Legal Question in Bankruptcy in Minnesota

I have a $10,000 judgement against me from an automobile that was repossessed in 2001 (this was renewed in 11/2011) - the vehicle would have cost $5000 to get it running again and I was out of work at the time. I have an additional dental bill for $1200 as well as miscellanious bills from my unemployment period and am thinking about filing bankruptcy to stop garnishments and creditor harassment.

Since that time, I have worked 9 years at the same company and am currently paying off my student loan and 2nd automobile loan.

However, I recently gained custody of my teenage son and the small one bedroom apartment no longer meets our needs. I now have some additional NET income since I am no longer paying child support for my 18 year old daughter who graduated lest month. The 2 bedroom apartments that I have looked into are running about $950 per month.

I would much rather put this money into a 2-3 bedroom house since the housing prices are low but are starting to make a rebound. I could borrow approximatley $6000 from my 401k to use towards a downpayment.

I am wondering if it would be feasible to buy a home prior to filing for bankruptcy - and claiming a homestead exemption while there is still no equity?


Asked on 6/28/12, 12:44 pm

2 Answers from Attorneys
David Kelly-952-544-6356 Kelly Law Office

Usually - in my opinion - it is not a good thing to have any real estate transactions within a year of filing a bankruptcy. Recent real estate transactions create all sorts of possibilities for things to go wrong, and I try to stay away from them. It would be much better - in my opinion - for you to look into filing your bankruptcy first.

If you have access to money in a 401K, you might want to consider offering a relatively small amount in settlement of the judgment. They haven't collected for a long time. Maybe they would accept $3,000. That would be nearly as cheap as filing a bankruptcy.

You need to see a competent lawyer for a face to face consult. This response is for general information purposes only and does not create an attorney-client relationship.

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Answered on 6/28/12, 1:28 pm
Nathan Hansen Nathan M. Hansen, Attorney at Law

Mr. Kelly is correct in what he said. I would further observe that it would be difficult to obtain financing for a piece of real estate with an outstanding judgment - just a practical consideration.

Nathan Hansen

651-704-9600

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Answered on 6/28/12, 1:58 pm


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