When floodwaters recede in Minnesota, they often leave financial ruin behind. If you’re an older couple nearing retirement, you may find these challenges extra daunting. Damage to property, lost income and unexpected expenses can quickly derail your carefully made financial plans.
Bankruptcy might help you regain financial stability, but it’s not a simple fix. If you’re considering it, carefully weigh the process and results before deciding.
Understanding your options
In Minnesota, you may qualify for these bankruptcy options:
- Chapter 7 erases most unsecured debts you owe, but you could lose some possessions in the process.
- Chapter 13 lets you repay debts over three to five years and can help save your home.
Additionally, Minnesota law provides certain protections during bankruptcy. The Minnesota Homestead Exemption can protect up to $450,000 of equity in your primary residence during bankruptcy proceedings.
Your financial situation, assets and long-term goals will help determine which bankruptcy option, if any, is most appropriate for you. These factors also influence how state protections like the Homestead Exemption may apply in your case.
Making an informed decision
Recent amendments to Minnesota’s bankruptcy laws provide additional considerations for disaster victims. However, these provisions are not automatically applied. Courts can adjust some rules on a case-by-case basis.
Before choosing bankruptcy, you should:
- Assess all your damages, including long-term losses
- Explore your insurance claims and disaster relief options
- Review your assets to understand potential losses
- Consider the effects on your retirement savings and pensions
- Gauge the impact on your credit score and future borrowing
Don’t rush to file right after a flood. Look into alternative options as well. Some ways to avoid bankruptcy include asking for government disaster assistance and talking to your lenders about easier payment plans. These can help you manage your debt.
Bankruptcy is a big choice that affects your finances for years, not just your current debts. Take time to think about the long-term effects. Consulting with a bankruptcy attorney is advisable for legal guidance on finding the best way to rebuild your finances after a flood.