truth Blog
Welcome to The Law Offices of Curtis Walker, a Minnesota based law firm whose practice is limited to bankruptcy. Our goal is to help you and your family get free from the burden of debt while treating you with the dignity and respect that you deserve.
The Minnesota legislature recently passed a law to make the first $25,000 that a person has in a Health Savings Account or HSA exempt from bankruptcy and exempt from judgment creditors or debt collectors who are trying to collect. This bill is called HF 2391 and was introduced by Senator Roger Chamberlain of District 38.
Effective August 1, 2018, people who use the Minnesota Bankruptcy Exemptions can now keep up to $25,000 in a Health Savings Account. Before August 1, 2018 then anyone who used the Minnesota Bankruptcy Exemptions would lose the money in their Health Savings Account. It was taken to pay creditors by the court, and the person filing bankruptcy had to be very careful about how they did their tax returns to avoid a tax penalty for an early withdrawal of the money.
A Health Savings Account is a special account where people can set aside money to pay for future medical expenses. Just like when you contribute to a traditional IRA, you get a tax deduction for contributions to a Health Savings Account. In 2018, single people can contribute up to $3,450 per year, and married couples or families can contribute up to $6,900 per year. In order to contribute, you must also have a high deductible health insurance plan. The money in a HSA may not be used to pay for health insurance premiums.
Money in a Health Savings Account may be used for meeting a health insurance deductible or out of pocket medical expenses such as prescriptions.
WHAT DOES THIS CHANGE?
Not very much, actually. In Minnesota, you can choose whether to use the Federal Exemptions, or the Minnesota exemption in bankruptcy. The exemptions are the list of property that people keep when they file bankruptcy. Most people in Minnesota actually use the Federal Bankruptcy Exemptions instead of the Minnesota exemptions because the Federal Exemptions let people keep $12,000 of property of any sort, in addition to many other things. This $12,000 wild card exemption is very useful for protecting things like money in bank accounts and tax refunds.
People using the federal exemptions to file bankruptcy in Minnesota would already be able to protect their Health Savings Accounts because they could use some of the $12,000 wild card exemption to protect it.
Here’s our car money saving tips on how you can save money and still get where you need to go.
Your car might be the second biggest monthly expense after your rent / mortgage. Is it really worth it?
Here’s what we think you should consider.
121. Choose a smaller car
Smaller cars will often cost less to run as they get better gas mileage compared to a bigger car with a much larger engine.
Perhaps you really want an old V8 muscle car but can’t really justify it when you’re mainly stuck in traffic most days on your way to work.
However, a smaller car may not be appropriate if you have a large family, want to tow a boat at the weekends, or need to carry lots of tools for work.
122. Choose an older car
An older car may have lower monthly payments, or be cheap enough for you to pay for it outright.
This would mean that it costs less than your newer car, perhaps without sacrificing performance, space or reliability.
This may be one of the more obvious car money saving tips, but not everyone considers it.
123. Choose a newer car
A newer car may be more economical and have lower running costs, thanks to advances in technology.
You might be able to get the same performance and better gas mileage from a much smaller engine, thanks to a better engine management system, or lightweight construction.
You might be able to get a deal on the servicing or insurance too.
Parts may also be cheaper or more readily available for newer cars, as they are likely to be in higher demand.
This may not be one of the more obvious car money saving tips, but probably one worth considering.
124. Do your homework
Look at magazines, watch reviews online, browse manufacturers’ websites and visit dealers.
You can learn many car money saving tips before you even go to see a dealer.
You’ll learn a lot and get an idea of what you can get for your money.
Certain car brands have a good reputation for reliability, for a reason, so something German or Japanese might give you more performance and better reliability at a price you’re happy with, compared to the American brands you’ve bought before.
Maybe paying more for a premium brand will be worth it in the long run as it gives you the space, features and comfort you need, whilst being nice to drive and having a higher resale value than a lesser brand.
Paying more now for something like a BMW or a Mercedes, compared to a Ford, could pay dividends when you come to sell it.
Why not see what used car prices are compared to new car prices for the makes and models you’re looking at?
125. Don’t buy on price alone
Whilst you might be tempted by something like a new European or Japanese supermini because it’s so cheap, will it really meet your needs?
The low running costs might be appealing, but what if
It struggles to get up hills
You can’t overtake on the freeway
It suffers badly with depreciation
It is barely big enough for the whole family to get in
It might not be the best choice of car for you and your family.
A cheap old car might need things like:
Making it more expensive than it initially appeared.
Sometimes car money saving tips will recommend that spending more money is the right thing to do.
126. Can you compromise?
Think with your head as well as your heart.
Do you need all the features and functionality?
Would you miss:
Those expensive wheels over the standard ones?
The louder stereo?
The concierge service?
The non-standard metallic paint?
The rear heated rear seats?
Drive to work alone in the city in an SUV?
Keep your bikes in your garage not in your station wagon?
127. Could you get rid of your car?
Could you get rid of your car?
Would getting a bus, train or cab work out cheaper?
If you don’t use your car a lot, as you live in the city centre, is the monthly expense of keeping a car worth it to you?
If you go away most weekends, or have to take the kids places then you do need a car.
But if your car spends more time on the drive than being driven, it might be to time to think about getting rid of your car, or changing it for a cheaper one.
128. Buying a car
We’re not car experts, but we’ve learnt a few things in our time.
If you’re buying a pre-owned car privately, remember that cash is king.
If you can turn up to the vendor’s hand with a pocket full of money, you have a lot of power.
Note any defects, and use them as a bargaining tool to knock the price down and don’t be scared to make a low offer.
Sometimes people just want a quick sale, and pile of dollar bills on their kitchen table can be very convincing.
It’s a good idea to look at several cars and try them out before making your mind up, so that you don’t just buy the first one you see.
Remember that you can walk away at any time, and that you don’t owe the seller anything.
If you’re buying a newcar then beware of the optional extras, and the other tricks of unscrupulous sales people.
Time sensitive offers
‘another customer coming to look at it’
a low trade-in price for your car
These tricks can all be used to get you to buy a car there and then, without you even realizing it.
Maybe the car you came to look at has ‘just been sold’, and you’re now going for a test drive in a much more expensive car. You’re bound to be impressed because it’s much nicer than the car you turned up in or the one you wanted to look at.
If you’re tempted to go for several optional extras, remember the purchase price is likely to go up several thousand dollars.
As is the wait time.
You might be encouraged to compromise and choose a “lesser” car in a color you don’t want, without the features you need. And because it’s in stock and you can have it immediately.
There are many more tricks you need to be aware of when buying a car from a dealer too.
Remember, don’t feel pressured into buying something that isn’t right.
129. Check the history of a pre-owned car
If you are buying a pre-owned car, check its history and condition first before buying.
You don’t want to find out about its colorful past when it’s too late.
Perhaps you didn’t know it had been in an accident, that some of the electrics don’t work, or that the tires will need replacing very soon.
Having full service records and seeing things like all the electrics working properly is likely to mean the car has been looked after.
130. Look around first
Before you hand over any money for a pre-owned car, look online for similar makes and models, as well as locally.
Are the prices you’re seeing comparable?
Are cars cheaper a few miles away?
Is there a better deal somewhere else?
Remember, a car that seems too good to be true, probably is.
Your car might be costing you a lot of money that you can’t really afford, but changing to a cheaper or older car might result in more problems.
Perhaps you know a smaller car is no good for your active lifestyle, that you don’t need a gas-guzzling SUV now that the kids have left home, or you get the bus to work.
Whilst we’re not car experts, these tips might help you to choose the right car and save money.
As a bankruptcy practitioner, I meet with lots of people who have tried debt consolidation using debt settlement companies first.
Often times they tell me that the settlement company had terrible customer service, and that the client couldn’t tell what was happening.
The complaint filed against Freedom Debt Relief mentions exactly these problems.
A few things that the complaint says about Freedom:
Freedom misled customers
Freedom misled consumers about whether ALL of the creditors will be willing to negotiate, or only SOME of them will be willing to negotiate.
In my experience, people who try debt settlement have a little initial success in settling a few debts, but the other creditors continue to collect and maybe even get judgments.
The debt settlement company can’t keep the other debt collectors at bay. Debt settlement companies do not stop debt collection law firms from getting judgments while they are working to settle the other debts.
Bankruptcy, however, has the automatic stay immediately stops any creditor from trying to get a judgment, and voids or discharges most pre-existing judgments.
Freedom deceived customers
Freedom deceived customers about the scope of their services.
Apparently, Freedom was telling clients that they will deal with all of the debts, but in reality knew that there were certain creditors that would never work with them.
In bankruptcy, creditors don’t have a choice of whether to accept the outcome or not.
They can try and fight or contest a bankruptcy, but only if they have proof that the client has been dishonest or fraudulent.
Freedom wasn’t totally honest
Freedom wasn’t totally honest about how their fees worked.
In debt settlement, the company takes as a fee a portion of any money that they get the creditors to forgive.
The complaint alleges that Freedom was taking fees for other reasons also, such as when the collector voluntarily gives up on collecting the debt.
Walker & Walker Law Offices does bankruptcy in Minnesota on an affordable flat fee.
We tell you exactly how much it costs when we first meet, and we see the case through to a successful discharge without nickel and diming our clients.
Freedom didn’t tell customers about the right to a refund
Freedom didn’t tell customers about the right to a refund.
Debt settlement works by having the client pay some money every month to the settlement company.
The settlement company sets that money aside and then tries to settle the debts one at a time by offering a lump sum to the creditors.
If the customer wants to stop, then the settlement company is supposed to give back whatever hasn’t been spent yet.
If they are setting aside money every month, then some of that money should still be there right?
Apparently Freedom wasn’t refunding this money.
I work with lots of people who tried debt settlement and found that it took too long and costed too much.
If you don’t know whether bankruptcy or debt settlement is better for your situation, why not read our article about the dangers of debt settlement, or even better, make a free appointment to sit down and talk to a lawyer about your debt options.
Call us today at 612-824-4357 and tell us how we can help you.
Business bankruptcies and personal bankruptcies have two basic similarities:
1. Businesses and people look into bankruptcy because they aren’t making enough money to pay all of their bills
2. After bankruptcy, both people and companies keep the assets that they need to make a living, but lose the debt which had become unbearable
Filing bankruptcy eliminates lots of debt and gives you some breathing room to reorganize.
Why do companies file for Chapter 11 Bankruptcy?
In the corporate Chapter 11 context, it allows companies to push back payments on debt and suppliers, and restructure some long term contracts like:
Health care plans
If a company has to make fewer debt payments every month, then it can afford to produce a higher quality product, and will make more money.
Getting rid of bad business deals or debts allows the company to use its resources on what it’s good at.
In the example of Toys R Us, it would allow them to:
Get rid of the stores that are not performing well without paying years of rent and penalties to the landlords, and reinvest that money into making the profitable stores better.
For example, they can:
Buy the season’s most popular toys
Stock up their inventory for the holidays
Invest a bit in renovating their stores
Improve their software or marketing
Why do people file for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy?
When it comes to ordinary people, filing bankruptcy also gives them some breathing room in their budget.
Lots of people are trying to pay off student loans at the same time as they are struggling with a high car payment or judgments or wage garnishments.
Personal bankruptcy means that you can immediately stop paying:
Most court judgments
If you have a bad deal on a car loan, then it also tends to allow you to get a better deal on a car afterwards without rolling the debt from your old car into the new car as part of the trade in process.
I have worked with lots of clients who have been struggling at work due to the stress of garnishment or living paycheck to paycheck, and I helped them get back on track by filing personal bankruptcy.
Just as Chapter 11 will give Toys R Us some breathing room to get rid of the bad debt and focus on the good parts of their business, bankruptcy allows ordinary people to get rid of bad debt so they can focus on family and career.
Bankruptcy also lets you keep:
Your personal effects
Your retirement accounts
So you have everything you need for a fresh start.
Most of my clients get to keep all of their property and money when they file bankruptcy.
Will suppliers continue to work with Toys R Us?
Another parallel between business and personal bankruptcies is that most companies will continue to do business with the company or person after the bankruptcy.
Think about it, will the toy manufacturers suddenly stop selling toys to Toys R Us because of the bankruptcy?
No! That would be ridiculous.
Toys R Us is a good partner for all of the toy manufacturers and brings them lots of sales.
They will keep working with Toys R Us, even if a few invoices for certain shipments don’t get paid, or get paid late.
It is the same for people who file consumer bankruptcy.
Most of my clients get more offers for credit and at better interest rates AFTER bankruptcy than they do before bankruptcy.
Why is that?
Because credit rating is supposed to measure how likely someone is to pay back a loan in the future.
Someone who just filed bankruptcy and got rid of all of their bad debt is a safer loan than someone who has lots of debt already and could file bankruptcy at any time.
Remember, banks and companies that make loans always want new business.
They won’t ignore an opportunity for new business just because there was a bankruptcy in the past.
Thinking about the time of day you do things can help you save money too.
Here’s what we think you should think about.
101. Get up on time
Probably the most unpopular suggestion, but getting up on time can actually save you money.
Sounds a bit strange doesn’t it, but by getting up on time there will be time to have breakfast with the kids, make your lunch and a drink to take with you on your way to work.
You won’t need to rush out of the door and buy something on the way to work or school.
You could get even more organized by making the kid’s lunches and yours the night before and enjoy a few more minutes in bed in the morning.
102. Get up earlier
Getting up earlier will give you time to prepare yourself for the day ahead.
Maybe you’ll be able to:
Organize your shopping list better
Make sure that you have the right amount of cash with you
Go to the gym
103. Go to bed earlier
This will not only mean you get more sleep, but also ensure that you don’t get sucked down the rabbit hole of online forums, ecommerce or auction sites!
Reading about something from your childhood, or learning g about something you simply must have, can be expensive!
Instead of dreaming about owning a classic car, booking a vacation, or where to get that amazing outfit, you can just be dreaming instead.
104. Go to bed later
Although sometimes going to bed later is a good idea.
Perhaps when the kids have gone to bed is the perfect time to do the necessary research for a major purchase like a new car or washing machine.
You can see whether a product or service you’re interested in is really what you want, and worth the cost.
Maybe you also won’t be distracted by the kids asking you to do other things with them, or trying to add things to your online cart.
Maybe you’ll talk it over, or read forums and watch reviews in peace and quiet to help you decide. This will mean that you won’t make a costly mistake.
105. Time of day
You might be able to save money by travelling earlier or later in the day on public transport.
Why would you pay extra to be somewhere before 9am, if you don’t need to?
Maybe getting the earlier train ensures you get a seat.
Perhaps going out earlier and ending your night sooner will mean that you can get a bus or train home instead of a cab.
Many restaurants and bars offer reductions for certain times of day. Maybe straight after work is expensive, but an hour later is much cheaper.
Maybe going out for a meal n a Monday instead of a Friday is cheaper too.
Remember that supermarkets often mark down fresh food in the evening too. You could save a lot of money by buying your fresh produce when it’s cheaper.
106. Quieter times of day
If you’re making a considered purchase, such as a new refrigerator or even just a pair of sneakers, you might want to take your time and choose a quiet time of day to check out different models in the stores.
Playing that guitar, looking at a car, or trying on clothes in the peace and quiet of a Monday lunchtime instead of a Saturday afternoon can mean that you don’t feel rushed too.
By taking your time, you are more likely to buy something you really want, or that best meets you needs.
107. Getting help and advice
Perhaps you do need help from the sales adviser, or want to try something for yourself.
It’s easier to find out the differences between hiking gear, golf clubs or bikes at lunchtime instead of at the weekend when everybody else is looking as well.
108. Better customer service
You might get more attention and help from a sales person without feeling under pressure when a store is quieter too.
Maybe you could have a test drive of that car, try that power tool, or see that TV in action for yourself, instead of having to rely on videos, magazine reviews or the manufacturer’s specifications.
109. Befriend the sales people
Perhaps you’re looking for a new car, the perfect honeymoon, or an item of jewellery or clothing. Why not try and make friends with the sales people at various stores when they are quiet?
Ask them if they could keep you informed of upcoming offers, or new products, which might mean that you save money in the long run.
You might also learn when the supermarket reduces the cost of items that are almost out of date, or when the big sale will be.
If the brand is launching a new product soon, will that mean the old stock will be cheaper? You’ll find out if you regularly visit the boutique.
110. Shopping with your children
Is going shopping with your children easier or harder than going by yourself?
If they’re tired, hungry and not interested, then they might be constantly demanding something, bickering or generally being hard work.
This can slow you down, and potentially mean you by thing you weren’t expecting to.
Perhaps you might be quicker and spend less if you go on your own during your lunch hour or the evening, rather than with them at the weekend.
Changing day or the time of day you do things can dramatically reduce the amount you spend.
You have probably heard that Equifax, one of the 3 big nationwide credit reporting companies, recently had a huge data breach.
Some 143 million Americans have had their information compromised.
Considering that there were 323.1 million Americans in 2016, and that lots of Americans, like children, don’t have credit reports, this is probably more than half of American adults.
WHAT DID EQUIFAX LOSE TO HACKERS?
According to the Star Tribune, the hackers got names, addresses, birth dates, Social Security numbers, and driver’s license numbers.
This is all the information that someone needs to open a credit card in someone else’s name, or to fraudulently file a tax return and steal someone’s tax refunds.
It is not possible to easily change this information to prevent people from using it in the future.
Sure you can move and get a new address, but it would be expensive and annoying to friends and family to change your name.
It is also almost impossible to get a new Social Security number.
In Minnesota, people get a new driver’s license once every 5 years.
WHAT ARE MY LEGAL RIGHTS?
I am a bankruptcy lawyer, so I am not an expert on this, but I have done some research for Minnesotans.
The basics don’t look good.
Minnesota has a law requiring organizations to notify people of data breaches.
Minn. Stat. Section 325E.61 says that any person or business that maintains data with the personal information of Minnesotans must notify affected people “in the most expedient time possible and without unreasonable delay,” unless there is some sort of law enforcement reason to keep the data breach secret.
Equifax knew of this breach on July 29, 2017, and didn’t go public with it until September, 2017.
That doesn’t seem to be the most expedient way possible.
Equifax also has not notified all people affected by the breach. They only made a website that allows you to search and see if you are affected or not.
The Minnesota courts have not decided whether making a website that people can search to see if they were affected counts as notifying the affected people.
What about people who don’t use the Internet? Does the website notify them?
One thing Minnesota Courts have decided is that Minn. Stat. Section 325E.61 does not allow individual people to bring lawsuits against companies that suffer data breaches.
In a 2014 case about the Target data breach, the Minnesota Supreme Court found that only the Attorney General may enforce the data breach statute on behalf of Minnesotans.
WHAT DOES THE MINNESOTA ATTORNEY GENERAL RECOMMEND?
As of press time in September, 2017 the Minnesota Attorney General has not started an enforcement action.
The Attorney General’s website recommends that everyone freeze their credit profiles with each of the 3 credit bureaus, Experian, Transunion, and Equifax. It costs money to freeze one’s credit profile.
Why freeze all 3?
Because someone who got your name, address, and Social Security number can open credit accounts anywhere.
Many of the lenders check one of the other 2 bureaus instead of Equifax, so if you only freeze with Equifax, then you are only partially protected.
Interestingly, the Attorney General says that Equifax will not be notifying people individually by mail, telephone, email or text.
If you receive a communication from someone purporting to be from Equifax, they are probably trying to scam you.
I do not offer legal advice on whether this policy complies with the requirement that a company with a data breach notify all who were affected by the breach.
Because Minnesota law does not allow Minnesotans to bring individual lawsuits for data breach, our only option is to try and limit harm by freezing credit profiles.
Also, it is wise to file your tax returns early so that no one steals your tax refunds.
Tax refund theft is another common practice of identity thieves, and is best presented by filing your tax returns as soon as you have your W-2s, 1099s, and other tax documents.
SO WHAT ARE YOUR RIGHTS?
At present, your rights seem to be only to wait and see.
Because Equifax collected your personal information and did not safeguard it, that info was lost to hackers.
These hackers may now open new accounts in your name or try to steal your tax refunds.
Your only real right seems to be to spend time and money protecting yourself from fraudsters.
I am not an expert on privacy law, I focus my practice on bankruptcy.
If you are harmed by the Equifax breach, I recommend you consult with a specialist.
We recently filed a Chapter 7 Bankruptcy for someone who continued to pay their mortgage throughout the 3 months of their Chapter 7.
We knew that the mortgage company was in no danger of taking a loss, as all payments were current, and the mortgage company did not have to do any extra work because of the bankruptcy.
Surprisingly, and unexpectedly, the mortgage company then charged our client $125 in attorney’s fees.
Understandably, Andrew Walker felt these attorney’s fees were wholly unjustified.
You know as well as we do, that that it isn’t reasonable to charge a fee where the mortgage company didn’t have to do anything extra, didn’t lose anything, and weren’t in danger of losing anything because of the bankruptcy.
In order to fix this situation, we sent a Qualified Written Request and Notice of Error to the mortgage company, saying that we thought that the fee was not allowed by the mortgage contract, because the fee was not reasonable.
The Qualified Written Request and Notice of Error are special types of letter that the Real Estate Settlement Procedures Act (RESPA) says homeowners can use to get information and resolve disputes with mortgage companies.
If the mortgage company doesn’t provide the information or fix the problem, then the homeowner may bring a civil action against the mortgage company.
In our case, the mortgage company wrote back to inform us that they would not charge the fee. Perhaps this was because they didn’t want to get drawn into a litigation case over whether the fee was reasonable or not.
Obviously, our client is delighted that they don’t have to pay an additional fee, and we’re delighted as well that the mortgage company saw sense, and decided not to charge the fee.
If you’ve been charged a fee that you feel is unreasonable because of your financial situation, or perhaps even during your Chapter 7 Bankruptcy or Chapter 13 Bankruptcy in Minnesota, then you’ll need the right legal advice.
Contact us at 612.824.4357 today, and tell us how we can help you.